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Tax Return H&r Block

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Tax Return H&r Block

Tax return h&r block 9. Tax return h&r block   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Tax return h&r block Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Tax return h&r block Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Tax return h&r block Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Tax return h&r block It also covers the following topics. Tax return h&r block Personal use of dwelling unit (including vacation home). Tax return h&r block Depreciation. Tax return h&r block Limits on rental losses. Tax return h&r block How to report your rental income and expenses. Tax return h&r block If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Tax return h&r block If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Tax return h&r block If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Tax return h&r block See Publication 527, Residential Rental Property, for more information. Tax return h&r block Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Tax return h&r block Rental income is any payment you receive for the use or occupation of property. Tax return h&r block In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Tax return h&r block When to report. Tax return h&r block   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Tax return h&r block You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Tax return h&r block You constructively receive income when it is made available to you, for example, by being credited to your bank account. Tax return h&r block   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Tax return h&r block Advance rent. Tax return h&r block   Advance rent is any amount you receive before the period that it covers. Tax return h&r block Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Tax return h&r block Example. Tax return h&r block You sign a 10-year lease to rent your property. Tax return h&r block In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Tax return h&r block You must include $10,000 in your income in the first year. Tax return h&r block Canceling a lease. Tax return h&r block   If your tenant pays you to cancel a lease, the amount you receive is rent. Tax return h&r block Include the payment in your income in the year you receive it regardless of your method of accounting. Tax return h&r block Expenses paid by tenant. Tax return h&r block   If your tenant pays any of your expenses, the payments are rental income. Tax return h&r block Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Tax return h&r block See Rental Expenses , later, for more information. Tax return h&r block Property or services. Tax return h&r block   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Tax return h&r block   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Tax return h&r block Security deposits. Tax return h&r block   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Tax return h&r block But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Tax return h&r block   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Tax return h&r block Include it in your income when you receive it. Tax return h&r block Part interest. Tax return h&r block   If you own a part interest in rental property, you must report your part of the rental income from the property. Tax return h&r block Rental of property also used as your home. Tax return h&r block   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Tax return h&r block However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Tax return h&r block See Personal Use of Dwelling Unit (Including Vacation Home) , later. Tax return h&r block Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Tax return h&r block It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Tax return h&r block Depreciation , which you can also deduct from your rental income, is discussed later. Tax return h&r block Personal use of rental property. Tax return h&r block   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Tax return h&r block Also, your rental expense deductions may be limited. Tax return h&r block See Personal Use of Dwelling Unit (Including Vacation Home) , later. Tax return h&r block Part interest. Tax return h&r block   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Tax return h&r block When to deduct. Tax return h&r block   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Tax return h&r block Depreciation. Tax return h&r block   You can begin to depreciate rental property when it is ready and available for rent. Tax return h&r block See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Tax return h&r block Pre-rental expenses. Tax return h&r block   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Tax return h&r block Uncollected rent. Tax return h&r block   If you are a cash-basis taxpayer, do not deduct uncollected rent. Tax return h&r block Because you have not included it in your income, it is not deductible. Tax return h&r block Vacant rental property. Tax return h&r block   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Tax return h&r block However, you cannot deduct any loss of rental income for the period the property is vacant. Tax return h&r block Vacant while listed for sale. Tax return h&r block   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Tax return h&r block If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Tax return h&r block Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Tax return h&r block Improvements. Tax return h&r block   You must capitalize any expense you pay to improve your rental property. Tax return h&r block An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Tax return h&r block Betterments. Tax return h&r block   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Tax return h&r block Restoration. Tax return h&r block   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Tax return h&r block Adaptation. Tax return h&r block   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Tax return h&r block Separate the costs of repairs and improvements, and keep accurate records. Tax return h&r block You will need to know the cost of improvements when you sell or depreciate your property. Tax return h&r block The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Tax return h&r block Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Tax return h&r block Insurance premiums paid in advance. Tax return h&r block   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Tax return h&r block You cannot deduct the total premium in the year you pay it. Tax return h&r block Legal and other professional fees. Tax return h&r block   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Tax return h&r block For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Tax return h&r block You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Tax return h&r block Local benefit taxes. Tax return h&r block   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Tax return h&r block These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Tax return h&r block However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Tax return h&r block Local transportation expenses. Tax return h&r block    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Tax return h&r block However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Tax return h&r block See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Tax return h&r block   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Tax return h&r block For 2013, the standard mileage rate for business use is 56. Tax return h&r block 5 cents per mile. Tax return h&r block For more information, see chapter 26. Tax return h&r block    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Tax return h&r block In addition, you must complete Form 4562, Part V, and attach it to your tax return. Tax return h&r block Rental of equipment. Tax return h&r block   You can deduct the rent you pay for equipment that you use for rental purposes. Tax return h&r block However, in some cases, lease contracts are actually purchase contracts. Tax return h&r block If so, you cannot deduct these payments. Tax return h&r block You can recover the cost of purchased equipment through depreciation. Tax return h&r block Rental of property. Tax return h&r block   You can deduct the rent you pay for property that you use for rental purposes. Tax return h&r block If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Tax return h&r block Travel expenses. Tax return h&r block   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Tax return h&r block You must properly allocate your expenses between rental and nonrental activities. Tax return h&r block You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Tax return h&r block You recover the cost of improvements by taking depreciation. Tax return h&r block For information on travel expenses, see chapter 26. Tax return h&r block    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Tax return h&r block   See Rental Expenses in Publication 527 for more information. Tax return h&r block Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Tax return h&r block You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Tax return h&r block You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Tax return h&r block However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Tax return h&r block Example. Tax return h&r block Your tax year is the calendar year. Tax return h&r block You moved from your home in May and started renting it out on June 1. Tax return h&r block You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Tax return h&r block Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Tax return h&r block Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Tax return h&r block You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Tax return h&r block You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Tax return h&r block There is no change in the types of expenses deductible for the personal-use part of your property. Tax return h&r block Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Tax return h&r block You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Tax return h&r block You do not have to divide the expenses that belong only to the rental part of your property. Tax return h&r block For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Tax return h&r block If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Tax return h&r block You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Tax return h&r block How to divide expenses. Tax return h&r block   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Tax return h&r block You can use any reasonable method for dividing the expense. Tax return h&r block It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Tax return h&r block The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Tax return h&r block Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Tax return h&r block You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Tax return h&r block For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Tax return h&r block Where to report. Tax return h&r block   Report your not-for-profit rental income on Form 1040, line 21. Tax return h&r block For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Tax return h&r block   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Tax return h&r block You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Tax return h&r block Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Tax return h&r block In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Tax return h&r block Only your rental expenses may be deducted on Schedule E (Form 1040). Tax return h&r block Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Tax return h&r block You must also determine if the dwelling unit is considered a home. Tax return h&r block The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Tax return h&r block Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Tax return h&r block There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Tax return h&r block Dwelling unit. Tax return h&r block   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Tax return h&r block It also includes all structures or other property belonging to the dwelling unit. Tax return h&r block A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Tax return h&r block   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Tax return h&r block Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Tax return h&r block Example. Tax return h&r block   You rent a room in your home that is always available for short-term occupancy by paying customers. Tax return h&r block You do not use the room yourself, and you allow only paying customers to use the room. Tax return h&r block The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Tax return h&r block Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Tax return h&r block When dividing your expenses, follow these rules. Tax return h&r block Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Tax return h&r block This rule does not apply when determining whether you used the unit as a home. Tax return h&r block Any day that the unit is available for rent but not actually rented is not a day of rental use. Tax return h&r block Example. Tax return h&r block Your beach cottage was available for rent from June 1 through August 31 (92 days). Tax return h&r block During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. Tax return h&r block The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Tax return h&r block Your family also used the cottage during the last 2 weeks of May (14 days). Tax return h&r block The cottage was not used at all before May 17 or after August 31. Tax return h&r block You figure the part of the cottage expenses to treat as rental expenses as follows. Tax return h&r block The cottage was used for rental a total of 85 days (92 − 7). Tax return h&r block The days it was available for rent but not rented (7 days) are not days of rental use. Tax return h&r block The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Tax return h&r block You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Tax return h&r block The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Tax return h&r block Your rental expenses are 85/99 (86%) of the cottage expenses. Tax return h&r block Note. Tax return h&r block When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Tax return h&r block Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Tax return h&r block Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Tax return h&r block If you have a net loss, you may not be able to deduct all of the rental expenses. Tax return h&r block See Dwelling Unit Used as a Home, next. Tax return h&r block Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Tax return h&r block You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Tax return h&r block See What is a day of personal use , later. Tax return h&r block Fair rental price. Tax return h&r block   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Tax return h&r block The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Tax return h&r block   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Tax return h&r block Instead, count it as a day of personal use in applying both (1) and (2) above. Tax return h&r block What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Tax return h&r block You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Tax return h&r block However, see Days used as a main home before or after renting , later. Tax return h&r block A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Tax return h&r block Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Tax return h&r block ), and lineal descendants (children, grandchildren, etc. Tax return h&r block ). Tax return h&r block Anyone under an arrangement that lets you use some other dwelling unit. Tax return h&r block Anyone at less than a fair rental price. Tax return h&r block Main home. Tax return h&r block   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Tax return h&r block Shared equity financing agreement. Tax return h&r block   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Tax return h&r block Donation of use of property. Tax return h&r block   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Tax return h&r block Examples. Tax return h&r block   The following examples show how to determine days of personal use. Tax return h&r block Example 1. Tax return h&r block You and your neighbor are co-owners of a condominium at the beach. Tax return h&r block Last year, you rented the unit to vacationers whenever possible. Tax return h&r block The unit was not used as a main home by anyone. Tax return h&r block Your neighbor used the unit for 2 weeks last year; you did not use it at all. Tax return h&r block Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Tax return h&r block Example 2. Tax return h&r block You and your neighbors are co-owners of a house under a shared equity financing agreement. Tax return h&r block Your neighbors live in the house and pay you a fair rental price. Tax return h&r block Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Tax return h&r block This is because your neighbors rent the house as their main home under a shared equity financing agreement. Tax return h&r block Example 3. Tax return h&r block You own a rental property that you rent to your son. Tax return h&r block Your son does not own any interest in this property. Tax return h&r block He uses it as his main home and pays you a fair rental price. Tax return h&r block Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Tax return h&r block Example 4. Tax return h&r block You rent your beach house to Joshua. Tax return h&r block Joshua rents his cabin in the mountains to you. Tax return h&r block You each pay a fair rental price. Tax return h&r block You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Tax return h&r block Days used for repairs and maintenance. Tax return h&r block   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Tax return h&r block Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Tax return h&r block Days used as a main home before or after renting. Tax return h&r block   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Tax return h&r block Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Tax return h&r block You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Tax return h&r block However, this special rule does not apply when dividing expenses between rental and personal use. Tax return h&r block Examples. Tax return h&r block   The following examples show how to determine whether you used your rental property as a home. Tax return h&r block Example 1. Tax return h&r block You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Tax return h&r block You rented the basement apartment at a fair rental price to college students during the regular school year. Tax return h&r block You rented to them on a 9-month lease (273 days). Tax return h&r block You figured 10% of the total days rented to others at a fair rental price is 27 days. Tax return h&r block During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Tax return h&r block Your basement apartment was used as a home because you used it for personal purposes for 30 days. Tax return h&r block Rent-free use by your brothers is considered personal use. Tax return h&r block Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Tax return h&r block Example 2. Tax return h&r block You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Tax return h&r block Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Tax return h&r block You figured 10% of the total days rented to others at a fair rental price is 3 days. Tax return h&r block The room was used as a home because you used it for personal purposes for 21 days. Tax return h&r block That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Tax return h&r block Example 3. Tax return h&r block You own a condominium apartment in a resort area. Tax return h&r block You rented it at a fair rental price for a total of 170 days during the year. Tax return h&r block For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Tax return h&r block Your family actually used the apartment for 10 of those days. Tax return h&r block Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Tax return h&r block You figured 10% of the total days rented to others at a fair rental price is 16 days. Tax return h&r block Your family also used the apartment for 7 other days during the year. Tax return h&r block You used the apartment as a home because you used it for personal purposes for 17 days. Tax return h&r block That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Tax return h&r block Minimal rental use. Tax return h&r block   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Tax return h&r block See Used as a home but rented less than 15 days , later, for more information. Tax return h&r block Limit on deductions. Tax return h&r block   Renting a dwelling unit that is considered a home is not a passive activity. Tax return h&r block Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Tax return h&r block The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Tax return h&r block Any expenses carried forward to the next year will be subject to any limits that apply for that year. Tax return h&r block This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Tax return h&r block   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Tax return h&r block Reporting Income and Deductions Property not used for personal purposes. Tax return h&r block   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Tax return h&r block Property used for personal purposes. Tax return h&r block   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Tax return h&r block Not used as a home. Tax return h&r block   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Tax return h&r block Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Tax return h&r block The expenses for personal use are not deductible as rental expenses. Tax return h&r block   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Tax return h&r block Used as a home but rented less than 15 days. Tax return h&r block   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Tax return h&r block You are not required to report the rental income and rental expenses from this activity. Tax return h&r block The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Tax return h&r block See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Tax return h&r block Used as a home and rented 15 days or more. Tax return h&r block   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Tax return h&r block Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Tax return h&r block The expenses for personal use are not deductible as rental expenses. Tax return h&r block   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Tax return h&r block You do not need to use Worksheet 9-1. Tax return h&r block   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Tax return h&r block To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Tax return h&r block Depreciation You recover the cost of income-producing property through yearly tax deductions. Tax return h&r block You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Tax return h&r block Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Tax return h&r block You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Tax return h&r block You can deduct depreciation only on the part of your property used for rental purposes. Tax return h&r block Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Tax return h&r block You may have to use Form 4562 to figure and report your depreciation. Tax return h&r block See How To Report Rental Income and Expenses , later. Tax return h&r block Alternative minimum tax (AMT). Tax return h&r block    If you use accelerated depreciation, you may be subject to the AMT. Tax return h&r block Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Tax return h&r block Claiming the correct amount of depreciation. Tax return h&r block   You should claim the correct amount of depreciation each tax year. Tax return h&r block If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Tax return h&r block   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Tax return h&r block S Individual Income Tax Return. Tax return h&r block If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Tax return h&r block See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Tax return h&r block Changing your accounting method to deduct unclaimed depreciation. Tax return h&r block   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Tax return h&r block In some instances, that consent is automatic. Tax return h&r block For more information, see chapter 1 of Publication 946. Tax return h&r block Land. Tax return h&r block   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Tax return h&r block The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Tax return h&r block More information. Tax return h&r block   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Tax return h&r block Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Tax return h&r block You must consider these rules in the order shown below. Tax return h&r block At-risk rules. Tax return h&r block These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Tax return h&r block This applies only if the real property was placed in service after 1986. Tax return h&r block Passive activity limits. Tax return h&r block Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Tax return h&r block However, there are exceptions. Tax return h&r block At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Tax return h&r block Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Tax return h&r block In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Tax return h&r block You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Tax return h&r block See Publication 925 for more information. Tax return h&r block Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Tax return h&r block For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Tax return h&r block Limits on passive activity deductions and credits. Tax return h&r block    Deductions or losses from passive activities are limited. Tax return h&r block You generally cannot offset income, other than passive income, with losses from passive activities. Tax return h&r block Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Tax return h&r block Any excess loss or credit is carried forward to the next tax year. Tax return h&r block   For a detailed discussion of these rules, see Publication 925. Tax return h&r block    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Tax return h&r block Real estate professionals. Tax return h&r block   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Tax return h&r block For a detailed discussion of the requirements, see Publication 527. Tax return h&r block For a detailed discussion of material participation, see Publication 925. Tax return h&r block Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Tax return h&r block Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Tax return h&r block Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Tax return h&r block This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Tax return h&r block Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Tax return h&r block Active participation. Tax return h&r block   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Tax return h&r block Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Tax return h&r block Maximum special allowance. Tax return h&r block   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Tax return h&r block   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Tax return h&r block If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Tax return h&r block   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Tax return h&r block More information. Tax return h&r block   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Tax return h&r block How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Tax return h&r block However, do not use that schedule to report a not-for-profit activity. Tax return h&r block See Not Rented for Profit, earlier. Tax return h&r block Providing substantial services. Tax return h&r block   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Tax return h&r block Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Tax return h&r block For information, see Publication 334, Tax Guide for Small Business. Tax return h&r block You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Tax return h&r block   Use Form 1065, U. Tax return h&r block S. Tax return h&r block Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Tax return h&r block Qualified joint venture. Tax return h&r block   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Tax return h&r block This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Tax return h&r block For more information, see Publication 527. Tax return h&r block Form 1098, Mortgage Interest Statement. Tax return h&r block    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. Tax return h&r block If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Tax return h&r block Attach a statement to your return showing the name and address of the other person. Tax return h&r block In the left margin of Schedule E, next to line 13, enter “See attached. Tax return h&r block ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Tax return h&r block , you normally report your rental income and expenses on Schedule E, Part I. Tax return h&r block List your total income, expenses, and depreciation for each rental property. Tax return h&r block Be sure to enter the number of fair rental and personal use days on line 2. Tax return h&r block If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Tax return h&r block Complete lines 1 and 2 for each property. Tax return h&r block However, fill in lines 23a through 26 on only one Schedule E. Tax return h&r block On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Tax return h&r block To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Tax return h&r block If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Tax return h&r block Form 6198, At-Risk Limitations. Tax return h&r block See At-Risk Rules , earlier. Tax return h&r block Also see Publication 925. Tax return h&r block Form 8582, Passive Activity Loss Limitations. Tax return h&r block See Passive Activity Limits , earlier. Tax return h&r block Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Tax return h&r block If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Tax return h&r block Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Tax return h&r block Worksheet 9-1. Tax return h&r block Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Tax return h&r block Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Tax return h&r block ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Tax return h&r block Rental Use Percentage A. Tax return h&r block Total days available for rent at fair rental price A. Tax return h&r block       B. Tax return h&r block Total days available for rent (line A) but not rented B. Tax return h&r block       C. Tax return h&r block Total days of rental use. Tax return h&r block Subtract line B from line A C. Tax return h&r block       D. Tax return h&r block Total days of personal use (including days rented at less than fair rental price) D. Tax return h&r block       E. Tax return h&r block Total days of rental and personal use. Tax return h&r block Add lines C and D E. Tax return h&r block       F. Tax return h&r block Percentage of expenses allowed for rental. Tax return h&r block Divide line C by line E     F. Tax return h&r block   PART II. Tax return h&r block Allowable Rental Expenses 1. Tax return h&r block Enter rents received 1. Tax return h&r block   2a. Tax return h&r block Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Tax return h&r block       b. Tax return h&r block Enter the rental portion of real estate taxes b. Tax return h&r block       c. Tax return h&r block Enter the rental portion of deductible casualty and theft losses (see instructions) c. Tax return h&r block       d. Tax return h&r block Enter direct rental expenses (see instructions) d. Tax return h&r block       e. Tax return h&r block Fully deductible rental expenses. Tax return h&r block Add lines 2a–2d. Tax return h&r block Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Tax return h&r block   3. Tax return h&r block Subtract line 2e from line 1. Tax return h&r block If zero or less, enter -0- 3. Tax return h&r block   4a. Tax return h&r block Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Tax return h&r block       b. Tax return h&r block Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Tax return h&r block       c. Tax return h&r block Carryover of operating expenses from 2012 worksheet c. Tax return h&r block       d. Tax return h&r block Add lines 4a–4c d. Tax return h&r block       e. Tax return h&r block Allowable expenses. Tax return h&r block Enter the smaller of line 3 or line 4d (see instructions) 4e. Tax return h&r block   5. Tax return h&r block Subtract line 4e from line 3. Tax return h&r block If zero or less, enter -0- 5. Tax return h&r block   6a. Tax return h&r block Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Tax return h&r block       b. Tax return h&r block Enter the rental portion of depreciation of the dwelling unit b. Tax return h&r block       c. Tax return h&r block Carryover of excess casualty losses and depreciation from 2012 worksheet c. Tax return h&r block       d. Tax return h&r block Add lines 6a–6c d. Tax return h&r block       e. Tax return h&r block Allowable excess casualty and theft losses and depreciation. Tax return h&r block Enter the smaller of  line 5 or line 6d (see instructions) 6e. Tax return h&r block   PART III. Tax return h&r block Carryover of Unallowed Expenses to Next Year 7a. Tax return h&r block Operating expenses to be carried over to next year. Tax return h&r block Subtract line 4e from line 4d 7a. Tax return h&r block   b. Tax return h&r block Excess casualty and theft losses and depreciation to be carried over to next year. Tax return h&r block  Subtract line 6e from line 6d b. Tax return h&r block   Worksheet 9-1 Instructions. Tax return h&r block Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Tax return h&r block Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Tax return h&r block Line 2a. Tax return h&r block Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Tax return h&r block Do not include interest on a loan that did not benefit the dwelling unit. Tax return h&r block For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Tax return h&r block Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Tax return h&r block Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Tax return h&r block   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Tax return h&r block See the Schedule A instructions. Tax return h&r block However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Tax return h&r block See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Tax return h&r block Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Tax return h&r block   Note. Tax return h&r block Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Tax return h&r block Instead, figure the personal portion on a separate Schedule A. Tax return h&r block If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Tax return h&r block           Line 2c. Tax return h&r block Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Tax return h&r block To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Tax return h&r block If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Tax return h&r block On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Tax return h&r block Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Tax return h&r block   Note. Tax return h&r block Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Tax return h&r block Instead, figure the personal portion on a separate Form 4684. Tax return h&r block           Line 2d. Tax return h&r block Enter the total of your rental expenses that are directly related only to the rental activity. Tax return h&r block These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Tax return h&r block Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Tax return h&r block           Line 2e. Tax return h&r block You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Tax return h&r block Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Tax return h&r block           Line 4b. Tax return h&r block On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Tax return h&r block If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Tax return h&r block Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Tax return h&r block           Line 4e. Tax return h&r block You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Tax return h&r block *           Line 6a. Tax return h&r block To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Tax return h&r block   A. Tax return h&r block Enter the amount from Form 4684, line 10       B. Tax return h&r block Enter the rental portion of line A       C. Tax return h&r block Enter the amount from line 2c of this worksheet       D. Tax return h&r block Subtract line C from line B. Tax return h&r block Enter the result here and on line 6a of this worksheet               Line 6e. Tax return h&r block You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Tax return h&r block * *Allocating the limited deduction. Tax return h&r block If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Tax return h&r block Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Tax return h&r block Prev  Up  Next   Home   More Online Publications
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The Tax Return H&r Block

Tax return h&r block Publication 54 - Additional Material Questions and AnswersThis section answers tax- related questions commonly asked by taxpayers living abroad. Tax return h&r block 1. Tax return h&r block Filing Requirements—Where, When, and How . Tax return h&r block 1) When are U. Tax return h&r block S. Tax return h&r block income tax returns due? . Tax return h&r block 2) I am going abroad this year and expect to qualify for the foreign earned income exclusion. Tax return h&r block How can I secure an extension of time to file my return, when should I file my return, and what forms are required? . Tax return h&r block 3) My entire income qualifies for the foreign earned income exclusion. Tax return h&r block Must I file a tax return? . Tax return h&r block 4) I was sent abroad by my company in November of last year. Tax return h&r block I plan to secure an extension of time on Form 2350 to file my tax return for last year because I expect to qualify for the foreign earned income exclusion under the physical presence test. Tax return h&r block However, if my company recalls me to the United States before the end of the qualifying period and I find I will not qualify for the exclusion, how and when should I file my return? . Tax return h&r block 5) I am a U. Tax return h&r block S. Tax return h&r block citizen and have no taxable income from the United States, but I have substantial income from a foreign source. Tax return h&r block Am I required to file a U. Tax return h&r block S. Tax return h&r block income tax return? . Tax return h&r block 6) I am a U. Tax return h&r block S. Tax return h&r block citizen who has retired, and I expect to remain in a foreign country. Tax return h&r block Do I have any further U. Tax return h&r block S. Tax return h&r block tax obligations? . Tax return h&r block 7) I have been a bona fide resident of a foreign country for over 5 years. Tax return h&r block Is it necessary for me to pay estimated tax? . Tax return h&r block 8) Will a check payable in foreign currency be acceptable in payment of my U. Tax return h&r block S. Tax return h&r block tax? . Tax return h&r block 9) I have met the test for physical presence in a foreign country and am filing returns for 2 years. Tax return h&r block Must I file a separate Form 2555 (or Form 2555-EZ) with each return? . Tax return h&r block 10) Does a Form 2555 (or 2555-EZ) with a Schedule C or Form W-2 attached constitute a return? . Tax return h&r block 11) On Form 2350, Application for Extension of Time To File U. Tax return h&r block S. Tax return h&r block Income Tax Return, I stated that I would qualify for the foreign earned income exclusion under the physical presence test. Tax return h&r block If I qualify under the bona fide residence test, can I file my return on that basis? . Tax return h&r block 12) I am a U. Tax return h&r block S. Tax return h&r block citizen who worked in the United States for 6 months last year. Tax return h&r block I accepted employment overseas in July of last year and expect to qualify for the foreign earned income exclusion. Tax return h&r block Should I file a return and pay tax on the income earned in the United States during the first 6 months and then, when I qualify, file another return covering the last 6 months of the year? . Tax return h&r block 13) I am a U. Tax return h&r block S. Tax return h&r block citizen. Tax return h&r block I have lived abroad for a number of years and recently realized that I should have been filing U. Tax return h&r block S. Tax return h&r block income tax returns. Tax return h&r block How do I correct this oversight in not having filed returns for these years? . Tax return h&r block 14) In 2008, I qualified to exclude my foreign earned income, but I did not claim this exclusion on the return I filed in 2009. Tax return h&r block I paid all outstanding taxes with the return. Tax return h&r block Can I file a claim for refund now? . Tax return h&r block 1) When are U. Tax return h&r block S. Tax return h&r block income tax returns due? Generally, for calendar year taxpayers, U. Tax return h&r block S. Tax return h&r block income tax returns are due on April 15. Tax return h&r block If you are a U. Tax return h&r block S. Tax return h&r block citizen or resident and both your tax home and your abode are outside the United States and Puerto Rico on the regular due date, an automatic extension is granted to June 15 for filing the return. Tax return h&r block Interest will be charged on any tax due, as shown on the return, from April 15. Tax return h&r block a) You should file Form 2350 by the due date of your return to request an extension of time to file. Tax return h&r block Form 2350 is a special form for those U. Tax return h&r block S. Tax return h&r block citizens or residents abroad who expect to qualify for the foreign earned income exclusion or the housing exclusion or deduction under either the bona fide residence test or physical presence test and would like to have an extension of time to delay filing until after they have qualified. Tax return h&r block b) If the extension is granted, you should file your return after you qualify, but by the approved extension date. Tax return h&r block c) You must file your Form 1040 with Form 2555 (or Form 2555-EZ). Tax return h&r block Generally, yes. Tax return h&r block Every U. Tax return h&r block S. Tax return h&r block citizen or resident who receives income must file a U. Tax return h&r block S. Tax return h&r block income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Tax return h&r block The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Tax return h&r block If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Tax return h&r block Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Tax return h&r block You must report your worldwide income on the return. Tax return h&r block If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Tax return h&r block S. Tax return h&r block income tax. Tax return h&r block However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Tax return h&r block Yes. Tax return h&r block All U. Tax return h&r block S. Tax return h&r block citizens and resident aliens are subject to U. Tax return h&r block S. Tax return h&r block tax on their worldwide income. Tax return h&r block If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Tax return h&r block S. Tax return h&r block income tax liability for the foreign taxes paid. Tax return h&r block Form 1116 is used to figure the allowable credit. Tax return h&r block Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 2) I am going abroad this year and expect to qualify for the foreign earned income exclusion. Tax return h&r block How can I secure an extension of time to file my return, when should I file my return, and what forms are required? a) You should file Form 2350 by the due date of your return to request an extension of time to file. Tax return h&r block Form 2350 is a special form for those U. Tax return h&r block S. Tax return h&r block citizens or residents abroad who expect to qualify for the foreign earned income exclusion or the housing exclusion or deduction under either the bona fide residence test or physical presence test and would like to have an extension of time to delay filing until after they have qualified. Tax return h&r block b) If the extension is granted, you should file your return after you qualify, but by the approved extension date. Tax return h&r block c) You must file your Form 1040 with Form 2555 (or Form 2555-EZ). Tax return h&r block Generally, yes. Tax return h&r block Every U. Tax return h&r block S. Tax return h&r block citizen or resident who receives income must file a U. Tax return h&r block S. Tax return h&r block income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Tax return h&r block The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Tax return h&r block If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Tax return h&r block Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Tax return h&r block You must report your worldwide income on the return. Tax return h&r block If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Tax return h&r block S. Tax return h&r block income tax. Tax return h&r block However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Tax return h&r block Yes. Tax return h&r block All U. Tax return h&r block S. Tax return h&r block citizens and resident aliens are subject to U. Tax return h&r block S. Tax return h&r block tax on their worldwide income. Tax return h&r block If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Tax return h&r block S. Tax return h&r block income tax liability for the foreign taxes paid. Tax return h&r block Form 1116 is used to figure the allowable credit. Tax return h&r block Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 3) My entire income qualifies for the foreign earned income exclusion. Tax return h&r block Must I file a tax return? Generally, yes. Tax return h&r block Every U. Tax return h&r block S. Tax return h&r block citizen or resident who receives income must file a U. Tax return h&r block S. Tax return h&r block income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Tax return h&r block The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Tax return h&r block If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Tax return h&r block Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Tax return h&r block You must report your worldwide income on the return. Tax return h&r block If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Tax return h&r block S. Tax return h&r block income tax. Tax return h&r block However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Tax return h&r block Yes. Tax return h&r block All U. Tax return h&r block S. Tax return h&r block citizens and resident aliens are subject to U. Tax return h&r block S. Tax return h&r block tax on their worldwide income. Tax return h&r block If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Tax return h&r block S. Tax return h&r block income tax liability for the foreign taxes paid. Tax return h&r block Form 1116 is used to figure the allowable credit. Tax return h&r block Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 4) I was sent abroad by my company in November of last year. Tax return h&r block I plan to secure an extension of time on Form 2350 to file my tax return for last year because I expect to qualify for the foreign earned income exclusion under the physical presence test. Tax return h&r block However, if my company recalls me to the United States before the end of the qualifying period and I find I will not qualify for the exclusion, how and when should I file my return? If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Tax return h&r block Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Tax return h&r block You must report your worldwide income on the return. Tax return h&r block If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Tax return h&r block S. Tax return h&r block income tax. Tax return h&r block However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Tax return h&r block Yes. Tax return h&r block All U. Tax return h&r block S. Tax return h&r block citizens and resident aliens are subject to U. Tax return h&r block S. Tax return h&r block tax on their worldwide income. Tax return h&r block If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Tax return h&r block S. Tax return h&r block income tax liability for the foreign taxes paid. Tax return h&r block Form 1116 is used to figure the allowable credit. Tax return h&r block Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 5) I am a U. Tax return h&r block S. Tax return h&r block citizen and have no taxable income from the United States, but I have substantial income from a foreign source. Tax return h&r block Am I required to file a U. Tax return h&r block S. Tax return h&r block income tax return? Yes. Tax return h&r block All U. Tax return h&r block S. Tax return h&r block citizens and resident aliens are subject to U. Tax return h&r block S. Tax return h&r block tax on their worldwide income. Tax return h&r block If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Tax return h&r block S. Tax return h&r block income tax liability for the foreign taxes paid. Tax return h&r block Form 1116 is used to figure the allowable credit. Tax return h&r block Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 6) I am a U. Tax return h&r block S. Tax return h&r block citizen who has retired, and I expect to remain in a foreign country. Tax return h&r block Do I have any further U. Tax return h&r block S. Tax return h&r block tax obligations? Your U. Tax return h&r block S. Tax return h&r block tax obligation on your income is the same as that of a retired person living in the United States. Tax return h&r block (See the discussion on filing requirements in chapter 1 of this publication. Tax return h&r block ) U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 7) I have been a bona fide resident of a foreign country for over 5 years. Tax return h&r block Is it necessary for me to pay estimated tax? U. Tax return h&r block S. Tax return h&r block taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Tax return h&r block See the discussion under Estimated Tax in chapter 1. Tax return h&r block Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Tax return h&r block S. Tax return h&r block taxation. Tax return h&r block Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Tax return h&r block The first installment of estimated tax is due on April 15 of the year for which the income is earned. Tax return h&r block Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 8) Will a check payable in foreign currency be acceptable in payment of my U. Tax return h&r block S. Tax return h&r block tax? Generally, only U. Tax return h&r block S. Tax return h&r block currency is acceptable for payment of income tax. Tax return h&r block However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Tax return h&r block Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 9) I have met the test for physical presence in a foreign country and am filing returns for 2 years. Tax return h&r block Must I file a separate Form 2555 (or Form 2555-EZ) with each return? Yes. Tax return h&r block A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Tax return h&r block No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 10) Does a Form 2555 (or 2555-EZ) with a Schedule C or Form W-2 attached constitute a return? No. Tax return h&r block The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Tax return h&r block Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 11) On Form 2350, Application for Extension of Time To File U. Tax return h&r block S. Tax return h&r block Income Tax Return, I stated that I would qualify for the foreign earned income exclusion under the physical presence test. Tax return h&r block If I qualify under the bona fide residence test, can I file my return on that basis? Yes. Tax return h&r block You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Tax return h&r block You are not bound by the test indicated in the application for extension of time. Tax return h&r block You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Tax return h&r block If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Tax return h&r block No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 12) I am a U. Tax return h&r block S. Tax return h&r block citizen who worked in the United States for 6 months last year. Tax return h&r block I accepted employment overseas in July of last year and expect to qualify for the foreign earned income exclusion. Tax return h&r block Should I file a return and pay tax on the income earned in the United States during the first 6 months and then, when I qualify, file another return covering the last 6 months of the year? No. Tax return h&r block You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Tax return h&r block After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Tax return h&r block b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Tax return h&r block This allows you to file only once and saves you from paying the tax and waiting for a refund. Tax return h&r block However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Tax return h&r block If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Tax return h&r block File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 13) I am a U. Tax return h&r block S. Tax return h&r block citizen. Tax return h&r block I have lived abroad for a number of years and recently realized that I should have been filing U. Tax return h&r block S. Tax return h&r block income tax returns. Tax return h&r block How do I correct this oversight in not having filed returns for these years? File the late returns as soon as possible, stating your reason for filing late. Tax return h&r block For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Tax return h&r block It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block . Tax return h&r block 14) In 2008, I qualified to exclude my foreign earned income, but I did not claim this exclusion on the return I filed in 2009. Tax return h&r block I paid all outstanding taxes with the return. Tax return h&r block Can I file a claim for refund now? It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Tax return h&r block A return filed before the due date is considered filed on the due date. Tax return h&r block 2. Tax return h&r block Meeting the Requirements of Either the Bona Fide Residence Test or the Physical Presence Test . Tax return h&r block 1) I recently came to Country X to work for the Orange Tractor Co. Tax return h&r block and I expect to be here for 5 or 6 years. Tax return h&r block I understand that upon the completion of 1 full year I will qualify for an exclusion or deduction under the bona fide residence test. Tax return h&r block Is this correct? . Tax return h&r block 2) I understand the physical presence test to be simply a matter of being physically present in a foreign country for at least 330 days within 12 consecutive months; but what are the criteria of the bona fide residence test? . Tax return h&r block 3) To meet the qualification of an uninterrupted period which includes an entire taxable year, do I have to be physically present in a foreign country for the entire year? . Tax return h&r block 4) I am a U. Tax return h&r block S. Tax return h&r block citizen and during 2012 was a bona fide resident of Country X. Tax return h&r block On January 15, 2013, I was notified that I was to be assigned to Country Y. Tax return h&r block I was recalled to New York for 90 days orientation and then went to Country Y, where I have been since. Tax return h&r block Although I was not in Country Y on January 1, I was a bona fide resident of Country X and was in Country Y on December 31, 2013. Tax return h&r block My family remained in Country X until completion of the orientation period, and my household goods were shipped directly to my new post. Tax return h&r block Am I a bona fide resident of a foreign country for 2013, or must I wait for the entire year of 2014 to become one? . Tax return h&r block 5) Due to illness, I returned to the United States before I completed my qualifying period to claim the foreign earned income exclusion. Tax return h&r block Can I figure the exclusion for the period I resided abroad? . Tax return h&r block 6) Can a resident alien of the United States qualify for an exclusion or deduction under the bona fide residence test or the physical presence test? . Tax return h&r block 7) On August 13 of last year I left the United States and arrived in Country Z to work for the Gordon Manufacturing Company. Tax return h&r block I expected to be able to exclude my foreign earned income under the physical presence test because I planned to be in Country Z for at least 1 year. Tax return h&r block However, I was reassigned back to the United States and left Country Z on July 1 of this year. Tax return h&r block Can I exclude any of my foreign earned income? . Tax return h&r block 1) I recently came to Country X to work for the Orange Tractor Co. Tax return h&r block and I expect to be here for 5 or 6 years. Tax return h&r block I understand that upon the completion of 1 full year I will qualify for an exclusion or deduction under the bona fide residence test. Tax return h&r block Is this correct? Not necessarily. Tax return h&r block The law provides that to qualify under this test for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, a person must be a “bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year. Tax return h&r block ” If, like most U. Tax return h&r block S. Tax return h&r block citizens, you file your return on a calendar year basis, the taxable year referred to in the law would be from January 1 to December 31 of any particular year. Tax return h&r block Unless you established residence in Country X on January 1, it would be more than 1 year before you would be a bona fide resident of a foreign country. Tax return h&r block Once you have completed your qualifying period, however, you are entitled to exclude the income or to claim the housing exclusion or deduction from the date you established bona fide residence. Tax return h&r block To be a bona fide resident of a foreign country, you must show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to that end, you are making your home in that country. Tax return h&r block Consideration is given to the type of quarters occupied, whether your family went with you, the type of visa, the employment agreement, and any other factor pertinent to show whether your stay in the foreign country is indefinite or prolonged. Tax return h&r block To claim the foreign earned income exclusion or foreign housing exclusion or deduction under this test, the period of foreign residence must include 1 full tax year (usually January 1 – December 31), but once you meet this time requirement, you figure the exclusions and the deduction from the date the residence actually began. Tax return h&r block No. Tax return h&r block Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Tax return h&r block During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Tax return h&r block To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Tax return h&r block Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Tax return h&r block No. Tax return h&r block You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Tax return h&r block If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Tax return h&r block S. Tax return h&r block tax. Tax return h&r block Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 2) I understand the physical presence test to be simply a matter of being physically present in a foreign country for at least 330 days within 12 consecutive months; but what are the criteria of the bona fide residence test? To be a bona fide resident of a foreign country, you must show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to that end, you are making your home in that country. Tax return h&r block Consideration is given to the type of quarters occupied, whether your family went with you, the type of visa, the employment agreement, and any other factor pertinent to show whether your stay in the foreign country is indefinite or prolonged. Tax return h&r block To claim the foreign earned income exclusion or foreign housing exclusion or deduction under this test, the period of foreign residence must include 1 full tax year (usually January 1 – December 31), but once you meet this time requirement, you figure the exclusions and the deduction from the date the residence actually began. Tax return h&r block No. Tax return h&r block Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Tax return h&r block During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Tax return h&r block To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Tax return h&r block Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Tax return h&r block No. Tax return h&r block You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Tax return h&r block If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Tax return h&r block S. Tax return h&r block tax. Tax return h&r block Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 3) To meet the qualification of “an uninterrupted period which includes an entire taxable year,” do I have to be physically present in a foreign country for the entire year? No. Tax return h&r block Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Tax return h&r block During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Tax return h&r block To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Tax return h&r block Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Tax return h&r block No. Tax return h&r block You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Tax return h&r block If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Tax return h&r block S. Tax return h&r block tax. Tax return h&r block Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 4) I am a U. Tax return h&r block S. Tax return h&r block citizen and during 2012 was a bona fide resident of Country X. Tax return h&r block On January 15, 2013, I was notified that I was to be assigned to Country Y. Tax return h&r block I was recalled to New York for 90 days orientation and then went to Country Y, where I have been since. Tax return h&r block Although I was not in Country Y on January 1, I was a bona fide resident of Country X and was in Country Y on December 31, 2013. Tax return h&r block My family remained in Country X until completion of the orientation period, and my household goods were shipped directly to my new post. Tax return h&r block Am I a bona fide resident of a foreign country for 2013, or must I wait for the entire year of 2014 to become one? Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Tax return h&r block No. Tax return h&r block You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Tax return h&r block If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Tax return h&r block S. Tax return h&r block tax. Tax return h&r block Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 5) Due to illness, I returned to the United States before I completed my qualifying period to claim the foreign earned income exclusion. Tax return h&r block Can I figure the exclusion for the period I resided abroad? No. Tax return h&r block You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Tax return h&r block If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Tax return h&r block S. Tax return h&r block tax. Tax return h&r block Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 6) Can a resident alien of the United States qualify for an exclusion or deduction under the bona fide residence test or the physical presence test? Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Tax return h&r block Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Tax return h&r block No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block . Tax return h&r block 7) On August 13 of last year I left the United States and arrived in Country Z to work for the Gordon Manufacturing Company. Tax return h&r block I expected to be able to exclude my foreign earned income under the physical presence test because I planned to be in Country Z for at least 1 year. Tax return h&r block However, I was reassigned back to the United States and left Country Z on July 1 of this year. Tax return h&r block Can I exclude any of my foreign earned income? No. Tax return h&r block You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Tax return h&r block 3. Tax return h&r block Foreign Earned Income . Tax return h&r block 1) I am an employee of the U. Tax return h&r block S. Tax return h&r block Government working abroad. Tax return h&r block Can all or part of my government income earned abroad qualify for the foreign earned income exclusion? . Tax return h&r block 2) I qualify for the foreign earned income exclusion under the bona fide residence test. Tax return h&r block Does my foreign earned income include my U. Tax return h&r block S. Tax return h&r block dividends and the interest I receive on a foreign bank account? . Tax return h&r block 3) My company pays my foreign income tax on my foreign earnings. Tax return h&r block Is this taxable compensation? . Tax return h&r block 4) I live in an apartment in a foreign city for which my employer pays the rent. Tax return h&r block Should I include in my income the cost to my employer ($1,200 a month) or the fair market value of equivalent housing in the United States ($800 a month)? . Tax return h&r block 5) My U. Tax return h&r block S. Tax return h&r block employer pays my salary into my U. Tax return h&r block S. Tax return h&r block bank account. Tax return h&r block Is this income considered earned in the United States or is it considered foreign earned income? . Tax return h&r block 6) What is considered a foreign country? . Tax return h&r block 7) What is the source of earned income? . Tax return h&r block 1) I am an employee of the U. Tax return h&r block S. Tax return h&r block Government working abroad. Tax return h&r block Can all or part of my government income earned abroad qualify for the foreign earned income exclusion? No. Tax return h&r block The foreign earned income exclusion applies to your foreign earned income. Tax return h&r block Amounts paid by the United States or its agencies to their employees are not treated, for this purpose, as foreign earned income. Tax return h&r block No. Tax return h&r block The only income that is foreign earned income is income from the performance of personal services abroad. Tax return h&r block Investment income is not earned income. Tax return h&r block However, you must include it in gross income reported on your Form 1040. Tax return h&r block Yes. Tax return h&r block The amount is compensation for services performed. Tax return h&r block The tax paid by your company should be reported on Form 1040, line 7, and on Form 2555, Part IV, line 22(f) (or on Form 2555-EZ, Part IV, line 17). Tax return h&r block You must include in income the fair market value (FMV) of the facility provided, where it is provided. Tax return h&r block This will usually be the rent your employer pays. Tax return h&r block Situations when the FMV is not included in income are discussed in chapter 4 under Exclusion of Meals and Lodging. Tax return h&r block If you performed the services to earn this salary outside the United States, your salary is considered earned abroad. Tax return h&r block It does not matter that you are paid by a U. Tax return h&r block S. Tax return h&r block employer or that your salary is deposited in a U. Tax return h&r block S. Tax return h&r block bank account in the United States. Tax return h&r block The source of salary, wages, commissions, and other personal service income is the place where you perform the services. Tax return h&r block For the purposes of the foreign earned income exclusion and the foreign housing exclusion or deduction, any territory under the sovereignty of a countr