If you pay for college in 2016, you may receive some tax savings on your
federal tax return, even if you’re studying outside of the U.S. Both the American
Opportunity Tax Credit and the Lifetime
Learning Credit may reduce the amount of tax you owe, but only the AOTC is
partially refundable.
Here are a few things you should know about education credits:
- American Opportunity Tax
Credit
‒ The AOTC
is worth up to $2,500 per year for an eligible student. This credit is
available for the first four years of higher education. Forty percent of
the AOTC is refundable. That means, if you’re eligible, you can get up to
$1,000 of the credit as a refund, even if you do not owe any tax.
- Lifetime Learning Credit ‒ The LLC
is worth up to $2,000 per tax return. There is no limit on the number of
years that you can claim the LLC for an eligible student.
- Qualified expenses ‒ You may use only qualified
expenses paid to figure your credit. These expenses include the costs
you pay for tuition, fees and other related expenses for an eligible
student to enroll at, or attend, an eligible educational institution.
- Eligible educational
institutions
‒ Eligible
educational schools are those that offer education beyond high school.
This includes most colleges and universities. Vocational schools or other
post secondary schools may also qualify. If you aren’t sure if your school
is eligible:
- Ask your school if it
is an eligible educational institution, or
- See if your school is
on the U.S. Department of Education’s Accreditation database.
- Form 1098-T ‒ In most cases, you
should receive Form
1098-T, Tuition Statement, from your school by February 1. This form
reports your qualified expenses to the IRS and to you. The amounts shown
on the form may be either: (1) the amount you paid for qualified
tuition and related expenses, or (2) the amount that your school billed
for qualified tuition and related expenses; therefore, the amounts shown
on the form may be different than the amounts you actually paid. Don’t
forget that you can only claim an education credit for the qualified
tuition and related expenses that you paid in the tax year and not
just the amount that your school billed.
- Income limits ‒ The education credits
are subject to income limitations and may be reduced, or eliminated, based
on your income.
- Interactive Tax
Assistant tool
‒ To see if you’re eligible to claim education credits, use the Interactive
Tax Assistant tool on IRS.gov.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
Generally, a nonresident alien who receives U.S. source income must file a return on Form 1040NR if additional taxes are due or if conducting a business in the United States. A nonresident alien who is married to a U.S. citizen or resident at the end of the year can choose tax treatment as a U.S. resident.
You must file Form 1040NR if any of the following conditions apply:
- A nonresident alien engaged in a trade or business in the United States during 2015 must file even if he does not receive income from the trade or business, has no U.S. source income, or receives income exempt from U.S. tax. However, a nonresident alien taxpayer with no gross income does not complete the schedules for Form 1040NR. Instead, he should attach a list of the kinds of exclusions claimed and the amount of each.
- A nonresident alien not engaged in a trade or business in the United States during 2015 who received income from U.S. sources reportable on Schedule NEC, Tax on Income Not Effectively Connected with a U.S. Trade or Business and not all of the U.S. tax owed was withheld from that income.
- You represent a deceased person who would have had to file Form 1040NR
- You represent an estate or trust that has to file Form 1040NR
A nonresident alien must also file a return if owing any special taxes, including any of the following:
- Alternative minimum tax
- Additional tax on a qualified plan, including an Individual Retirement Arrangement (IRA), or other tax-favored account. However, if this is the only tax owed, you can file Form 5329 by itself.
- Household employment taxes. However, if this is the only tax owed, you can file Schedule H by itself.
- Social security and Medicare tax on tips not reported to the employer or on wages received from an employer who did not withhold these taxes.
- Recapture of first-time homebuyer credit.
- Write-in taxes or recapture taxes, including uncollected social security and Medicare or RRTA tax on tips reported to an employer or group-term life insurance and additional taxes on HSAs.
- You have net earnings from self-employment of at least $400 and is a resident of a country with whom the United States has an international social security agreement.
A nonresident alien does not need to file Form 1040NR if:
- The only U.S. trade or business was the performance of personal services; and
- Wages were less than $4,000; and
- You have no other need to file a return to claim a refund of over withheld taxes, to satisfy additional withholding at source, or to claim income exempt or partly exempt by treaty
- You are a nonresident alien student, teacher, or trainee temporarily present in the United States under an "F", "J", "M" or "Q" visa, and have no income that is subject to tax under section 871.
- You are a partner in a U.S. partnership that was not engaged in a trade o business in the United States during the tax year and Schedule K-1 (Form 1065) includes only income from U.S sources that is reportable on Schedule NEC
contact@officetaxservices.com
(858)247-1680
8/3/2016
Deposit payroll tax for payments on Jul 27-29 if the semiweekly
deposit rule applies
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Usually, profits you earn are taxable. However, if you sell your home, you
may not have to pay taxes on the money you gain. Here are ten tips to keep in
mind if you sell your home this year.
- Exclusion of Gain. You may be able to
exclude part or all of the gain from the sale of your home. This rule may
apply if you meet the eligibility test. Parts of the test involve your
ownership and use of the home. You must have owned and used it as your
main home for at least two out of the five years before the date of sale.
- Exceptions May Apply. There are
exceptions to the ownership, use and other rules. One exception applies to
persons with a disability. Another applies to certain members of the
military. That rule includes certain government and Peace Corps workers.
For more on this topic, see Publication
523, Selling Your Home.
- Exclusion Limit. The most gain you
can exclude from tax is $250,000. This limit is $500,000 for joint
returns. The Net
Investment Income Tax will not apply to the excluded gain.
- May Not Need to Report
Sale.
If the gain is not taxable, you may not need to report the sale to the IRS
on your tax return.
- When You Must Report the
Sale.
You must report the sale on your tax return if you can’t exclude all or
part of the gain. You must report the sale if you choose not to claim the
exclusion. That’s also true if you get Form 1099-S, Proceeds From Real
Estate Transactions. If you report the sale, you should review the Questions
and Answers on the Net Investment Income Tax on IRS.gov.
- Exclusion Frequency
Limit.
Generally, you may exclude the gain from the sale of your main home only
once every two years. Some exceptions may apply to this rule.
- Only a Main Home
Qualifies.
If you own more than one home, you may only exclude the gain on the sale
of your main home. Your main home usually is the home that you live in
most of the time.
- First-time Homebuyer
Credit.
If you claimed the first-time homebuyer credit when you bought the home,
special rules apply to the sale. For more on those rules, see Publication
523.
- Home Sold at a Loss. If you sell your
main home at a loss, you can’t deduct the loss on your tax return.
- Report Your Address
Change.
After you sell your home and move, update your address with the IRS. To do
this, file Form
8822, Change of Address. Mail it to the address listed on the form’s
instructions. If you purchase health insurance through the Health
Insurance Marketplace, you should also notify the Marketplace when you
move out of the area covered by your current Marketplace plan.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
