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Taxes 2009

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Taxes 2009

Taxes 2009 4. Taxes 2009   Filing U. Taxes 2009 S. Taxes 2009 Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. Taxes 2009 S. Taxes 2009 Tax ReturnU. Taxes 2009 S. Taxes 2009 Armed Forces. Taxes 2009 Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. Taxes 2009 S. Taxes 2009 income tax return is required for your situation. Taxes 2009 If a U. Taxes 2009 S. Taxes 2009 return is required, your next step is to see if you meet the filing requirements. Taxes 2009 If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. Taxes 2009 This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. Taxes 2009 Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. Taxes 2009 S. Taxes 2009 income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. Taxes 2009 If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. Taxes 2009 S. Taxes 2009 tax return, your filing requirement may be less than the amount in Table 4-1. Taxes 2009 For details, see the information under Filing Requirement if Possession Income Is Excluded , later. Taxes 2009 Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. Taxes 2009 For more information, see the Form 1040 instructions. Taxes 2009 Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. Taxes 2009 S. Taxes 2009 tax return, you must determine your adjusted filing requirement. Taxes 2009 Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. Taxes 2009 Personal exemption. Taxes 2009   When figuring your filing requirement, your personal exemption is allowed in full. Taxes 2009 Do not reduce it for this purpose. Taxes 2009 Do not include exemptions for your dependents. Taxes 2009 Allowable standard deduction. Taxes 2009   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. Taxes 2009 Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. Taxes 2009 Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. Taxes 2009 S. Taxes 2009 income tax     Gross income from all sources (including excluded possession income)   Example. Taxes 2009 Barbara Spruce, a U. Taxes 2009 S. Taxes 2009 citizen, is single, under 65, and a bona fide resident of American Samoa. Taxes 2009 During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. Taxes 2009 S. Taxes 2009 income tax). Taxes 2009 Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. Taxes 2009   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. Taxes 2009 You must file a U. Taxes 2009 S. Taxes 2009 income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. Taxes 2009    1. Taxes 2009 Enter the allowable standard deduction you figured earlier under Allowable standard deduction . Taxes 2009 If your filing status is married filing separately, enter -0-   2. Taxes 2009 Personal exemption. Taxes 2009 If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. Taxes 2009 Add lines 1 and 2. Taxes 2009 You must file a U. Taxes 2009 S. Taxes 2009 income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. Taxes 2009 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Taxes 2009 . Taxes 2009 . Taxes 2009 AND at the end of 2013 you were*. Taxes 2009 . Taxes 2009 . Taxes 2009 THEN file a return if your gross income** was at least. Taxes 2009 . Taxes 2009 . Taxes 2009 single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Taxes 2009 ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Taxes 2009 Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). Taxes 2009 If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Taxes 2009 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. Taxes 2009 Example 1. Taxes 2009 James and Joan Thompson, one over 65, are U. Taxes 2009 S. Taxes 2009 citizens and bona fide residents of Puerto Rico during the entire tax year. Taxes 2009 They file a joint income tax return. Taxes 2009 During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. Taxes 2009 S. Taxes 2009 income tax). Taxes 2009 Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. Taxes 2009 S. Taxes 2009 income tax return because their gross income subject to U. Taxes 2009 S. Taxes 2009 tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). Taxes 2009 Example 2. Taxes 2009 Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. Taxes 2009 S. Taxes 2009 income tax return because her gross income subject to U. Taxes 2009 S. Taxes 2009 tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). Taxes 2009 If you must file a U. Taxes 2009 S. Taxes 2009 income tax return, you may be able to file a paperless return using IRS e-file. Taxes 2009 See your form instructions or visit our website at IRS. Taxes 2009 gov. Taxes 2009 When To File If you file on a calendar year basis, the due date for filing your U. Taxes 2009 S. Taxes 2009 income tax return is April 15 following the end of your tax year. Taxes 2009 If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. Taxes 2009 If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. Taxes 2009 For your 2013 tax return, the due date is April 15, 2014. Taxes 2009 If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. Taxes 2009 If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. Taxes 2009 See your form instructions for a list of designated private delivery services. Taxes 2009 Extension of Time To File You can get an extension of time to file your U. Taxes 2009 S. Taxes 2009 income tax return. Taxes 2009 Special rules apply for those living outside the United States. Taxes 2009 Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. Taxes 2009 Example. Taxes 2009 If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. Taxes 2009 Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. Taxes 2009 If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. Taxes 2009 You may also be charged penalties (see the Instructions for Form 4868). Taxes 2009 How to get the automatic extension. Taxes 2009   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. Taxes 2009 E-file Form 4868 using your personal computer or a tax professional. Taxes 2009 E-file and pay by credit or debit card. Taxes 2009 Your payment must be at least $1. Taxes 2009 You may pay by phone or over the Internet. Taxes 2009 Do not file Form 4868. Taxes 2009 File a paper Form 4868. Taxes 2009 If you are a fiscal year taxpayer, you must file a paper Form 4868. Taxes 2009 See Form 4868 for information on getting an extension using these options. Taxes 2009 When to file. Taxes 2009   You must request the automatic extension by the due date for your return. Taxes 2009 You can file your return any time before the 6-month extension period ends. Taxes 2009 When you file your return. Taxes 2009   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Taxes 2009 If you file Form 1040A, U. Taxes 2009 S. Taxes 2009 Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. Taxes 2009 Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. Taxes 2009 You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. Taxes 2009 Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Taxes 2009 S. Taxes 2009 citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Taxes 2009 However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. Taxes 2009 If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Taxes 2009 For more information, see Publication 3, Armed Forces' Tax Guide. Taxes 2009 Married taxpayers. Taxes 2009   If you file a joint return, only one spouse has to qualify for this automatic extension. Taxes 2009 However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Taxes 2009 How to get the extension. Taxes 2009   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Taxes 2009 (See the situations listed under (2), earlier. Taxes 2009 ) Extension beyond 2 months. Taxes 2009   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. Taxes 2009 File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). Taxes 2009 Be sure to check the box on Form 4868, line 8, if appropriate. Taxes 2009   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Taxes 2009   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Taxes 2009 Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. Taxes 2009 Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. Taxes 2009 If you are not including a check or a money order, send your U. Taxes 2009 S. Taxes 2009 tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. Taxes 2009 S. Taxes 2009 tax return and all attachments to:  Internal Revenue Service P. Taxes 2009 O. Taxes 2009 Box 1303 Charlotte, NC 28201-1303 USA Also send your U. Taxes 2009 S. Taxes 2009 return to these addresses if you are attaching Form 5074 or Form 8689. Taxes 2009 If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. Taxes 2009 Special Rules for Completing Your U. Taxes 2009 S. Taxes 2009 Tax Return If you are not excluding possession income from your U. Taxes 2009 S. Taxes 2009 tax return, follow the instructions for the specific forms you file. Taxes 2009 However, you may not qualify to claim the earned income credit (EIC). Taxes 2009 Earned income credit. Taxes 2009   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. Taxes 2009 S. Taxes 2009 tax return. Taxes 2009 This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. Taxes 2009 S. Taxes 2009 Armed Forces. Taxes 2009 U. Taxes 2009 S. Taxes 2009 Armed Forces. Taxes 2009   U. Taxes 2009 S. Taxes 2009 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Taxes 2009 Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Taxes 2009 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Taxes 2009 Income from American Samoa or Puerto Rico excluded. Taxes 2009   You will not be allowed to take deductions and credits that apply to the excluded income. Taxes 2009 The additional information you need follows. Taxes 2009 Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. Taxes 2009 S. Taxes 2009 income tax return. Taxes 2009 Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. Taxes 2009 S. Taxes 2009 tax return. Taxes 2009 Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). Taxes 2009 Figuring the deduction. Taxes 2009   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. Taxes 2009   Gross income subject to U. Taxes 2009 S. Taxes 2009 income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). Taxes 2009 Moving expense deduction. Taxes 2009   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. Taxes 2009 Likewise, the expenses of a move back to the United States are generally attributable to U. Taxes 2009 S. Taxes 2009 earned income. Taxes 2009   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. Taxes 2009 S. Taxes 2009 tax return. Taxes 2009 For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. Taxes 2009   If you are claiming expenses for a move from a U. Taxes 2009 S. Taxes 2009 possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. Taxes 2009 For purposes of deducting moving expenses, the possessions are considered part of the United States. Taxes 2009 See Publication 521, Moving Expenses, for information about what expenses are deductible. Taxes 2009 Self-employment tax deduction. Taxes 2009   Generally, if you are reporting self-employment income on your U. Taxes 2009 S. Taxes 2009 return, you can include the deductible part of your self-employment tax on Form 1040, line 27. Taxes 2009 This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). Taxes 2009   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. Taxes 2009   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. Taxes 2009 This would happen if, for instance, you have two businesses and only the income from one of them is excludable. Taxes 2009   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. Taxes 2009   Self-employment income subject to U. Taxes 2009 S. Taxes 2009 income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. Taxes 2009 Include the deductible part of this amount on Form 1040, line 27. Taxes 2009 Individual retirement arrangement (IRA) deduction. Taxes 2009   Do not take excluded income into account when figuring your deductible IRA contribution. Taxes 2009 Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. Taxes 2009 To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. Taxes 2009 Then multiply your full standard deduction by the following fraction. Taxes 2009   Gross income subject to U. Taxes 2009 S. Taxes 2009 income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). Taxes 2009 ” This calculation may not be the same as the one you used to determine if you need to file a U. Taxes 2009 S. Taxes 2009 tax return. Taxes 2009 Itemized Deductions Most itemized deductions do not apply to a particular type of income. Taxes 2009 However, itemized deductions can be divided into three categories. Taxes 2009 Those that apply specifically to excluded income, such as employee business expenses, are not deductible. Taxes 2009 Those that apply specifically to income subject to U. Taxes 2009 S. Taxes 2009 income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. Taxes 2009 Those that do not apply to specific income must be allocated between your gross income subject to U. Taxes 2009 S. Taxes 2009 income tax and your total gross income from all sources. Taxes 2009 The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. Taxes 2009 Example. Taxes 2009 In 2013, you and your spouse are both under 65 and U. Taxes 2009 S. Taxes 2009 citizens who are bona fide residents of Puerto Rico during the entire tax year. Taxes 2009 You file a joint income tax return. Taxes 2009 During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. Taxes 2009 S. Taxes 2009 gross income) and your spouse earned $60,000 from the U. Taxes 2009 S. Taxes 2009 Government. Taxes 2009 You have $16,000 of itemized deductions that do not apply to any specific type of income. Taxes 2009 These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). Taxes 2009 You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. Taxes 2009   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. Taxes 2009 Overall limitation on itemized deductions. Taxes 2009   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. Taxes 2009 Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. Taxes 2009 However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. Taxes 2009 See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. Taxes 2009 Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. Taxes 2009 S. Taxes 2009 tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. Taxes 2009 However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. Taxes 2009 S. Taxes 2009 tax return. Taxes 2009 The foreign tax credit is generally figured on Form 1116. Taxes 2009 If you have income, such as U. Taxes 2009 S. Taxes 2009 Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. Taxes 2009 You make this reduction for each separate income category. Taxes 2009 To find the amount of this reduction, use the following formula for each income category. Taxes 2009 Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. Taxes 2009 For more information on the foreign tax credit, see Publication 514. Taxes 2009 Example. Taxes 2009 Jason and Lynn Reddy are U. Taxes 2009 S. Taxes 2009 citizens who were bona fide residents of Puerto Rico during all of 2013. Taxes 2009 They file a joint tax return. Taxes 2009 The following table shows their excludable and taxable income for U. Taxes 2009 S. Taxes 2009 federal income tax purposes. Taxes 2009   Taxable   Excludable Jason's wages from  U. Taxes 2009 S. Taxes 2009 Government $25,000     Lynn's wages from Puerto Rico  corp. Taxes 2009     $15,000 Dividend from Puerto Rico corp. Taxes 2009 doing business in Puerto Rico     200 Dividend from U. Taxes 2009 S. Taxes 2009  corp. Taxes 2009 doing business  in U. Taxes 2009 S. Taxes 2009 * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. Taxes 2009   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. Taxes 2009 They have gross income of $26,000 for U. Taxes 2009 S. Taxes 2009 tax purposes. Taxes 2009 They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). Taxes 2009 They figure their foreign tax credit on two Forms 1116, which they must attach to their U. Taxes 2009 S. Taxes 2009 return. Taxes 2009 They fill out one Form 1116 for wages and one Form 1116 for the dividend. Taxes 2009 Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. Taxes 2009   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. Taxes 2009 Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. Taxes 2009 A U. Taxes 2009 S. Taxes 2009 citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. Taxes 2009 This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. Taxes 2009 S. Taxes 2009 income tax return must otherwise be filed). Taxes 2009 Bona fide residents of the possessions discussed in this publication are considered U. Taxes 2009 S. Taxes 2009 residents for this purpose and are subject to the self-employment tax. Taxes 2009 Forms to file. Taxes 2009   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. Taxes 2009 If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. Taxes 2009 If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. Taxes 2009 If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. Taxes 2009 Do not file forms 1040-SS or 1040-PR with Form 1040. Taxes 2009 If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. Taxes 2009 Chapter 11 Bankruptcy cases. Taxes 2009   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. Taxes 2009 S. Taxes 2009 Income Tax Return for Estates and Trusts) of the bankruptcy estate. Taxes 2009 However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. Taxes 2009   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. Taxes 2009   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. Taxes 2009 Additional Medicare Tax Beginning in 2013, a 0. Taxes 2009 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). Taxes 2009 Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Taxes 2009 A self-employment loss should not be considered for purposes of this tax. Taxes 2009 RRTA compensation should be separately compared to the threshold. Taxes 2009 Your employer is responsible for withholding the 0. Taxes 2009 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Taxes 2009 You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. Taxes 2009 There are no special rules for U. Taxes 2009 S. Taxes 2009 citizens and nonresident aliens living abroad for purposes of this provision. Taxes 2009 Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Taxes 2009 For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. Taxes 2009 irs. Taxes 2009 gov and enter the following words in the search box: Additional Medicare Tax. Taxes 2009 You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Taxes 2009 Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Taxes 2009 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. Taxes 2009 Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Taxes 2009 The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Taxes 2009 Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. Taxes 2009 Forms to file. Taxes 2009   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. Taxes 2009 For more information, see Form 8960 and its instructions. Taxes 2009 Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. Taxes 2009 This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. Taxes 2009 In this situation, you may need to make estimated tax payments. Taxes 2009 Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. Taxes 2009 Include the Additional Medicare Tax and Net Investment Income Tax if applicable. Taxes 2009 If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. Taxes 2009 Or, you can make your payments electronically and not have to file any paper forms. Taxes 2009 See the Form 1040-ES instructions for information on making payments. Taxes 2009 Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. Taxes 2009 American Samoa. Taxes 2009 The Commonwealth of Puerto Rico. Taxes 2009 The Commonwealth of the Northern Mariana Islands. Taxes 2009 Guam. Taxes 2009 The U. Taxes 2009 S. Taxes 2009 Virgin Islands. Taxes 2009 These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. Taxes 2009 Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. Taxes 2009 How to make your request. Taxes 2009   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. Taxes 2009 R. Taxes 2009 B. Taxes 2009 900 available at www. Taxes 2009 irs. Taxes 2009 gov/pub/irs-irbs/irb06-49. Taxes 2009 pdf. Taxes 2009    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Taxes 2009 S. Taxes 2009 competent authority assistance under tax treaties. Taxes 2009 As noted, an update to Revenue Procedure 2006-23 will be published in the future. Taxes 2009   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. Taxes 2009 It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. Taxes 2009 You (or a person having authority to sign your federal return) must sign and date the request. Taxes 2009    Send your written request for U. Taxes 2009 S. Taxes 2009 assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. Taxes 2009 W. Taxes 2009  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. Taxes 2009 Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. Taxes 2009 S. Taxes 2009 tax paid on the income in question, you should file a claim on Form 1040X, Amended U. Taxes 2009 S. Taxes 2009 Individual Income Tax Return. Taxes 2009 Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Taxes 2009 Attach a copy of the request to the form. Taxes 2009 Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. Taxes 2009 See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. Taxes 2009 Prev  Up  Next   Home   More Online Publications
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Taxes 2009 5. Taxes 2009   Credits Table of Contents Credit for the Elderly or the DisabledCan You Take the Credit? Figuring the Credit Child and Dependent Care Credit Earned Income Credit (EIC)Do You Qualify for the Earned Income Credit (EIC)? Figuring the EIC This chapter briefly discusses the credit for the elderly or disabled, the child and dependent care credit, and the earned income credit. Taxes 2009 You may be able to reduce your federal income tax by claiming one or more of these credits. Taxes 2009 Credit for the Elderly or the Disabled This section explains who qualifies for the credit for the elderly or the disabled and how to figure this credit. Taxes 2009 For more information, see Publication 524, Credit for the Elderly or the Disabled. Taxes 2009 You can take the credit only if you file Form 1040 or Form 1040A. Taxes 2009 You cannot take the credit if you file Form 1040EZ or Form 1040NR. Taxes 2009 Can You Take the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. Taxes 2009 You are a qualified individual. Taxes 2009 Your income is not more than certain limits. Taxes 2009  You can use Figure 5-A and Figure 5-B as guides to see if you are eligible for the credit. Taxes 2009   Qualified Individual You are a qualified individual for this credit if you are a U. Taxes 2009 S. Taxes 2009 citizen or resident alien, and either of the following applies. Taxes 2009 You were age 65 or older at the end of 2013. Taxes 2009 You were under age 65 at the end of 2013 and all three of the following statements are true. Taxes 2009 You retired on permanent and total disability (explained later). Taxes 2009 You received taxable disability income for 2013. Taxes 2009 On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). Taxes 2009 Age 65. Taxes 2009 You are considered to be age 65 on the day before your 65th birthday. Taxes 2009 Therefore, you are considered to be age 65 at the end of 2013 if you were born before January 2, 1949. Taxes 2009 Figure 5-A. Taxes 2009 Are You a Qualified Individual? This image is too large to be displayed in the current screen. Taxes 2009 Please click the link to view the image. Taxes 2009 Figure 5-A, Are you a qualified individual? U. Taxes 2009 S. Taxes 2009 citizen or resident alien. Taxes 2009   You must be a U. Taxes 2009 S. Taxes 2009 citizen or resident alien (or be treated as a resident alien) to take the credit. Taxes 2009 Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. Taxes 2009 Exceptions. Taxes 2009   You may be able to take the credit if you are a nonresident alien who is married to a U. Taxes 2009 S. Taxes 2009 citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. Taxes 2009 S. Taxes 2009 resident alien. Taxes 2009 If you make that choice, both you and your spouse are taxed on your worldwide income. Taxes 2009   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. Taxes 2009 S. Taxes 2009 citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. Taxes 2009 S. Taxes 2009 resident alien for the entire year. Taxes 2009 In that case, you may be allowed to take the credit. Taxes 2009   For information on these choices, see chapter 1 of Publication 519, U. Taxes 2009 S. Taxes 2009 Tax Guide for Aliens. Taxes 2009 Married persons. Taxes 2009   Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. Taxes 2009 However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. Taxes 2009 Head of household. Taxes 2009   You can file as head of household and qualify to take the credit even if your spouse lived with you during the first 6 months of the year if you meet certain tests. Taxes 2009 See Publication 524 and Publication 501. Taxes 2009 Under age 65. Taxes 2009   If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability and have taxable disability income (discussed later under Disability income ). Taxes 2009 You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. Taxes 2009 You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the end of the tax year. Taxes 2009   Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. Taxes 2009 If you retired on disability before 1977 and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. Taxes 2009 Permanent and total disability. Taxes 2009   You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. Taxes 2009 A physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Taxes 2009 See Physician's statement , later. Taxes 2009 Substantial gainful activity. Taxes 2009   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Taxes 2009   Full-time work (or part-time work done at the employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. Taxes 2009   Substantial gainful activity is not work you do to take care of yourself or your home. Taxes 2009 It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. Taxes 2009 However, doing this kind of work may show that you are able to engage in substantial gainful activity. Taxes 2009    Figure 5-B. Taxes 2009 Income Limits IF your filing status is. Taxes 2009 . Taxes 2009 . Taxes 2009 THEN even if you qualify (see Figure 5-A), you CANNOT take the credit if: Your adjusted gross income (AGI)* is equal to or more than. Taxes 2009 . Taxes 2009 . Taxes 2009 OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. Taxes 2009 . Taxes 2009 . Taxes 2009 single, head of household, or qualifying widow(er) with dependent child $17,500 $5,000 married filing jointly and only one spouse qualifies in Figure 5-A $20,000 $5,000 married filing jointly and both spouses qualify in Figure 5-A $25,000 $7,500 married filing separately and you lived apart from your spouse for all of 2013 $12,500 $3,750 *AGI is the amount on Form 1040A, line 22, or Form 1040, line 38      The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. Taxes 2009 Physician's statement. Taxes 2009   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. Taxes 2009   You do not have to file this statement with your tax return, but you must keep it for your records. Taxes 2009 The Instructions for Schedule R (Form 1040A or 1040) include a statement your physician can complete and that you can keep for your records. Taxes 2009 Veterans. Taxes 2009   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. Taxes 2009 VA Form 21-0172 must be signed by a person authorized by the VA to do so. Taxes 2009 You can get this form from your local VA regional office. Taxes 2009 Physician's statement obtained in earlier year. Taxes 2009   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. Taxes 2009 For a detailed explanation of the conditions you must meet, see the instructions for Schedule R (Form 1040A or 1040), Part II. Taxes 2009 If you meet the required conditions, you must check the box on Schedule R (Form 1040A or 1040), Part II, line 2. Taxes 2009   If you checked Schedule R (Form 1040A or 1040), Part I, box 4, 5, or 6, print in the space above the box in Part II, line 2, the first name(s) of the spouse(s) for whom the box is checked. Taxes 2009 Disability income. Taxes 2009   If you are under age 65, you must also have taxable disability income to qualify for the credit. Taxes 2009   Disability income must meet the following two requirements. Taxes 2009 It must be paid under your employer's accident or health plan or pension plan. Taxes 2009 It must be included in your income as wages (or payments in lieu of wages) for the time you are absent from work because of permanent and total disability. Taxes 2009 Payments that are not disability income. Taxes 2009   Any payment you receive from a plan that does not provide for disability retirement is not disability income. Taxes 2009 Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. Taxes 2009   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Taxes 2009 Mandatory retirement age is the age set by your employer at which you would have had to retire had you not become disabled. Taxes 2009 Figuring the Credit You can figure the credit yourself, or the IRS will figure it for you. Taxes 2009 Figuring the credit yourself. Taxes 2009   If you figure the credit yourself, fill out the front of Schedule R (Form 1040A or 1040). Taxes 2009 Next, fill out Schedule R (Form 1040A or 1040), Part III. Taxes 2009 Credit figured for you. Taxes 2009   If you can take the credit and you want the IRS to figure the credit for you, see Publication 524 or the Instructions for Schedule R (Form 1040A or 1040). Taxes 2009 If you want the IRS to figure your tax, see chapter 30 of Publication 17, Your Federal Income Tax. Taxes 2009 Child and Dependent Care Credit You may be able to claim this credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Taxes 2009 The credit can be up to 35% of your expenses. Taxes 2009 To qualify, you must pay these expenses so you can work or look for work. Taxes 2009 If you claim this credit, you must include on your return the name and taxpayer identification number (generally the social security number) of each qualifying person for whom care is provided. Taxes 2009 If the correct information is not shown, the credit may be reduced or disallowed. Taxes 2009 You also must show on your return the name, address, and the taxpayer identification number of the person(s) or organization(s) that provided the care. Taxes 2009 For more information, see Publication 503, Child and Dependent Care Expenses. Taxes 2009 Earned Income Credit (EIC) The earned income credit (EIC) is a refundable tax credit for certain people who work and have earned income under $51,567. Taxes 2009 The EIC is available to persons with or without a qualifying child. Taxes 2009 Credit has no effect on certain welfare benefits. Taxes 2009   Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. Taxes 2009 These programs include the following. Taxes 2009 Medicaid and supplemental security income (SSI). Taxes 2009 Supplemental Nutrition Assistance Program (food stamps). Taxes 2009 Low-income housing. Taxes 2009 Temporary Assistance for Needy Families (TANF). Taxes 2009  In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. Taxes 2009 Check with your local benefit coordinator to find out if your refund will affect your benefits. Taxes 2009 Do You Qualify for the Earned Income Credit (EIC)? Use Table 5-1 as an initial guide to the rules you must meet in order to qualify for the EIC. Taxes 2009 The specific rules you must meet depend on whether you have a qualifying child. Taxes 2009 If you have a qualifying child, the rules in Parts A, B, and D apply to you. Taxes 2009 If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. Taxes 2009  If, after reading all the rules in each part that applies to you, you think you may qualify for the credit, see Publication 596, Earned Income Credit, for more details about the EIC. Taxes 2009 You can also find information about the EIC in the instructions for Form 1040 (line 64a), Form 1040A (line 38a), or Form 1040EZ (line 8a). Taxes 2009 The sections that follow provide additional information for some of the rules. Taxes 2009 Adjusted gross income (AGI). Taxes 2009   Under Rule 1, you cannot claim the EIC unless your AGI is less than the applicable limit shown in Part A of Table 5-1. Taxes 2009 Your AGI is the amount on line 37 (Form 1040), line 21 (Form 1040A), or line 4 (Form 1040EZ). Taxes 2009 Table 5-1. Taxes 2009 Earned Income Credit (EIC) in a Nutshell First, you must meet all the rules in this column. Taxes 2009 Second, you must meet all the rules in one of these columns, whichever applies. Taxes 2009 Third, you must meet the rule in this column. Taxes 2009 Part A. Taxes 2009  Rules for Everyone Part B. Taxes 2009  Rules If You Have a Qualifying Child Part C. Taxes 2009  Rules If You Do Not Have a Qualifying Child Part D. Taxes 2009  Figuring and Claiming the EIC 1. Taxes 2009 Your adjusted gross income (AGI) must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Taxes 2009 2. Taxes 2009 You must have a valid social security number. Taxes 2009  3. Taxes 2009 Your filing status cannot be “Married filing separately. Taxes 2009 ” 4. Taxes 2009 You must be a U. Taxes 2009 S. Taxes 2009 citizen or resident alien all year. Taxes 2009  5. Taxes 2009 You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Taxes 2009  6. Taxes 2009 Your investment income must be $3,300 or less. Taxes 2009  7. Taxes 2009 You must have earned income. Taxes 2009 8. Taxes 2009 Your child must meet the relationship, age, residency, and joint return tests. Taxes 2009  9. Taxes 2009 Your qualifying child cannot be used by more than one person to claim the EIC. Taxes 2009  10. Taxes 2009 You generally cannot be a qualifying child of another person. Taxes 2009 11. Taxes 2009 You must be at least age 25 but under age 65. Taxes 2009  12. Taxes 2009 You cannot be the dependent of another person. Taxes 2009  13. Taxes 2009 You generally cannot be a qualifying child of another person. Taxes 2009  14. Taxes 2009 You must have lived in the United States more than half of the year. Taxes 2009 15. Taxes 2009 Your earned income must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Taxes 2009 Social security number. Taxes 2009   Under Rule 2, you (and your spouse if you are married filing jointly) must have a valid social security number (SSN) issued by the Social Security Administration (SSA). Taxes 2009 Any qualifying child listed on Schedule EIC also must have a valid SSN. Taxes 2009 (See Qualifying child , later, if you have a qualifying child. Taxes 2009 )   If your social security card (or your spouse's if you are married filing jointly) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Taxes 2009 An example of a federally funded benefit is Medicaid. Taxes 2009 Investment income. Taxes 2009   Under Rule 6, you cannot claim the EIC unless your investment income is $3,300 or less. Taxes 2009 If your investment income is more than $3,300, you cannot claim the credit. Taxes 2009 For most people, investment income is the total of the following amounts. Taxes 2009 Taxable interest (line 8a of Form 1040 or 1040A). Taxes 2009 Tax-exempt interest (line 8b of Form 1040 or 1040A). Taxes 2009 Dividend income (line 9a of Form 1040 or 1040A). Taxes 2009 Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). Taxes 2009  If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Taxes 2009   For more information about investment income, see Publication 596, Earned Income Credit. Taxes 2009 Earned income. Taxes 2009   Under Rule 7, you must have earned income to claim the EIC. Taxes 2009 Under Rule 15, you cannot claim the EIC unless your earned income is less than the applicable limit shown in Table 5-1, Part D. Taxes 2009 Earned income includes all of the following types of income. Taxes 2009 Wages, salaries, tips, and other taxable employee pay. Taxes 2009 Employee pay is earned income only if it is taxable. Taxes 2009 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Taxes 2009 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Taxes 2009 Net earnings from self-employment. Taxes 2009 Gross income received as a statutory employee. Taxes 2009 Gross income defined. Taxes 2009   Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Taxes 2009 Do not include any social security benefits unless (a) you are married filing a separate tax return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Taxes 2009 If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b to figure the taxable part of social security benefits you must include in gross income. Taxes 2009 Self-employed persons. Taxes 2009   If you are self-employed and your net earnings are $400 or more, be sure to correctly fill out Schedule SE (Form 1040), Self-Employment Tax, and pay the proper amount of self-employment tax. Taxes 2009 If you do not, you may not get all the credit to which you are entitled. Taxes 2009 Disability benefits. Taxes 2009   If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Taxes 2009 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Taxes 2009 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Taxes 2009   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Taxes 2009 It does not matter whether you have reached minimum retirement age. Taxes 2009 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code J. Taxes 2009 Income that is not earned income. Taxes 2009   Examples of items that are not earned income under Rule 7 include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits — except for payments covered under Disability benefits earlier), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Taxes 2009 Do not include any of these items in your earned income. Taxes 2009 Workfare payments. Taxes 2009   Nontaxable workfare payments are not earned income for the EIC. Taxes 2009 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. Taxes 2009 Qualifying child. Taxes 2009   Under Rule 8, your child is a qualifying child if your child meets four tests. Taxes 2009 The four tests are: Relationship, Age, Residency, and Joint return. Taxes 2009   The four tests are illustrated in Figure 5-C. Taxes 2009 See Publication 596 for more information about each test. Taxes 2009 Figure 5-C. Taxes 2009 Tests for Qualifying Child A qualifying child for the EIC is a child who is your. Taxes 2009 . Taxes 2009 . Taxes 2009 Son, daughter, stepchild, foster child,  or a descendant of any of them (for example, your grandchild) OR Brother, sister, half brother, half sister, stepbrother,  stepsister, or a descendant of any of them (for example, your  niece or nephew) was . Taxes 2009 . Taxes 2009 . Taxes 2009 Under age 19 at the end of 2013 and younger than you (or your spouse if filing jointly) OR Under age 24 at the end of 2013, a student, and younger than you (or your spouse if filing jointly) OR Permanently and totally disabled at any time during the year, regardless of age who. Taxes 2009 . Taxes 2009 . Taxes 2009 Is not filing a joint return for 2013  (or is filing a joint return for 2013 only as a claim for refund of income tax withheld or estimated tax paid) who. Taxes 2009 . Taxes 2009 . Taxes 2009 Lived with you in the United States for more than half of 2013. Taxes 2009  If the child did not live with you for the required time, see Publication 596 for more information. Taxes 2009 Figuring the EIC To figure the amount of your credit, you have two choices. Taxes 2009 Have the IRS figure the EIC for you. Taxes 2009 If you want to do this, see IRS Will Figure the EIC for You in Publication 596. Taxes 2009 Figure the EIC yourself. Taxes 2009 If you want to do this, see How To Figure the EIC Yourself in Publication 596. Taxes 2009 Prev  Up  Next   Home   More Online Publications