Table of contents Foreign Wages Online Desktop Foreign Retirement Income Online Desktop Related Links If you received foreign income that was not reported on Form W-2 or Form 1099-R, complete the FEC (Foreign Employer Compensation) worksheet. The foreign income will be carried to Form 1040, Line 1a or Line 5, depending on the type of […]
If this is your first time filing a tax return, there are a few things you should keep in mind: Talk to your parents. Even if you have earned income, your parents may still be able to claim you as a dependent. Depending on your circumstances, you may need to decide whether they will claim […]
TaxAct® has developed a worksheet to assist you with the preparation of the Free Application for Federal Student Aid (FAFSA) online application. Based on the information entered into TaxAct (and the additional information entered in the FAFSA section) the FAFSA Tax Summary Worksheet will provide you with the applicable income tax information needed for you to […]
The IRS is expecting Form 1095-A and Form 8962 to be included with your return. You would have received Form 1095-A if your health insurance was obtained through a Marketplace. Please visit healthcare.gov to confirm if you or someone on your tax return had Marketplace coverage. Depending on the results of your search, use one […]
The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay enough tax, you may have to pay a penalty for underpayment […]
Before you enter your foreign currency transactions, you must determine whether the gain or (loss) is subject to IRC (Internal Revenue Code) 1256 or 988. If you are unsure how to classify your trades, it is best to seek professional tax advice from your broker or a qualified tax professional (Enrolled Agent, CPA, or attorney). […]
A valid SSN or ITIN must be obtained by the extended filing deadline in order to receive certain credits on the 20YY return. For most calendar year taxpayers, the extended filing deadline for the 20YY return is October 15 of the following year; however, there may be an exception if you are living outside of […]
You can use the Forms Assistant to search for and add Schedule OI (Form 1040-NR) to your return. In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant. In classic navigation, click Tools > Forms Assistant. On desktop, click Forms and locate the federal form in the Forms Explorer. […]
The Internal Revenue Code only allows income averaging to farmers and fishermen. If you are a farmer or fisherman, you need to complete Schedule J, Income Averaging for Farmers and Fishermen, using the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner […]
The amount you can contribute to a Health Savings Account (HSA) is limited to zero for any month you are enrolled in Medicare. See IRS Publication 969 for details. To enter HSA contribution amounts in the program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, […]
Use Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, to figure the amount of your Net Investment Income Tax (NIIT). To access Form 8960 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner […]
You must file IRS Form 8938, Statement of Specified Foreign Financial Assets, if you have an interest in specified foreign assets and the value of those assets is more than the applicable reporting threshold. See the IRS Instructions for Form 8938 and Basic Questions and Answers on Form 8938 for more information. To enter the […]
The TaxAct program does not support the returns for the U.S. Virgin Islands; however, if you were a U.S. Citizen or Resident Alien and not a Bona Fide resident of the U.S. Virgin Islands, you may only need to file Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands, and send a […]
Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition, is used to exclude days of presence in the U.S. for certain individuals. The form needs to be filed with your Form 1040-NR, and if you don’t need to file a return, send the form to the IRS. Attach Form 8843 to your […]
Form 8840, Closer Connection Exception Statement for Aliens, is used to claim the closer connection to a foreign country exception to the substantial presence test. Note. You must have selected to file Form 1040-NR in order to access Form 8840. For information about the substantial presence test, go to IRS Publication 519. You can use […]
To enter a loss from a Ponzi-type investment scheme in TaxAct, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, click Federal Search. Click the Itemized or Standard Deductions drop-down, then […]
If you have a casualty and/or theft loss on property used 100% for business, you will report the loss on Form 4684, Casualties and Thefts, in Section B for business property. To report casualty/theft loss on property used 100% for business on Form 4684 in the TaxAct program, follow the steps below. Once this information has […]
To review or modify entries for disasters, theft, & other property loss or damage in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Other Deductions […]
The checkbox at the top of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, must be selected if you would like the IRS to compute any applicable penalty and send you a bill. To check the box Check here if you would like the IRS to compute any applicable penalty and send […]
Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or code exception to taxation or if any amount withheld was […]
You can use the Forms Assistant to search for and add Form 1042-S to your return (under Documents Received). In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant. In classic navigation, click Tools > Forms Assistant. On desktop, click Forms and locate the federal form in the Forms […]
The IRS Instructions for Form 1040-NR detail who must file Form 1040-NR. You can edit your personal information following the steps in Changing Basic Information (Name, SSN, Birthdate), and check the box Nonresident alien. Related Links Form 1040-NR – Itemized or Standard Deduction
To enter information for Form W-7 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, click Federal Search. Click the Basic Information drop-down, then click Form […]
An Individual Taxpayer Identification Number (ITIN) is a nine-digit number assigned by the Internal Revenue Service to taxpayers who are not eligible to obtain a Social Security Number (SSN). Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception. It is used […]
IRS Notice CP-48 is sent to inform a taxpayer that their Individual Taxpayer Identification Number (ITIN) must be renewed. ITINs now expire when they have not been used on at least one federal tax return for three consecutive tax years. Once an ITIN expires, it must be renewed before it can be used on a […]
To enter or review health insurance coverage information in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Medical drop-down. Click Add beside Affordable Care Act […]
Under IRS rules, a married couple generally cannot file a joint return if either spouse was a nonresident alien during the tax year. However, when one spouse is a U.S. citizen or resident alien and the other is a nonresident alien, the couple may choose to file jointly by electing to treat the nonresident spouse […]
According to IRS Publication 519, most nonresident aliens cannot claim the standard deduction, however, a special rule applies to students and business apprentices from India who are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty. They can claim the standard deduction if they do not claim itemized deductions. Except for […]
Employer contributions to a Health Savings Account (HSA) are reported on Form W-2, Box 12, using Code W. Because California does not follow federal HSA rules, these employer contributions must be added back to your California income. When you enter your W-2 in TaxAct, the amount reported with Code W flows to Schedule CA (540), […]
If you are a self-employed nonresident alien living in the United States, the information below will help determine whether you are subject to self-employment tax. If you are not, but the tax is calculating on your return, the navigation steps below will allow you to stop that from calculating. Online Dashboard From within your TaxAct […]
To report foreign dividend or interest income, enter the information as though you had received a Form 1099-DIV, Dividends and Distributions, or Form 1099-INT, Interest Income, but leave off the Payer’s Federal Identification Number. This number is not required, and the return will still electronically file without the number. The information required by the IRS […]
IRS Instructions for Form 1116 discuss an election to claim the foreign tax credit without filing Form 1116. See Foreign Earned Income – Exclusion and Foreign Tax Credit (or Deduction) for details on entering foreign income and credit information. Form 1116 will not print with your return if it is not necessary.
Interview questions for Part III of Federal Schedule B (Form 1040) only appear automatically in the TaxAct program if you have: over $1,500 of taxable interest or ordinary dividends, had a foreign account, received a distribution from, or were a grantor of, or a transferor to, a foreign trust. If you want to answer those […]
Interview questions for Part III of Federal Schedule B (Form 1040) only appear automatically in the TaxAct program if you have: over $1,500 of taxable interest or ordinary dividends, had a foreign account, received a distribution from, or were a grantor of, or a transferor to, a foreign trust. If you want to answer those […]
If you received foreign income, you must report it on your individual income tax return. IRS Form 2555 Foreign Earned Income, Form 1116 Foreign Tax Credit, or Schedule A (Form 1040) Itemized Deductions may provide income tax benefits. See the following for entering income or distributions from foreign entities: Foreign Earned Compensation – FEC Foreign […]
Canadian sourced retirement income may be entered in one of two ways. The amounts are then carried to the applicable lines of Form 1040. Social Security Benefits Foreign Employer Compensation (FEC) Worksheet Social Security Benefits Under the income tax treaty between the U.S. and Canada, benefits paid under the Canada Pension Plan (CPP), Quebec […]
To enter a foreign address in TaxAct, follow the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Locate the Address line and click Start or Edit. Below the City/State, click Enter a foreign address. […]
TaxAct supports Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. Currently, we only support the creation and electronic filing of five copies of Form 5471. If the return requires more than five copies of the form, the only option is to manually complete the additional copies and attach them to […]
Health Savings Account (HSA) distributions are reported on Form 1099-SA, Distributions from an HSA, Archer MSA, or Medicare Advantage MSA, and the information transfers to Form 8889 Health Savings Accounts (HSAs). To enter distribution information in the program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click […]
The Federal Government offers relief to those in areas who were impacted by certain Presidentially declared disasters. Federal casualty losses, disaster losses and qualified disaster losses are three categories of casualty losses that refer to federally declared disasters. The requirements for each loss vary. For more information, see Publication 547 or the Instructions for Form 4684. […]
The following information is adapted from the IRS Form 1040 Instructions: If a taxpayer died before filing their return and has a filing requirement, the surviving spouse or personal representative must file the final return. If taxes were withheld, a return must be filed to claim a refund. If your spouse died and you didn’t […]
When filing a return, the first year after the taxpayer or spouse has died, you can either import the prior year information into the return, and then make changes, or skip the import process and enter return details manually. If you choose to import the prior year’s information, if the spouse was the deceased you […]
If you are claiming any of the following nonrefundable credits or excluding income from Puerto Rico, American Samoa, or other foreign earned income on Form 2555 Foreign Earned Income, you will need to use the various worksheets on pages 6-9 of IRS Publication 972 Child Tax Credit and Credit for Other Dependents to calculate the Child Tax Credit. Form 8396 Mortgage […]
You may need to allocate amounts of the Form 1095-A to another individual at zero percent. For more information, see IRS Instructions for Form 8962. To indicate zero allocation in the TaxAct program, follow the instructions in FAQ Form 1095-A – Entering Health Insurance Marketplace Statement in Program. During the interview, when entering the recipient’s […]
Per the Form 8962 Instructions: “If an individual in your tax family was enrolled in a policy with an individual in another tax family and you are not taking the PTC, the taxpayer who is claiming the individual not in your tax family may agree to reconcile all APTC paid for the policy.” For more […]
Per the Form 8962 Instructions: “You need to allocate policy amounts (enrollment premiums, SLCSP premiums, and/or APTC) on a Form 1095-A between your tax family and another tax family if: The policy covered at least one individual in your tax family and at least one individual in another tax family; and Either: a. You received a […]
To enter or review Form 1095-A Health Insurance Marketplace Statement in TaxAct, follow the steps below. Access your HealthCare.gov account to review your uploaded Form 1095-A. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. […]
To indicate that a Form 1099-INT is foreign Interest for a mutual fund or a regulated investment company, follow these steps. Online Dashboards From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Expand Investment and Savings. Click Add beside […]
If you believe you may be at risk for tax-related identity theft, fill out IRS Form 14039 and either fax or mail it to the IRS so they can mark your account to identify any questionable activity (the fax number and mailing address are provided below the signature section on the second page of the form). […]
If you were a victim of identity theft, you may receive IRS Notice CP01A containing a single-use 6-digit Identity Protection (IP) PIN. For information on IP PINs, follow this link to the IRS FAQs about the Identity Protection Personal Identification Number (IP PIN). If you have misplaced the IRS letter containing your IP PIN, you […]
The number reported in Box 12 of Form W-2 – Wage and Tax Statement (code “W”) is the amount your employer contributed to your health savings account (including cafeteria plan contributions). You’ll need to enter this figure in your tax return when adding Form W-2 – see Entering in Program – Form W-2 for details. […]
The Electronic Federal Tax Payment System (EFTPS) is a free tax payment system for all taxpayers. The EFTPS system is an easy way to pay your federal taxes for individuals as well as businesses. You can make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement, and estimated tax payments using […]
Understanding the Affordable Care Act (ACA) and Your Federal Tax Return To help you better understand how the Affordable Care Act of 2010 (also known as ACA, the Health Care Law, or Obamacare) may affect your federal tax return, TaxAct has compiled key information regarding related forms and terminology. Not all items listed below will […]
During enrollment through the Marketplace, the Marketplace will determine if you are eligible for advance payments of the premium tax credit, also called “advance credit payments.” If you enrolled in Marketplace coverage last year, you will receive Form 1095-A detailing the coverage. You must enter the details of Form 1095-A on your tax return. To […]
“Not for Filing” Watermark on TaxAct Return A “Not for Filing” watermark will appear on your return if you choose to pay your TaxAct® program fees using your refund. This is because TaxAct does not allow customers to print their final return before the fees are paid. When Does the Watermark Go Away? If your e-filed return is […]
To view and print the receipt for your payment of your TaxAct return: Sign in to your TaxAct Online account. If the navigation menu, choose Tax Returns, and open your return. On the left, click My Return, then My Return Details. Under Payment Information, click My Return Fees. A detailed break-down of the charges will […]
For information about whether you can claim the mortgage interest paid on a foreign loan for a foreign home, go to the IRS website. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the […]
The amount of excess premium tax credit repayment, calculated on Line 29 of Federal Form 8962 Premium Tax Credit (PTC), has a different calculation if there was a self-employed health insurance deduction claimed on Line 16 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income. Per IRS Instructions for Form 8962, page 15: […]
Since 2016, the IRS has allowed Form 1040-NR U.S. Nonresident Alien Income Tax Return to be e-filed. Form 1040-NR-EZ is no longer available. TaxAct supports e-filing for Form 1040-NR. For more information, go to the IRS Instructions for Form 1040-NR. Note that any link in the information above is updated each year automatically and will […]
Per IRS Publication 5187 Affordable Care Act: What You and Your Family Need to Know, page 3: What’s New? Under the Tax Cuts and Jobs Act, passed December 22, 2017, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018. Beginning in tax year 2019 and […]
Form 1095-B, Health Coverage provides coverage information you, your spouse (if you file a joint return), and individuals you claim as dependents had qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year. Note. Providers of minimum essential coverage are required to furnish only one Form 1095-B for […]
Partnerships (Form 1065 U.S. Return of Partnership Income) are able to e-file their business tax return with nonresident partners who do not have an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN), provided they have made an application to obtain one of these. Per the IRS, the entry FOREIGNUS is no longer valid […]
If you see duplicate income listed in Part I of Form 1116 Foreign Tax Credit, it may mean a country has not been selected on one or more of the supporting documents. Use the steps below to review your Forms 1099-INT Interest Income, Form(s) 1099-DIV Dividends and Distributions, and/or manual input worksheets. Form 1099-INT To […]
Taxpayers should enter all Forms 1095-A Health Insurance Marketplace Statement for their tax family; however, as the ownership of each individual Form 1095-A does not affect the calculations in the return, the TaxAct® program does not request ownership information on the Q&A interview screens. The one exception is if you are using the alternative calculation. […]
The policy number reported to you by the Marketplace may be longer than the 15 characters allowed in the TaxAct® program entry field. However, only the last 15 characters are needed when filing your return. Per IRS Instructions for Form 1095-A Health Insurance Marketplace Statement: Enter the number the Marketplace assigned to the policy. If […]
Health Reimbursement Arrangements (HRAs), are employer-sponsored plans that reimburse you for health care costs. Your employer is the only one who can contribute to your HRA. There is nothing to report on your tax return for an HRA. Per IRS Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans, page 18: Health Reimbursement Arrangements […]
TaxAct supports the entry of up to four Forms 1095-A Health Insurance Marketplace Statement. Form 1095-A is not e-filed with the return; however, the information is transferred to Form 8962 Premium Tax Credit (PTC) for purposes of the Premium Tax Credit. If you have more than four Forms 1095-A, the information can be combined. For […]
Based on your entries in a return, you may be prompted to enter an amount for a self-employed health insurance deduction adjustment. This entry is necessary due to the calculations detailed on pages 56-72 of IRS Publication 974 Premium Tax Credit (PTC). The actual calculation for the self-employed health insurance deduction adjustment is automatically done […]
The foreign tax credit cannot be more than the foreign tax credit limit. The limit is calculated by multiplying your U.S. tax by a fraction. To calculate the fraction, divide your foreign income by your total taxable income (U.S. and foreign). When the fraction is multiplied by your U.S. tax, the result represents the amount […]
When you file Form 1040-NR U.S. Nonresident Alien Income Tax Return, you cannot file jointly with your spouse. There is only one exception to this rule outlined as follows: Per IRS Publication 519 U.S. Tax Guide for Aliens, page 54: I am a nonresident alien. Can I file a joint return with my spouse? Generally, […]
The TaxAct® programs select country codes according to the IRS Foreign Country Code Listing for Modernized e-File (MeF) webpage which is what software developers must follow. As the IRS references that list for returns they process, only if they correct their listing for software developers can we change a code in our programs. A current […]
You are unable to file a return (when utilizing the bona fide residence test on Federal Form 2555 Foreign Earned Income) until a full year has passed that you met the qualifications. Per IRS Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad, page 4: Extension of time to meet residency tests. You […]
Per the IRS Fulbright Grants webpage: Fulbright grants received by a U.S. citizen from an agency which dispenses and administers Fulbright grants (domestic or foreign) fall into two types of income for tax purposes. If you are a U.S. citizen recipient of a Fulbright grant, you must determine which category of income your grant falls into in […]
Line 18 of Federal Form 1116 Foreign Tax Credit instructs that if you figured your tax using the lower rates on qualified dividends or capital gains to see the instructions. This is because instead of entering the amount from Form 1040 U.S. Individual Income Tax Return, Line 10a, you would need to make adjustments to […]
Schedule NEC (Form 1040-NR) is used to report income not effectively connected with a U.S. trade or business. This may include, but is not limited to, dividends, royalties, and gambling winnings. Tax must be withheld at the source, and is generally withheld at a rate of 30%. The tax must be withheld by the person […]
As a nonresident alien, your income is either effectively connected to a U.S. business or is not effectively connected to a U.S. business. Effectively Connected Income (ECI) is taxed at the regular graduated rate. If your income is Not Effectively Connected (NEC), it is generally taxed at a 30% rate. However, if your resident country […]
Per IRS Instructions for Schedule 8812 Additional Child Tax Credit: Taxpayer Identification Number Requirements Each qualifying child must have the required social security number (SSN). If you have a qualifying child who does not have the required SSN, you cannot use the child to claim the ACTC on either your original or an amended 2024 return. The required […]
Although the IRS Instructions for Form 8938 Statement of Specified Foreign Financial Assets specifically outline the identifying information to list at the top of the form, there is no additional guidance relating to the names that should be listed on the attached additional sheets. The reason TaxAct® lists both names at the top of the […]
Per IRS Instructions for Schedule SE, page SE-2: U.S. Citizens Employed by Foreign Governments or International Organizations You must pay SE tax on income you earned as a U.S. citizen employed by a foreign government (or, in certain cases, by a wholly owned instrumentality of a foreign government or an international organization under the International […]
When you enter a Form 1099-INT Interest Income and/or Form 1099-DIV Dividends and Distributions with an amount in the Foreign Tax Paid box, you will need to determine how much of the total interest, ordinary dividends, qualified dividends, and/or capital gain distributions are from foreign sources. You may have received a supplemental statement outlining these […]
Per IRS Instructions for Schedule SE (Form 1040) Self-Employment Tax, page SE-2: U.S. Citizens or Resident Aliens Living Outside the United States If you are a self-employed U.S. citizen or resident alien living outside the United States, in most cases you must pay SE tax. You can’t reduce your foreign earnings from self-employment by your […]
Per IRS Instructions for Form 8839 Qualified Adoption Expenses, page 3: Foreign child. If the eligible child is a foreign child, you can’t take the adoption credit or exclusion unless the adoption becomes final. A child is a foreign child if he or she wasn’t a citizen or resident of the United States (including U.S. […]
The TaxAct® program does not support IRS Form 2350 Application for Extension of Time to File U.S. Income Tax Return. This form is filed separately from your tax return and mailed to the address listed below. Per IRS Instructions for Form 2350, page 3: Purpose of Form Use Form 2350 to ask for an extension […]
For information regarding foreign currency transactions, go to the IRS Foreign Currency and Currency Exchange Rates webpage. There are links to Governmental Resources and External Resources where you may find exchange rates. Note that any link in the information above is updated each year automatically and will take you to the most recent version of […]
Valid Ranges for Social Security Number (SSN): 001-01-0001 through 665-99-9999 667-01-0001 through 899-99-9999 750-01-0001 through 763-99-9999 764-01-0001 through 899-99-9999 When the SSN “Group” contains zeros, the SSN is a test number and the return will be rejected. When the SSN “Serial” contains all zeros, the return will be rejected. Social Security/Taxpayer Identification Numbers are broken […]
Multiple Forms 4684 Casualties and Thefts can be used for a single casualty incident. TaxAct allows up to 20 copies of the Section A portion of the Form 4684 with four properties each, a total of 80 entries. TaxAct allows up to five copies of the Section B portion of the Form 4684 with four […]
TaxAct supports the individual tax return on Form 1040 U.S. Individual Income Tax Return, but does not support Form 3520 Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts or Form 3520-A Annual Information Return of Foreign Trust With a U.S. Owner. These forms are separate returns from the individual […]
TaxAct® supports Form 5472 Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business within the corporate Form 1120 U.S. Corporation Income Tax Return return. There is a maximum of five copies that can be added to the return. If you need more than five copies, you must complete the additional Forms 5472 […]
The TaxAct® program supports the entry of fifty (50) Forms 8621 Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund per return. If you need to file more than 50 Forms 8621 through TaxAct, you must paper file your return, but you can still enter the 50+ Forms 8621 […]
Military and civilian pay from the U.S. government is not eligible for exclusion on Form 2555 Foreign Earned Income. Per IRS Publication 3 Armed Forces’ Tax Guide, page 9: Foreign earned income exclusion. Certain taxpayers can exclude income earned in foreign countries. For 2023, this exclusion amount can be as much as $120,000. However, the […]
Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 23: Nonresident alien spouse. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you don’t choose to treat your nonresident spouse as a resident alien. However, your spouse isn’t a […]
If you are married and your spouse is a nonresident alien without either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN), you may need to paper file your state return. Although the spouse’s SSN or ITIN may not be required on your federal return in certain situations (see IRS instructions below), […]
Since resident and nonresident aliens are taxed differently, it is important for you to determine your status. You are considered a nonresident alien for any period that you are neither a United States citizen nor a United States resident alien. Determining Residency You are considered a resident alien if you met one of two tests […]
Expenses up to $50 per month can be deducted for a child living with you from a Student Exchange Program. Per IRS Publication 526 Charitable Contributions, page 5: Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. You can deduct qualifying expenses […]
When completing the Child and Dependent Care Expenses form, you are required to supply the care provider’s identification number. If you are living abroad, your care provider may not have or be required to have a U.S. taxpayer identification number. Per IRS Publication 503 Child and Dependent Care Expenses, page 10: U.S. citizens and resident […]
Per IRS Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad, page 22: Foreign Housing Exclusion and Deduction In addition to the foreign earned income exclusion, you can also claim an exclusion or a deduction from gross income for your housing amount if your tax home is in a foreign country and you […]
If you received a foreign pension, you first must determine whether the foreign pension is taxable. TaxAct® has no process to determine this; please review the following IRS links to make this determination: United States Income Tax Treaties – A to Z Publication 901 U.S. Tax Treaties Publication 54 Tax Guide for U.S. Citizens and […]
When there are multiple entries coming from separate Forms 1099-DIV Dividends and Distributions in a return, all the entries are consolidated into one single column on Form 1116 Foreign Tax Credit. In the IRS Instructions for Form 1116, starting on page 8, are instructions that apply. When there are Qualified Dividends or Capital Gain Distributions […]
The TaxAct® calculation of Line 3e Gross income from all sources of Federal Form 1116 Foreign Tax Credit is not necessarily the same amount as reflected on Line 6 of Federal Form 1040 U.S. Individual Income Tax Return. This is because only gross amounts are taken into consideration (before subtracting losses and deductions). For example, […]
If an individual has multiple foreign employers, all foreign earned income (for that individual taxpayer) would be combined on to one Form 2555 Foreign Earned Income. The IRS only allows two Forms 2555 to be filed per return (one for the taxpayer and one for the spouse). This is because completing more than one Form […]
Per the IRS Individual Taxpayer Identification Number (ITIN) Reminders for Tax Professionals webpage: Tax returns filed with an Individual Taxpayer Identification Number reporting wages paid are required to show the Social Security Number under which the wages were earned. This creates an identification number (ITIN/SSN) mismatch. In the past, returns with this mismatch could only […]
Per IRS Publication 547 Casualties, Disasters, and Thefts, page 9: Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. This section explains the adjustment you […]
For Connecticut income to be correctly reflected on Line 6 of Form CT-1040NR/PY, you must complete the Part-Year Residents and Nonresidents section of the State Q&A. This information will be included in the calculation of the percentage to prorate the tax figured on Line 10. To enter this information in TaxAct: From within your TaxAct […]
Usually, tax relief assistance payments are not taxable. People in a presidentially-declared disaster area who receive grants from state programs, charitable organizations, or employers to cover medical, transportation, or temporary housing expenses do not include these grants in their income. In the case of a federally-declared disaster, an affected taxpayer can call 1-866-562-5227 to speak […]
The IRS News From Around the Nation webpage provides news specific to local areas, primarily disaster relief or tax provisions that affect certain states. In the case of a federally declared disaster, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues. Note that any link in the […]
Returns can still be electronically filed if the taxpayer or spouse (or any of their dependents) has an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN). If the dependent does not have a SSN or ITIN yet, the taxpayer can e-file without the dependent and file an amended return later, or […]
For Social Security recipients, the TaxAct® program will calculate the taxable portion of the Social Security benefits reported on Line 5a of Form 1040 U.S. Individual Income Tax Return based on Worksheet 1 from IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 16. If you reside in a country (listed in Publication […]
Per IRS Publication 3 Armed Forces’ Tax Guide, page 15: Combat Zone Defined A combat zone is any area the President of the United States designates by Executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to […]
For military personnel, your permanent residence is generally considered to be your residence when you entered the military. However, if you or your spouse have earned income in the state in which you were stationed, you may need to file a state tax return as a nonresident of that state. You will need to determine […]
Per IRS Publication 3 Armed Forces’ Tax Guide, page 35: Spouse incapacitated. If your spouse can’t sign because of disease or injury and he or she tells you to sign, you can sign your spouse’s name in the proper space on the return, followed by the words “by [your name], Husband (or Wife).” Be sure […]
If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. The Bipartisan Budget Act of 2018 extends the exclusion from gross income of discharge of qualified principal residence indebtedness, which generally allows taxpayers to exclude income from the discharge of debt on their principal […]
The filing requirements for a federal tax return depend on factors such as the taxpayer’s income, the taxpayer’s age and filing status, the age of the spouse on joint returns, if the taxpayer is claimed as a dependent on someone else’s return, earnings from self-employment, and more. The IRS Interactive Tax Assistant (ITA) Do I […]
Go to the IRS Contact My Local Office Internationally webpage to learn about international taxpayer service centers. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
The TaxAct® program does not support Form 2555-EZ Foreign Earned Income Exclusion. But, all Foreign Earned Income Exclusion information will be reported on Form 2555 Foreign Earned Income (Part VIII Taxpayers Claiming the Housing Exclusion, Foreign Earned Income Exclusion, or Both), for you to claim the benefits. Note that any link in the information above is […]
A U.S. citizen or resident alien is generally subject to U.S. tax on total worldwide income; however, if you are a U.S. citizen or a resident alien who lives and works abroad, you may qualify to exclude all or part of your foreign earned income. You may wish to refer to IRS Publication 54 Tax […]
The TaxAct® program does not support IRS Form 1040-C U.S. Departing Alien Income Tax Return. Form 1040-C is used by aliens who intend to leave the United States or any of its possessions to report income received or expected to be received for the entire tax year, and pay the expected tax liability on that […]
Per IRS Publication 17, page 8: Who Should File Even if you don’t have to file, you should file a federal income tax return to get money back if any of the following conditions apply. 5. You qualify for the health coverage tax credit. See Form 8885, Health Coverage Tax Credit, and its instructions, for […]
While the Foreign Earned Income (FEI) Tax Worksheet is linked to Federal Form 1040 U.S. Individual Income Tax Return, it is only used if the return reports an amount on Form 2555 Foreign Earned Income, Line 45 for the Foreign Earned Income Exclusion. If that information is not present on Form 2555, the tax amount […]
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Your income, filing status, and age generally determine whether you must file an income tax return. If you […]
The TaxAct program no longer supports the creation of FinCEN Form 114 (FBAR) as of tax year 2019. Since this is a Bank Secrecy Act (BSA) form, it is not processed by the IRS. You can fill out and e-file the form through the BSA E-Filing System. If you own a foreign bank account, brokerage […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 3: Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Chapter 13 relief isn’t available to corporations or partnerships. The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 2: Bankruptcy proceedings begin with the filing of either a voluntary petition in the United States Bankruptcy Court, or in certain cases an involuntary petition filed by creditors. This filing creates the bankruptcy estate. The bankruptcy estate generally consists of all of the assets the individual or […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 2: CAUTION! This publication isn’t intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions. Page 3: Individuals in Chapter 7 or 11 When an individual debtor files for […]
The Foreign Tax Credit is available if you paid taxes to a foreign country on foreign-source income and are subject to U.S. tax on the same income. This credit is intended to relieve taxpayers of a double tax burden. Generally, you must be a U.S. citizen or resident alien to take the credit. Foreign taxes […]
The Patient Protection and Affordable Care Act (PPACA), commonly termed the Affordable Care Act (ACA) or “Obamacare”, is a federal statute which was signed into law by President Barack Obama on March 23, 2010. Due to this law impacting so many people, there are a number of IRS websites providing information: Affordable Care Act (ACA) […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding. This applies even if no amount is withheld from the payment because of a treaty or code exception to taxation, or if any amount […]
If you were a self-employed individual working abroad, you would still report your self-employment earnings and expenses on Schedule C (Form 1040) Profit or Loss From Business. To access Schedule C in the TaxAct program, go to our Schedule C – Entering Sole Proprietorship in Program FAQ. If you need to remove the self-employment tax […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported. That […]
Note: Losses you Can deduct for tax years 2018 through 2025: if you are an individual, losses of personal-use property from fire, storm, shipwreck, or other casualty, or theft are deductible only if the loss is attributable to a federally declared disaster (federal casualty loss). See Pub. 547 for more information. If the event causing […]
The Federal Tax Calculator is a powerful tool available in the TaxAct® program that helps customers perform “what-if” scenarios for future tax years. If you need help accessing the Tax Calculator, go to our Tax Calculator FAQ. Keep in mind that the Tax Calculator is a report for taxpayers to project their earnings and expenses […]
Excess housing allowance is generated when the housing allowance the clergy member received from the church or organization is more than the amount actually used to provide a home. If you need more information refer to IRS Publication 517 Social Security and Other Information for Members of the Clergy and Religious Workers. If you need […]
To enter the death of a taxpayer or spouse in the TaxAct® program, go to our Death of Taxpayer Prior to Filing Return FAQ. If both the taxpayer and spouse are entered as deceased, the TaxAct program will show the name and date of death for both at the top of the federal return. The representative […]
Your family may have received multiple Forms 1095-A Health Insurance Marketplace Statements. However, there are only certain instances in which the combined amounts from Column B of those forms should be transferred to the Monthly Calculation section (Lines 12-23) of Form 8962 Premium Tax Credit (PTC). Form 1095-A, Columns A and C will always be […]
You can elect to have someone of your choosing discuss your federal tax return with the IRS by completing the Third Party Designee section. To enter the Third Party Designee in the TaxAct® program: From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your […]
You can report Form 1099-SA Distributions From an HSA, Archer MSA, or Medicare Advantage MSA two different ways in the TaxAct program depending on where the distribution is from. To report or edit distributions from an HSA, go to our Form 1099-SA – Distributions from an HSA FAQ. To report or edit distributions from an Archer MSA […]
Identity theft occurs when someone uses your personal information to file a fraudulent tax return. Usually, the tax return is filed with your name, Social Security Number (SSN), and other identifying information in an attempt to obtain a fraudulent refund. Be alert to possible identity theft if you receive an IRS notice or letter that […]
Per IRS Publication 559 Survivors, Executors, and Administrators, page 25: The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts aren’t taxable gifts. Gifts, excluding gifts of future interests, that aren’t more than the annual exclusion for the calendar year. Tuition or medical expenses […]
IRS Publication 555 Community Property outlines the requirements for filing the federal tax return for married filing separate spouses, California or Washington same-sex spouses, or registered domestic partners (RDPs) domiciled in Nevada, Washington, or California. See the publication for additional details and definitions. TaxAct supports the completion of these returns so they can be e-filed. […]
The IRS does not provide instructions for what to enter in the “Occupation” field, which appears at the bottom of your federal tax return, to the right of the signature lines. Enter whichever term best reflects your current occupation. Terms such as Student, Laborer, Self-Employed, Homemaker, Unemployed, and Retired are fully acceptable. The contents of the “Occupation” field do […]
