3.21.3 Individual Income Tax Returns

Manual Transmittal

November 15, 2022

Purpose

(1) This transmits revised IRM (Internal Revenue Manual) 3.21.3, International Returns and Documents Analysis - Individual Income Tax Returns.

Material Changes

(1) IRM 3.21.3 - IPU 22U0026 issued 01-03-2022 - Changed Action Code 215 to 231 throughout the IRM to increase the suspense period. Superseded by IPU 22U0550.

(2) IRM 3.21.3 - IPU 22U0550 issued 04-26-2022 - Changed Action Code 231 back to 215 throughout the IRM to return the suspense period to normal.

(3) IRM 3.21.3.3(1) - IPU 22U0690 issued 06-07-2022 - Added more notations related to "Relief for Certain Former Citizens" and a copy of a Certificate of Loss of Nationality to list of indicators of an international tax return.

(4) IRM 3.21.3.3(2) - IPU 22U0690 issued 06-07-2022 - Added new paragraph for returns requiring routing to LB&I for review. Renumbered subsequent paragraphs.

(5) IRM 3.21.3.3(2) - IPU 22U0757 issued 06-23-2022 - Added a new bullet to send returns with Form 8898 to LB&I for review.

(6) IRM 3.21.3.3.2(6) Per counsel, changed "tax year" references to "calendar year" .

(7) IRM 3.21.3.3.4(6) Updated how a degree candidate now reduces their scholarship grant income by qualified expenses before reporting the net amount on Schedule 1, line 8r rather than reporting the gross income and the qualified expenses separately.

(8) IRM 3.21.3.3.6(2) Per counsel, removed "for the entire tax year" in regards to residency requirements for taxpayers in U.S. territories.

(9) IRM 3.21.3.4(3) - IPU 22U0247 issued 02-07-2022 - Deleted program 46280 from OFP chart after it was determined it would not be needed.

(10) IRM 3.21.3.4(3) - IPU 22U0331 issued 03-04-2022 - Added program 46870 for Spanish Form 1040 ITIN.

(11) IRM 3.21.3.6(2) - IPU 22U0331 issued 03-04-2022 - Removed Form 2106 and Form 8812 from exception.

(12) IRM 3.21.3.6.1(2) - IPU 22U0331 issued 03-04-2022 - Removed Form 2106 and Form 8812 from exception.

(13) IRM 3.21.3.6.1(6) - IPU 22U0952 issued 09-15-2022 - Updated (g) with the information necessary to be edited in an Action Trail when sending correspondence back to the taxpayer.

(14) IRM 3.21.3.6.2(2) - IPU 22U0331 issued 03-04-2022 - Removed Form 2106 and Form 8812 from exception.

(15) IRM 3.21.3.6.2(6)(f) - IPU 22U0254 issued 02-09-2022 - Added an instruction to always select a fax paragraph when preparing CAS sheet Form 13900 or 13975.

(16) IRM 3.21.3.7.2 Removed Schedule OI from the table in (4) and added it to the list of transcribed schedules and forms in (10) as it is now transcribed.

(17) IRM 3.21.3.7.4(5) - IPU 22U0459 issued 04-01-2022 - Corrected line numbers in (d) and (e), and changed (g) to list the international correspondence forms when mailing the return back to the taxpayer.

(18) IRM 3.21.3.7.8 Added new subsection for the new Form Processing Codes (FPCs).

(19) IRM 3.21.3.7.9(2) Stated that RPCs will now all be edited in the same place, regardless of the type of return.

(20) IRM 3.21.3.7.10(3) Removed SPC D as FPC D will now be edited when there is a federally declared disaster loss claimed on Schedule A and Form 4684.

(21) IRM 3.21.3.8(2) - IPU 22U0459 issued 04-01-2022 - Added a note to cover received date editing for prior year Form 1040.

(22) IRM 3.21.3.8.1(1) - IPU 22U0109 issued 01-13-2022 - Added an exception for determining received dates for timely-filed carryover inventory.

(23) IRM 3.21.3.8.1(5) - IPU 22U0331 issued 03-04-2022 - Added a note for received date editing on timely-filed TY20 returns processed in 2022.

(24) IRM 3.21.3.8.2(1) - IPU 22U0331 issued 03-04-2022 - Deleted note under (1)a, deleted program 46280 in (1)b since it was determined to be an unnecessary program addition, and changed 1040 to 1040-NR in (1)e.

(25) IRM 3.21.3.9(3) Removed the exception to not edit RPC "V" on Forms 1040-NR, 1040-SS, and 1040-PR, and added the exception to not edit it when the return is a prior year. Also, added the editing of SPC "Y" when "FFF" is present for all international returns.

(26) IRM 3.21.3.12.3.3(2) - IPU 22U0459 issued 04-01-2022 - Added an exception for buildings in a PR address, and deleted "Carretera" from table as it doesn’t belong there.

(27) IRM 3.21.3.13 Deleted filing status code "7" as it is not used downstream, and added CCC "Q" to account for the situation covered by the deleted FSC.

(28) IRM 3.21.3.14.1(1) - IPU 22U0331 issued 03-04-2022 - Updated IRM 3.11.3 reference.

(29) IRM 3.21.3.14.2(1) - IPU 22U0331 issued 03-04-2022 - Updated IRM 3.11.3 reference.

(30) IRM 3.21.3.15.1.1 Changed line 1 to 1a for the revised Form 1040.

(31) IRM 3.21.3.15.1.2 Added subsection for the new Form 1040, line 1b.

(32) IRM 3.21.3.15.1.3 Added subsection for the new Form 1040, line 1e.

(33) IRM 3.21.3.15.1.4 Added subsection for the new Form 1040, line 1f.

(34) IRM 3.21.3.15.1.5 Added subsection for the new Form 1040, line 1g.

(35) IRM 3.21.3.15.1.6 Added subsection for the new Form 1040, line 1i.

(36) IRM 3.21.3.15.1.7 Added subsection for the new Form 1040, line 1z.

(37) IRM 3.21.3.15.1.12 Added new Form 1040, box 6c and the editing of CCC "H" when it is checked.

(38) IRM 3.21.3.15.1.13(1) Changed SPC H to the new FPC H in the note, and also deleted SPC 6 as it is no longer a valid code.

(39) IRM 3.21.3.15.1.19 Changed SPC "H" to FPC "H" .

(40) IRM 3.21.3.15.1.23 Added subsection for the Form 1040, line 19.

(41) IRM 3.21.3.15.1.23(9)(a) - IPU 22U0247 issued 02-07-2022 - Updated paragraph to match revision of Form 13900.

(42) IRM 3.21.3.15.1.28 Moved this subsection to the PY section since the RRC is only valid for TY20 and TY21.

(43) IRM 3.21.3.15.1.30(7) Per counsel, changed residency requirement from "part" to "more than half of the tax year" .

(44) IRM 3.21.3.15.1.31 Moved this subsection of Nontaxable Combat Pay Election to the new line 1i.

(45) IRM 3.21.3.15.1.32 Deleted this subsection as PYEI does not apply to TY22.

(46) IRM 3.21.3.15.1.33 Deleted refundable child tax credit from title as it does not apply beyond TY21.

(47) IRM 3.21.3.15.1.35 Deleted this subsection as RRC does not apply after TY21.

(48) IRM 3.21.3.15.2 Added which lines need to be edited in dollars and cents.

(49) IRM 3.21.3.16 Updated T-lines for Schedule 1.

(50) IRM 3.21.3.16.8(1) - IPU 22U0812 issued 07-15-2022 - Rewrote the two rows of the table concerning IRC 893 on a Form 1040, Schedule 1 to agree with the rewrite of the corresponding subsection of the Form 1040-NR, Schedule 1.

(51) IRM 3.21.3.16.8(2) Added statement that there is a new Schedule 1, line 8r.

(52) IRM 3.21.3.16.9 Added subsection for new Schedule 1, line 8r attached to a Form 1040.

(53) IRM 3.21.3.17 Updated T-lines for Schedule 2.

(54) IRM 3.21.3.17.8 Removed indication that Form 8959 is not transcribed.

(55) IRM 3.21.3.17.9 Removed indication that Form 8960 is not transcribed.

(56) IRM 3.21.3.17.13 Indicated that Schedule 2, line 19 is now reserved for TY22, but not for TY21.

(57) IRM 3.21.3.18 Updated T-lines for Schedule 3.

(58) IRM 3.21.3.18.13 Updated title of Schedule 3, line 13b.

(59) IRM 3.21.3.18.14 Added new subsection for Schedule 3, line 13d.

(60) IRM 3.21.3.18.15 Reserved Schedule 3, line 13g.

(61) IRM 3.21.3.18.17 Deleted reference to IRM 3.11.3.

(62) IRM 3.21.3.19 - IPU 22U0331 issued 03-04-2022 - Updated IRM 3.11.3 references in (3) and (4).

(63) IRM 3.21.3.20 Updated T-lines for Schedule A.

(64) IRM 3.21.3.24(1) - IPU 22U0331 issued 03-04-2022 - Corrected columns (b) to (c) in the T-Lines chart for entries with the "Y" Code on Form 8949.

(65) IRM 3.21.3.31 Updated T-lines for Form 2441.

(66) IRM 3.21.3.42.5(1) - IPU 22U0757 issued 06-23-2022 - Added countries to the table for which a waiver of the minimum time requirements may be claimed for TY21.

(67) IRM 3.21.3.42.5(1) Removed the entries from the table in the note since the countries for which a waiver of minimum time requirements may be claimed for TY22 won’t be announced until next year. Moved the TY21 countries to the prior year section.

(68) IRM 3.21.3.42.5(8) - IPU 22U0331 issued 03-04-2022 - Added "or blank" to "and" column in second to last row of chart.

(69) IRM 3.21.3.42.9(3) - IPU 22U0459 issued 04-01-2022 - Deleted (b) through (e) as unnecessary information.

(70) IRM 3.21.3.44 Updated T-lines for Form 8839.

(71) IRM 3.21.3.48(1) Updated table to show that Schedule H, lines 8c and 8f are T-lines for TY21 and later.

(72) IRM 3.21.3.57 Updated T-lines for Form 8978.

(73) IRM 3.21.3.75.1 Per counsel, deleted, "reporting gross worldwide income," and, "to report only income from sources within American Samoa," from (2), (4), and (5).

(74) IRM 3.21.3.78.1 - IPU 22U0584 issued 05-04-2022 - Added a new paragraph (6) to tell what to do when a misbatched VI Cover Over return is found.

(75) IRM 3.21.3.78.2(2) - IPU 22U0331 issued 03-04-2022 - Rewrote instructions to clarify that dependent entries need to be deleted for all years.

(76) IRM 3.21.3.79.1 Per counsel, deleted, "to report income from worldwide sources," "to report income from Puerto Rico sources," and, "to report Puerto Rico source income," from (2), (3), (4), and (5).

(77) IRM 3.21.3.79.1(2)(c) - IPU 22U0459 issued 04-01-2022 - Corrected "USVI" to "Puerto Rico" .

(78) IRM 3.21.3.80(2) Added lines to clarify what the TP can file a Form 1040-PR/SS for in relation to ACTC or RCTC for TY20 and prior, TY21, and TY22.

(79) IRM 3.21.3.80.1(1) Updated the new editing location of a Return Processing Code, the new Form Processing Code, and other T-lines on a Form 1040-PR/SS.

(80) IRM 3.21.3.80.3.1 Streamlined, clarified, and updated the filing status code tables for the Form 1040-PR/SS.

(81) IRM 3.21.3.80.3.2 Clarified what requirements to follow whether the Form 1040-PR/SS is filed for TY21 or TY22.

(82) IRM 3.21.3.80.3.2.3 Deleted the line that said the CTC Indicator is used to compute the CTC. CTC is determined by all the qualifying children information in line 2.

(83) IRM 3.21.3.80.3.10 Distinguished between RCTC for TY21 and ACTC for TY22.

(84) IRM 3.21.3.80.3.11 Deleted the subsection for line 10, Health Coverage Tax Credit.

(85) IRM 3.21.3.80.4 Updated the editing of Part II on a Form 1040-PR/SS for TY21 and TY22.

(86) IRM 3.21.3.80.4.1 Indicated that MAGI is what is used in Part II, line 1 of a Form 1040-PR/SS for TY21 and later.

(87) IRM 3.21.3.80.4.2 Reinstated the TY20 instructions for Part II, line 2 of a Form 1040-PR/SS for all years except TY21.

(88) IRM 3.21.3.81 At counsel’s suggestion, I clarified in what fashion a dual-status filer, in the year of entry into the U.S., would attach a Form 1040-NR.

(89) IRM 3.21.3.82 Made a couple changes to special coding on a Form 1040-NR:

  • Changed coding of RPC "W" to the new FPC "S"

  • Changed editing of SPC "E" to when the new line 1b for HSH has an entry

(90) IRM 3.21.3.82 Deleted paragraph that stated not to edit RPC "V" on any Form 1040-NR.

(91) IRM 3.21.3.82.5(3) - IPU 22U0459 issued 04-01-2022 - Added "Form 1040-NR" for clarification.

(92) IRM 3.21.3.82.8(2) - IPU 22U0690 issued 06-07-2022 - Changed instructions when Form 8854 is attached.

(93) IRM 3.21.3.83(3) Added Schedule OI to (a) to be treated as page 3 of Sequence 07 when ordering the return and deleted (b) as Schedule OI is now a transcribed schedule.

(94) IRM 3.21.3.83(4) Added Schedule OI as page 3 of Sequence 07, to be kept together with Schedule A and Schedule NEC.

(95) IRM 3.21.3.83.2(3) Updated the T-line table for Form 1040-NR.

(96) IRM 3.21.3.83.6(3) Corrected filing status code table for Form 1040-NR.

(97) IRM 3.21.3.83.6(3) Corrected filing status code table for Form 1040-NR.

(98) IRM 3.21.3.83.6(4) Indicated when to edit the new CCC "Q" .

(99) IRM 3.21.3.83.7.1(2) - IPU 22U0459 issued 04-01-2022 - Added "Form 8843" to note in row for India as a form to use for help in determining eligibility of dependent claims.

(100) IRM 3.21.3.83.7.1(7) - IPU 22U0459 issued 04-01-2022 - Updated the IRM references.

(101) IRM 3.21.3.83.8.1(1) Removed the household employee income from the table as it now has its own line.

(102) IRM 3.21.3.83.8.2 Moved the scholarship and fellowship grants subsection from Form 1040-NR, line 1b to a new Schedule 1, line 8r subsection, and removed the paragraph requiring RPC B to be edited on a dual-status return when the Form 1040 is the controlling document.

(103) IRM 3.21.3.83.8.2 Created a new subsection for Form 1040-NR, line 1b, Household Employee Wages.

(104) IRM 3.21.3.83.8.3 Deleted the subsection for Form 1040-NR, line 1b for scholarships.

(105) IRM 3.21.3.83.8.4 Added subsection for the new Form 1040-NR, line 1e.

(106) IRM 3.21.3.83.8.5 Added subsection for the new Form 1040-NR, line 1f.

(107) IRM 3.21.3.83.8.6 Added subsection for the new Form 1040-NR, line 1g.

(108) IRM 3.21.3.83.8.7 Changed the old line 1c to the new line 1k on Form 1040-NR.

(109) IRM 3.21.3.83.8.8 Added subsection for the new Form 1040-NR, line 1z.

(110) IRM 3.21.3.83.8.9 - IPU 22U0331 issued 03-04-2022 - Corrected paragraphs (1) and (2) to indicate that pension income may validly be reported on either Form 1040-NR, line 5b, or Schedule NEC, and also to explain where to edit unreported pension income.

(111) IRM 3.21.3.83.8.10(5) - IPU 22U0247 issued 02-07-2022 - Updated paragraph to match revision of Form 13900.

(112) IRM 3.21.3.83.9.2 Deleted the subsection for scholarship and fellowship grants excluded since this is now netted out with the gross income of scholarship and fellowship grants and reported on Schedule 1, line 8r.

(113) IRM 3.21.3.83.10.2 Moved this subsection concerning charitable contributions for certain residents of India to the prior year section since it is only for TY20 and TY21.

(114) IRM 3.21.3.83.10.4 Deleted the subsection for line 13b, Exemptions for Estates and Trusts Only, as it is reserved.

(115) IRM 3.21.3.83.10.5 Deleted the subsection for line 13c, as it is reserved.

(116) IRM 3.21.3.83.10.6 Deleted the subsection for line 14, as it is reserved.

(117) IRM 3.21.3.83.11.1 Removed "nonrefundable" from line name.

(118) IRM 3.21.3.83.12.1 - IPU 22U0331 issued 03-04-2022 - Deleted old (3) because it was not correct or necessary, rewrote new (3) to clarify, and renumbered due to deleted paragraph.

(119) IRM 3.21.3.83.12.5(2) - IPU 22U0331 issued 03-04-2022 - Added a list of ways to calculate and edit line 24.

(120) IRM 3.21.3.83.13.5(3) - IPU 22U0331 issued 03-04-2022 - Clarified the instruction.

(121) IRM 3.21.3.83.13.8 Changed the title since the refundable child tax credit was only for TY21.

(122) IRM 3.21.3.83.19.8 Moved (4) to instructions for Schedule 1, line 9, and added a reference of where to go if there is an entry on the new Schedule 1, line 8r.

(123) IRM 3.21.3.83.19.8(7) - IPU 22U0812 issued 07-15-2022 - Added an exception and note to (d), fixed the third row of the table in (e), deleted the exception from (f), and cleaned up the wording throughout.

(124) IRM 3.21.3.83.19.9 Added subsection for new Schedule 1, line 8r attached to a Form 1040-NR that represents the net amount of scholarship income after qualified exclusions.

(125) IRM 3.21.3.83.19.10(2) This instruction was moved here from the lines 8a-8z subsection.

(126) IRM 3.21.3.83.19.25 Reorganized and rewrote this subsection to cover more situations and to be more clear.

(127) IRM 3.21.3.83.20.4(2) Changed RPC "W" to the new FPC "S" .

(128) IRM 3.21.3.83.20.6(1) Added a condition under which correspondence for the Form 5329 would not be required.

(129) IRM 3.21.3.83.20.8 Removed indication that Form 8959 is not transcribed.

(130) IRM 3.21.3.83.20.9 Removed indication that Form 8960 is not transcribed.

(131) IRM 3.21.3.83.20.10 Added subsection for Schedule 2, line 13, "Uncollected Social Security and Medicare or RRTA Tax on Tips" .

(132) IRM 3.21.3.83.20.14 Reserved Schedule 2, line19, except for TY21.

(133) IRM 3.21.3.83.21.5(1) Per counsel, removed the threshold to correspond.

(134) IRM 3.21.3.83.21.13 Changed the title of Schedule 3, line 13b.

(135) IRM 3.21.3.83.21.14 Added subsection for Schedule 3, line 13d.

(136) IRM 3.21.3.83.22.3 - IPU 22U0331 issued 03-04-2022 - Corrected the Form 8283 line references in (4) and (5).

(137) IRM 3.21.3.83.23(2) Added requirement that Schedule OI does not have any T-line entries in order to "X" Schedule NEC.

(138) IRM 3.21.3.83.23(4) - IPU 22U0331 issued 03-04-2022 - Corrected note that professional gambling is effectively connected income.

(139) IRM 3.21.3.83.24 Added new subsection for the transcribed Schedule OI.

(140) IRM 3.21.3.84.1(4) Per counsel, deleted part of the last sentence that excepted students from India from not being allowed to claim treaty benefits.

(141) IRM 3.21.3.84.2(1) Deleted FS "7" as it is no longer used downstream.

(142) IRM 3.21.3.84.3(4) - IPU 22U0690 issued 06-07-2022 - Changed bullet list in exception to agree with other Form 8854 processing changes.

(143) IRM 3.21.3.84.4(4)(a) Cleaned up the FSC table and added a missing condition under "qualifying surviving spouse" filing status.

(144) IRM 3.21.3.84.5(12) Per counsel, moved lines 5b and 5c to the second row of the table due to the $10,000 SALT cap implications.

(145) IRM 3.21.3.85.2(2)(a) - IPU 22U0331 issued 03-04-2022 - Corrected tax period to return due date.

(146) IRM 3.21.3.85.2(4)(b) - IPU 22U0331 issued 03-04-2022 - Updated IRM 3.11.3 reference.

(147) IRM 3.21.3.85.3.1.1 Moved the Form 1040, line 30, RRC to prior year instructions.

(148) IRM 3.21.3.85.3.2(3) Added countries for which taxpayer can claim a waiver of minimum time requirements for TY21.

(149) IRM 3.21.3.85.3.4.5 Added new subsection for prior year Form 1040-NR filings that have an entry on line 1b.

(150) IRM 3.21.3.85.3.4.6 Changed the title of the subsection to be more accurate.

(151) IRM 3.21.3.85.3.4.7 Added new subsection for prior year Form 1040-NR filings that have an entry on line 10c.

(152) IRM 3.21.3.85.3.5(3) Added Schedule OI to (a) to be treated as page 3 of Sequence 07 when ordering the return and deleted (b) as Schedule OI is now a transcribed schedule.

(153) IRM 3.21.3.85.3.5.1(2) Added lines to clarify what the TP can file a Form 1040-PR/SS for in relation to ACTC or RCTC for TY20 and prior, TY21, and TY22.

(154) IRM 3.21.3.85.3.5.2(1)(b) - IPU 22U0331 issued 03-04-2022 - Deleted the instruction to edit CCC "Y" and an action trail in the note.

(155) IRM 3.21.3.85.3.5.3(1) Stated where to edit the filing status code on a Form 1040-PR/SS.

(156) IRM 3.21.3.85.3.5.4 Moved some current year info to the Form 1040-PR/SS prior year section for reference.

(157) IRM 3.21.3.85.3.5.5.1(1) - IPU 22U0331 issued 03-04-2022 - Removed the correspondence requirement and added SPC "A" .

(158) IRM 3.21.3.85.3.5.5.1(1) Changed SPC "A" to the new FPC "A" in the note.

(159) IRM 3.21.3.85.3.5.10 - IPU 22U0331 issued 03-04-2022 - Updated subsection title.

(160) IRM 3.21.3.85.3.6 - IPU 22U0331 issued 03-04-2022 - Updated line numbers in (2) reminder and (4).

(161) IRM 3.21.3.85.3.6.5.1(1) Updated SPC "A" to FPC "A" .

(162) IRM 3.21.3.85.3.7(4) - IPU 22U0331 issued 03-04-2022 - Corrected Form 1040-NR-EZ conversion instructions for CCC codes, line 11, and RPC codes.

(163) IRM 3.21.3.85.3.7.1(4) - IPU 22U0331 issued 03-04-2022 - Deleted (4) since the instruction to rebatch was obsolete as Form 1040-NR-EZ is now batched with Form 1040-NR.

(164) IRM 3.21.3.85.3.7.2(1) - IPU 22U0331 issued 03-04-2022 - Clarified that the table is to be followed whether or not withholding documents are attached. Also, added the situation where source of line 11 amount cannot be determined.

(165) IRM 3.21.3.85.3.7.2(1) - IPU 22U0247 issued 02-07-2022 - Changed a paragraph selection in the table to a fill-in since the revised Form 13900 no longer has the old paragraph selection.

(166) IRM 3.21.3.85.3.8(4) Updated conversion chart for prior year Form 1040-NR-EZ.

(167) IRM 3.21.3.86 - IPU 22U0812 issued 07-15-2022 - Corrected where the GIIN is edited in (8), revised to where the Form 8966 should be emailed when unprocessable or containing items that need to be reviewed in (10) and (11).

(168) IRM 3.21.3.86 Deleted subsection since the FATCA information is moving to the IRM 3.13.5 for PY23.

(169) IRM 3.21.3.87 - IPU 22U0812 issued 07-15-2022 - Corrected to where the Excel workbooks should be emailed in (6) and corrected the line numbers in (9).

(170) IRM 3.21.3.87 Deleted subsection since the FATCA information is moving to the IRM 3.13.5 for PY23.

(171) Exhibit 3.21.3-1 - IPU 22U0331 issued 03-04-2022 - Changed the wording of the Form 1065 to match the IRM 3.11.3 attachment guide.

(172) Exhibit 3.21.3-1 - IPU 22U0690 issued 06-07-2022 - Updated instructions for when Form 8854 is attached to a return.

(173) Exhibit 3.21.3-1 - IPU 22U0757 issued 06-23-2022 - Added instructions to attachment guide when Form 8898 is attached to a return.

(174) Exhibit 3.21.3-1 - IPU 22U0898 issued 08-19-2022 - Corrected the routing for Form 8957.

(175) Exhibit 3.21.3-1 Changed CCC I to the new FPC J when Form 8886 is attached to a return.

(176) Exhibit 3.21.3-1 Changed SPC Q to the new FPC R when Form 8990, 8992, or 8994 is attached to the return. Removed the editing of SPC Q when Form 8991 or 8993 is attached.

(177) Exhibit 3.21.3-1 Added Form 8995-A Schedule A, Form 8995-A Schedule B, Form 8995-A Schedule C, and Form 8995-A Schedule D to guide.

(178) Exhibit 3.21.3-1 Changed SPC W to the new FPC W when Form 5471, Form 5471 Schedule G-1, or a supporting schedule is attached to the return.

(179) Exhibit 3.21.3-1 Changed SPC X to the new FPC X when Form 8865 is attached to the return.

(180) Exhibit 3.21.3-1 Changed SPC 8 to the new FPC 8 when Form 14039 is attached to the return. Changed SPC S to the new FPC 9 when Form 14039 (SP) is attached to the return.

(181) Exhibit 3.21.3-2 Added new income codes 56 and 57.

(182) Exhibit 3.21.3-3 Deleted return processing codes W and 9.

(183) Exhibit 3.21.3-4 - IPU 22U0812 issued 07-15-2022 - Updated international organization list from U.S. Code at House of Representatives legal counsel site.

(184) Exhibit 3.21.3-7 - IPU 22U0331 issued 03-04-2022 - Corrected Saint Maarten to Sint Maarten.

(185) Exhibit 3.21.3-10 - IPU 22U0331 issued 03-04-2022 - Deleted reference below the table to information that was removed in the past.

(186) Exhibit 3.21.3-15 - IPU 22U0247 issued 02-07-2022 - Updated with the January 2022 revision of the Form 13900 CAS sheet along with updated instructions.

(187) Exhibit 3.21.3-15 - IPU 22U0254 issued 02-09-2022 - Added instruction for selecting a fax paragraph to the table and a corresponding reference on page 2 of the Form 13900.

(188) Exhibit 3.21.3-16 - IPU 22U0247 issued 02-07-2022 - Updated with the January 2022 revision of the Form 13975 CAS sheet along with updated instructions.

(189) Exhibit 3.21.3-16 - IPU 22U0254 issued 02-09-2022 - Added instruction for selecting a fax paragraph to the table and a corresponding reference on the Form 13975.

(190) IRM 3.21.3 Made editorial changes and annual changes, such as dates, tax years, line numbers, tolerances, and maximum claimable amounts to reflect current year specifics throughout this IRM.

Effect on Other Documents

IRM 3.21.3, dated November 12, 2021 (effective January 1, 2022), is superseded. This IRM incorporates the following IRM Procedural Updates (IPUs), issued January 3, 2022 through September 15, 2022: 22U0026, 22U0109, 22U0247, 22U0254, 22U0331, 22U0459, 22U0550, 22U0584, 22U0690, 22U0757, 22U0812, 22U0898, and 22U0952.

Audience

Wage and Investment, Code and Edit Tax Examiners

Effective Date

(01-01-2023)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. Purpose: The Document Perfection Operation, Code & Edit unit, prepares paper returns for processing by reviewing and editing the documents with specialized processing codes for use downstream. This Internal Revenue Manual (IRM) provides instructions for coding and editing international individual income tax returns for transcription and validation. IRM 3.11.3, Individual Income Tax Returns, must be used for ALL International returns. When specific international processing instructions are not provided in IRM 3.21.3, tax examiners will use the general processing instructions in IRM 3.11.3.

  2. Audience: Tax examiners in the Wage and Investment Division (W&I), Austin Submission Processing Service Center, Code & Edit Units are the primary users of this IRM.

  3. Policy Owner: The Director of Submission Processing is responsible for the policies in this IRM.

  4. Program Owner: The Code & Edit/ERS IMF Section of the Paper Processing Branch of Submission Processing is responsible for the procedures and all updates related to this IRM.

  5. Primary Stakeholders: Submission Processing (SP).

  6. Program Goals: To timely review and edit all returns received in Code & Edit (C&E).

Background

  1. This section of the Internal Revenue Manual (IRM) provides instructions for coding and editing individual income tax returns for transcription and validation. Special codes are used to perform specific functions. Editing is necessary because many returns are incomplete, contain invalid or misplaced entries, or are computed incorrectly.

  2. This IRM contains instructions for processing international returns using the following form types:

    • Form 1040, U.S. Individual Income Tax Return

    • Form 1040 (SP), Declaración de Impuestos de los Estados Unidos Sobre los Ingresos Personales

    • Form 1040-SR, U.S. Tax Return for Seniors

    • Form 1040-SR (SP), Declaración de Impuestos de los Estados Unidos para Personas de 65 Años de Edad o Más

    • Form 1040A, U.S. Individual Income Tax Return (tax year 2017 and prior only)

    • Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents (tax year 2017 and prior only)

    • Form 1040-NR, U.S. Nonresident Alien Income Tax Return

    • Form 1040-NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents (tax year 2019 and prior only)

    • Form 1040-SS, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico)

    • Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico)

    • Supporting forms and schedules for the forms listed above

    Reminder:

    IRM 3.11.3, Individual Income Tax Returns, must be used to process returns when specific instructions are not provided in this IRM.

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury regulations:

    • IRC 6201(a)

    • IRC 6213(b)

    • IRC 6402(a)

    • IRC 6511

  2. Policy Statements for Submission Processing are contained in IRM 1.2.1, Servicewide Policy Statements.

Responsibilities

  1. The Submission Processing Director is responsible for monitoring operational performance for the Submission Processing campus.

  2. The Document Perfection Operations Manager is responsible for monitoring operational performance for the Code and Edit operation.

  3. The Code & Edit Team Managers and Leads are responsible for performance monitoring and ensuring tax technicians have the tools to perform their duties.

  4. The tax technicians are responsible for following the instructions contained in this IRM, including all IRM procedural updates (IPU) posted to the SERP (Servicewide Electronic Research Program) website.

Program Management and Review

  1. Program Reports: The Monitoring Section under Submission Processing Program Management/Process Assurance monitors the Code & Edit reports.

  2. Program Effectiveness: The program goals are measured by the following reviews:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  3. Annual Review: The processes included in this manual are reviewed annually to ensure accuracy and promote consistent tax administration.

Terms and Definitions

  1. See Exhibit 3.21.3-20 for the glossary of frequently used terms.

Related Resources

  1. International Job Aid 2513-701, Coding and Editing International Income Tax Returns, was developed as a reference guide for this manual. This manual refers the tax examiner to clarifying information or exhibits in the Job Aid, where appropriate. When conflict between any referenced material and the IRM instructions occurs, the IRM instructions take precedence.

IRM Deviations

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

International Returns

  1. International tax returns are identified by the presence of one of the following:

    • An address outside the 50 United States and Washington D.C.

      Exception:

      This does not include APO(Army/Air Post Office)/DPO (Diplomatic Post Office)/FPO (Fleet Post Office) addresses

    • Form 390 (American Samoa), American Samoa Individual Income Tax Return

    • Form 482.0/Formulario 482 (Puerto Rico), Planilla de Contribución Sobre Ingresos de Individous

    • Form 1040CM (CNMI), Commonwealth of the Northern Mariana Islands Territorial Individual Income Tax

    • Form 1040 GUAM, Guam Individual Income Tax Return

    • Form W-2 from American Samoa (W-2AS)

    • Form W-2 from CNMI (W-2CM)

    • Form W-2 from Guam (W-2GU)

    • Form W-2 from Virgin Islands (W-2VI)

    • Form 499R-2/W-2PR (Puerto Rico Withholding)

    • Form 1040-NR, U.S. Nonresident Alien Income Tax Return

    • Form 1040-NR-EZ, U.S. Income Tax Returns for Certain Nonresident Aliens With No Dependents

    • Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico)

    • Form 1040-SS, U.S. Self-Employment Tax Return

    • Form 1042-S, Form SSA-1042S, or Form RRB-1042S

    • Form 2555, Foreign Earned Income

    • Form 2555-EZ, Foreign Earned Income Exclusion

    • Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa

    • Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)

    • Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests

    • Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands

    • Form 8804, Annual Return for Partnership Withholding Tax Under Section 1446

    • Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax

    • Form 8813, Partnership Withholding Tax Payment

    • Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)

    • Form 8854, Initial and Annual Expatriation Information Statement

    • Form 8898, Statement for Individuals Who Begin or End Bona Fide Residency in a United States Possession

    • Form 14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures

    • Form 14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures

    • Dual Status (any of the following):
      - Form 1040 and Form 1040-NR filed together for the same tax year

      Note:

      Do not treat as Dual Status if Form 1040 is filed with 1040-NR Schedule OI attached.


      - "Dual Status" or "D/S" indicated on the return
      - Taxpayer claims part year residence and part year non-residence.

      Caution:

      Always leave Form 1040 and Form 1040-NR for the same taxpayer together.

    • Nonresident Alien (NRA): Either primary or both taxpayers are Nonresident Aliens

      Exception:

      Do not treat as a nonresident alien if the primary taxpayer is a Nonresident Alien (NRA) without a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) and the secondary taxpayer has an SSN/ITIN and is reporting income.

    • International Tax Treaty: taxpayer indicating exemption or exclusion of tax and/or income due to an International Tax Treaty

      Exception:

      Do not treat as international if the taxpayer claims exemption due to an American Indian treaty and no other international condition exists.

    • Treaty Trader

    • Fulbright Grantee

    • IRC 871, IRC 893, IRC 911, IRC 913, IRC 931, IRC 932, IRC 933, IRC 934 or IRC 935 is notated anywhere on the return

    • Notation of "Streamlined" on the return or other Streamlined certification

    • "Relief for Certain Former Citizens" , "Relief" , "Expat" , "FAQ 24" , "FAQ 25" , or something similar is written on return and/or attachments

    • Copy of Certificate of Loss of Nationality (CLN) is attached

    • Taxpayer specifically mentions "Relief" , "Former Citizen" , "Expatriate process" , "FAQ 24" , "FAQ 25" , or something similar in an attached letter

    Caution:

    If none of the International conditions listed above are present, consider it a domestic return and process it accordingly.

  2. If a return has any of the following characteristics and does not have an LB&I stamp indicating LB&I has already reviewed it, route the return to Stop 4301 AUSC:

    • "Relief for Certain Former Citizens", "Relief", "Expat", “FAQ 24”, “FAQ 25”, or something similar is written on return and/or attachments.

    • Form 8854 is attached.

    • Copy of Certificate of Loss of Nationality (CLN) is attached.

    • Taxpayer specifically mentions "Relief", "Former Citizen", "Expatriate process", “FAQ 24”, “FAQ 25”, or something similar in an attached letter.

    • Form 8898 is attached.

  3. Do not treat returns that convert income paid in foreign currency to U.S. currency as international returns unless additional international criteria are present.

    Example:

    Canadian dollars converted to U.S. dollars

  4. If a numbered return assigned international File Location Code (FLC) 20 or 21 does not meet the definition of an international return, edit Action Code "610" to have a new Document Locator Number (DLN) assigned.

Form 1042 and Form 1042-S

  1. Form 1042 and Form 1042-S are used by withholding agents to report tax withheld at the source on certain income paid to foreign persons (nonresident alien individuals, foreign partnerships, foreign corporations or foreign trusts and estates) that is not effectively connected with the conduct of a trade or business in the United States. Form 1042-S is a withholding document that identifies, by type, income that is subject to U.S. tax withholding and that is paid to nonresident aliens by U.S. payers.

  2. See Exhibit 3.21.3-2, Form 1042-S Income Codes, to determine where the provided Income Code is to be reported on Form 1040-NR.

  3. If Form 1042-S is attached to Form 1040:

    If And Then
    Refund return and the only income is from the Form 1042-S Both are true:
    • Taxpayer does not state they are a U.S. resident alien, and

    • Taxpayer does not provide a copy of their resident alien card.

    Correspond for the filer's U.S. status using Form 9143, box 24.
    Refund return and the only income is from the Form 1042-S Either is true:
    • Taxpayer states they are a U.S. resident alien, or

    • Taxpayer does provide a copy of their resident alien card.

    1. Delete Form 1042-S withholding from line 25d

    2. Edit Form 1042-S withholding to the dotted portion of line 33.

    Worldwide income is reported or the return is other than a refund  
    1. Delete Form 1042-S withholding from line 25d

    2. Edit Form 1042-S withholding to the dotted portion of line 33.

International Filers Overview

  1. Individuals may be expected to file international returns for a variety of conditions. More than one condition may be met by a single taxpayer. Generally:

    • Taxpayers who are treated as resident aliens file Form 1040.

    • Taxpayers who are treated as nonresident aliens file Form 1040-NR.

      Note:

      Special filing requirements often apply to U.S. territories.

  2. U.S. citizens living/traveling outside of the United States: They are generally required to file U.S. income tax returns on which they must report their worldwide income.

  3. Resident Alien: A foreign individual who meets either the green card test or the substantial presence test for the calendar year.

  4. Nonresident Alien: A foreign individual who does not meet either the green card test or the substantial presence test for the calendar year, unless:

    1. They choose to be treated as a resident alien for part of the calendar year by making the First-Year Choice (see IRM 3.21.3.3.2 (12), or

    2. They are a nonresident married to a U.S. citizen or resident alien. They and their spouse may be able to make a joint election under IRC 6013(g) or (h) to treat the individual as a resident alien for the entire calendar year. See IRM 3.21.3.3.2 (12) and IRM 3.21.3.3.2 (13) below.

  5. Green Card Test: The individual is a resident alien once they are issued a Permanent Resident Card, also known as a green card as a lawful permanent resident of the U.S. Lawful permanent residency continues unless revoked or determined to be abandoned. A lawful permanent resident may be treated as a nonresident alien for U.S. income tax purposes if they are both a U.S. resident alien and a resident of a foreign country under its laws. In this situation, the taxpayer would claim treatment as a resident of the foreign country under the tie-breaker rules of an income tax treaty.

  6. Substantial Presence Test: The individual is treated as a resident alien for the calendar year if they are physically present for at least:

    1. 31 days during the current calendar year; and

    2. 183 days during the 3-year period that includes the current calendar year and 2 calendar years immediately before that, counting:
      1) All the days of physical presence in the calendar year,
      2) 1/3 of days of physical presence in the first year prior to the current calendar year, and
      3) 1/6 of the number of days of physical presence in the second year prior to the current calendar year.

  7. Exceptions to the Substantial Presence Test: The following days of presence in the United States do not count for the substantial presence test:

    • Days commuting to work in the United States from a residence in Canada or Mexico if they "commute regularly." They "commute regularly" if they commute to work in the United States on more than 75% of the workdays during a working period in the current year.

    • Days in the United States for less than 24 hours when in transit between two places outside the United States.

    • Days in the United States as a crew member of a foreign vessel engaged in transportation between the United States and a foreign country or a U.S. territory.

      Note:

      This exception doesn't apply if otherwise engaged in any trade or business in the United States on those days.

    • Days they intended to leave, but couldn't leave the United States because of a medical condition or medical problem that arose while in the United States. Whether they intended to leave the United States on a particular day is determined based on all the facts and circumstances.

      Note:

      See IRM 3.21.3.42.5 for information on determining physical presence.

    • Days the individual is an "exempt individual."

  8. Exempt Individuals for the Substantial Presence Test: An individual is an "exempt individual" if any of the following are true:

    • An individual is temporarily present in the United States as a foreign government-related individual under an A or G visa.

      Exception:

      Excludes household staff of a foreign government-related individual present in the United States under an A-3 or G-5 visa.

    • A teacher or trainee temporarily present in the United States under a J or Q visa. See IRM 3.21.3.3.2 (9) and IRM 3.21.3.3.2 (10) for additional information.

    • A professional athlete temporarily present in the United States to compete in a charitable sports event.

  9. An individual is not an exempt individual as a teacher or trainee if they were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years, unless all are true:

    • The individual was exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 preceding calendar years

    • A foreign employer paid all compensation during the current year

    • They were present in the United States as a teacher or trainee in any of the prior 6 years

    • A foreign employer paid all compensation during each of the preceding 6 years the individual was present in the United States as a teacher or trainee.

  10. A student temporarily present in the United States under an F, J, M, or Q visa is not an exempt individual as a student in the current year if they have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless both are true:

    • The individual establishes that they do not intend to reside permanently in the United States.

    • They substantially complied with the requirements of their visa.

  11. Closer Connection Exception: Individuals who meet the substantial presence test may still be treated as nonresident aliens if all of the following are true:

    1. They are present in the United States for fewer than 183 days during the current calendar year

    2. They maintain a tax home in a foreign country during the year

    3. They have a closer connection to that country than to the United States

    4. They timely file Form 8840, Closer Connection Exception Statement for Aliens, claiming to have a closer connection to a foreign country or countries.

      Note:

      An individual may not claim a closer connection to a foreign country if they have applied for status as a lawful permanent resident of the United States or have an application pending for adjustment of status. Some tax treaties provide special rules for determining residency.

  12. First-Year Choice: A foreign individual who does not meet the green card test or the substantial presence test may be treated as a resident alien for part of a calendar year by making the First-Year Choice.

  13. Married to a U.S. citizen or resident alien: A foreign individual who does not meet the green card test or substantial presence test may be able to choose to be treated as a resident alien if the individual is a nonresident alien married to a U.S. citizen or resident alien, the individual and their spouse may be able to make a joint election under IRC 6013(g) or (h).

  14. Individuals from a U.S. Territory:

    1. American Samoa, see IRM 3.21.3.75.

    2. Guam, see IRM 3.21.3.76.

    3. Commonwealth of Northern Mariana Islands, see IRM 3.21.3.77.

    4. U.S. Virgin Islands, see IRM 3.21.3.78.

    5. Puerto Rico, see IRM 3.21.3.79.

  15. Effectively Connected Income: Nonresident aliens are taxed on both:

    1. U.S. source income if the U.S. tax due has not been fully withheld

    2. Income effectively connected with a U.S. trade or business.

  16. Tax Treaties: The U.S. has income tax treaties with a number of countries. Under these treaties, nonresident aliens who are residents of the foreign country may be taxed at a reduced rate or exempt from U.S. income taxes on certain types of income from sources in the United States. An individual is a resident of a foreign country under an income tax treaty if they are treated as a resident under the domestic laws of that country for income tax purposes. Some treaties include requirements beyond citizenship to establish residency for treaty purposes, such as physical presence within the purported residence country. See IRM 3.21.3.82.7 for more information about tax treaties.

  17. Dual-Status Taxpayers: An individual who is both a resident alien and nonresident alien in the United States within the same tax year. This usually occurs in the year the taxpayer arrived in or departed from the United States. The taxpayer will submit both Form 1040 and Form 1040-NR with Dual-Status Return written across the top of the return for the tax year. The form filed as the return is based on the taxpayer's residence on the last day of the year.

    1. If the individual is a resident of the U.S. on the last day of the tax year, they will file Form 1040 with a statement attached (such as a Form 1040-NR) for the portion of the year that they were a nonresident alien.

    2. If the individual is not a resident of the U.S. on the last day of the tax year, they will file Form 1040-NR with a statement attached (such as a Form 1040) for the portion of the year they were a resident alien.

  18. U.S. Citizens and U.S. Resident Aliens Living Abroad Who Qualify for the IRC 911 Foreign Earned Income Exclusion: A taxpayer who meets the specific requirements of IRC 911(b)(2)(D) may claim an exclusion of foreign earned income up to the maximum allowed for the tax year and either the housing exclusion or the housing deduction if the taxpayer has a tax home in a foreign country or countries and the taxpayer is one or more of the following:

    1. A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period (regardless of physical presence) that includes an entire taxable year

    2. A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with an applicable nondiscrimination clause, and who is a bona fide resident of a foreign country for an uninterrupted period that includes an entire year

    3. A U.S. resident alien who has been physically present in a foreign country or countries for 330 days during a period of 12 consecutive months

Visas Overview

  1. A U.S. visa allows a foreigner to live permanently in the United States (immigrant visa) or travel to the United States on a temporary basis for specific purposes and periods of time (nonimmigrant visa). See Exhibit 3.21.3-8 for a list of nonimmigrant visa types.

  2. Most, but not all, nonimmigrant visa holders are taxed as nonresident aliens.

    1. A nonresident alien is taxed on all United States source income and on all income that is effectively connected with the conduct of a trade or business in the United States. Unlike U.S. citizens, nonresident aliens are not taxed on non-effectively connected foreign source income.

    2. Resident aliens are generally taxed on worldwide income, like U.S. citizens.

U.S. Income Reporting Requirements Overview

  1. United States citizens and resident aliens: They are generally required to file Form 1040 and must report 100% of their worldwide income. Worldwide income is income from ALL sources, including foreign and U.S. income reported on Form 1040, lines 1 through 7 and Schedule 1, lines 1 through 9. For information on identifying resident aliens, see IRM 3.21.3.3.2, International Filers Overview.

  2. Nonresident Aliens: They are generally required to file Form 1040-NR to report only:

    • U.S. source income, if the amount of tax withheld didn't satisfy the tax due

    • Income effectively connected with a U.S. trade or business

  3. A nonresident alien not otherwise engaged in a U.S. trade or business is not required to report U.S. source income that was withheld properly at the source or any foreign source income that is not effectively connected with a U.S. trade or business, but may file to claim a refund for overpaid taxes. Generally, income received from U.S. payers constitutes U.S. source income. Income received from foreign payers may also constitute U.S. source income in certain circumstances, such as income received for services performed in the U.S. or income received for the use of intangibles in the U.S.

    Exception:

    U.S. tax laws exempt nonresident aliens from U.S. taxation on interest earned on certain deposits, which are not effectively connected with a trade or business.

  4. U.S. source income is reported on Form 1042-S, Form W-2, Form SSA-1042S, Form RRB-1042S, Form 1099 series, Form 8805, Form 8288-A, or a statement of income.

  5. U.S. source income which is not effectively connected with a U.S. trade or business is generally taxed at 30% unless a tax treaty exists between the U.S. and the taxpayer's foreign country of residence that either reduces the rate or exempts the income.

  6. When Scholarship/Fellowship grant income is paid to a nonresident alien from a country that does not have a tax treaty with the United States:

    • It is not exempted.

    • It is reported on Form 1042-S and attached to the return, if paid by a U.S. payor.

    • It must be reported on Schedule 1, line 8r.

    • If the individual is a "degree candidate," amounts paid to a qualified educational institution for tuition and education related expenses (such as fees, books, supplies, and equipment) may be omitted from Schedule 1, line 8r, so that only part of the scholarship is reported.

    • If the individual is not a "degree candidate," the full amount of the scholarship or fellowship is generally taxable.

  7. When Scholarship/Fellowship grant income is paid to a resident alien (because of the substantial presence test) or nonresident alien who was a resident of a tax treaty country immediately before coming to the U.S. to study:

    • It may be fully or partly excluded under a tax treaty.

    • It is reported on Form 1042-S and attached to the return, if paid by a U.S. payor.

    • It must be reported on Schedule 1, line 8r, if taxable, or on Form 1040-NR, line 1k, if exempt by treaty.

    • Schedule OI, Question "L," must be answered.

    • The validity of the tax treaty benefit claimed must be verified.

Form 1040 with Schedule 1 and Form 2555 or Form 2555-EZ Attached

  1. For processing instructions, see IRM 3.21.3.42

  2. Form 2555 is valid for all tax years. Form 2555-EZ is valid for TY18 and prior.

  3. Form 2555 must be attached if any of the following indicators are on Form 1040 or Schedule 1:

    • IRC 911 exclusion

    • Notation of Form 2555 or Form 2555-EZ

    • Foreign Housing Exclusion on Schedule 1, line 8d

    • Foreign Earned Income Exclusion on Schedule 1, line 8d

    • Foreign Housing Deduction on Schedule 1, line 24j

  4. A taxpayer with foreign earned income is entitled to claim the following on Form 2555:

    • Foreign Earned Income Exclusion (Part VII and VIII), and/or

    • Housing Deduction, if housing is paid for with earnings from self-employment (Parts VI and IX), or

    • Housing Exclusion, if housing is paid for with employer-provided amounts, such as wages, housing allowance, etc.(Parts VI and VIII).

  5. A U.S. citizen or U.S. resident alien living and working in a foreign country may use Form 2555 to:

    1. Exclude a limited amount of their foreign earned income. For TY 2022, this amount is $112,000. See IRM 3.21.3.85.3.2.4 (1) for prior year amounts.

    2. Claim a housing exclusion or deduction.

  6. For TY18 and prior, a U.S. citizen or U.S. resident alien living and working in a foreign country may use Form 2555-EZ if:

    1. They have earned wages/salaries in a foreign country below the maximum allowable for the year. See IRM 3.21.3.85.3.2.5.1 (1) for prior year amounts.

    2. They did not have any income from self-employment.

    3. They did not have any business or moving expenses for the year.

    4. They are not claiming the housing exclusion or deduction.

    5. They are filing a calendar-year return that covers a 12 month period.

  7. Foreign earned income is any income earned for personal services performed in a foreign country or countries. For this purpose, a foreign country is any territory under the sovereignty of a government other than the United States.

    Note:

    It does not include U.S. territories.

  8. Unearned income may not be excluded on Form 2555 or Form 2555-EZ. To avoid double taxation, foreign taxes paid on the unearned foreign income can be:

    1. Claimed as a credit on Form 1116, or

    2. Reported as a deduction on Schedule A, line 6.

  9. U.S. citizens and resident aliens living and working outside the United States are generally required to file a U.S. income tax return to report worldwide income.

  10. In general, to qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction under IRC 911, taxpayers must be:

    1. A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes both an entire tax year and part of the year of the return.

    2. A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes both an entire tax year and a part of the year of the return, or

    3. A U.S. citizen or resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months that includes part of the year of the return.

    Note:

    Due to additional taxpayer requirements, taxpayers may also reference the tax home test, or indicate that the exclusion was prorated based on the qualifying period.

  11. Wages paid by the U.S. government to its employees are not foreign earned income, and an individual cannot claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on those wages.

U.S. Territories - General Information

  1. The following are the five key U.S. Territories:

    1. American Samoa (AS)

    2. Commonwealth of Northern Mariana Islands (CNMI)

    3. Guam (GU)

    4. Puerto Rico (PR)

    5. United States Virgin Islands (USVI)

  2. Special tax rules apply to bona fide residents of these five key territories. The taxpayer must be a United States citizen or resident alien and a bona fide resident of one of AS, CNMI, GU, PR, or the USVI. A bona fide resident of one of these territories is an individual taxpayer who:

    • Does not have a tax home outside the relevant territory.

    • Does not have a closer connection to the United States or to a foreign country.

    • Meets the presence test. To satisfy the presence test for the entire year, the taxpayer must meet ONE of the conditions in the table below.

    Bona Fide Residence Presence Test for United States Territories
    Present in the relevant territory for at least 183 days during the tax year.
    Present in the relevant territory for at least 549 days during the three-year period consisting of the current taxable year and the preceding two tax years, provided the taxpayer was also present in the territory for at least 60 days during each tax year of the three-year period.
    Present in the United States for no more than 90 days during the tax year.
    Earned income (pay for personal services performed, such as wages, salaries or professional fees) from the United States of no more than $3,000.00 and was present for more days in the territory than the U.S. during the tax year.
    No significant connection to the U.S. during the tax year. Significant connections include a permanent home, voter registration, or spouse/minor child in the United States.

    Note:

    It is often difficult to determine bona fide residency based on the test above. Therefore, for purpose of processing income tax returns, if the only address on the return or attachments (including Form W-2 type statements) is that of a territory, treat as an indication that the taxpayer is a bona fide resident of that territory.

  3. Taxpayers who reside in any U.S. territory are generally not entitled to claim Earned Income Credit (EIC). See IRM 3.21.3.15.1.30.

  4. U.S. Service Members / Military Personnel: A service member's "state of legal residence" generally determines their residency for tax purposes. For non-tax purposes, U.S. service members have two types of "residency" : "home of record" and "state of legal residence."

    • A service member's "home of record" is the state where they joined the military and it is used to determine certain military benefits (for example, travel allowance back to the state when leaving the military).

    • A service member's "state of legal residence" is their permanent home, the state where they intend to live after leaving the military. All service members declare their state of legal residence with the Department of Defense or equivalent.

  5. Under the Service members Civil Relief Act of 2003 (SCRA), if a service member qualifies as a bona fide resident of a U.S. Territory in an earlier tax year, their absence from that territory during the current tax year in compliance with military orders will not affect their status as a bona fide resident. Similarly, being in a territory solely in compliance with military orders will not qualify a service member for bona fide residency status in that territory.

  6. Service Members Civilian Spouses / Military Spouses: In accordance with Military Spouses Residency Relief Act of 2009 (MSRRA), civilian spouses of active duty U.S. Service Members can choose to keep their prior residence or domicile for tax purposes. Under the MSRRA, if civilian spouses qualify as bona fide residents of a U.S. territory in an earlier tax year, their absence from that territory during the current year when accompanying the service member spouse who is relocating under military orders will not affect the civilian spouse's status as a bona fide resident. Similarly, being in a territory solely to accompany the service member in compliance with military orders will not qualify the civilian spouse for bona fide resident status in that territory. For additional guidance on when and how MSRRA applies to civilian spouses who are working in or claiming tax residency in a U.S. territory, see Notice 2010-30, Notice 2011-16 and Notice 2012-41.

Control of International Returns

  1. Unnumbered returns are batched according to the type of return. The type of return determines the File Location Code (FLC) where like returns are batched together for processing under a certain program code.

  2. International Returns will be assigned the following FLCs:

    1. FLC 20 will be assigned to any Form 1040, Form 1040-SR, Form 1040A (TY17 and prior), or Form 1040EZ (TY17 and prior) with any International criteria other than U.S. territories, including Form 2555 or Form 2555-EZ (TY18 and prior), and Form 1040-NR or Form 1040-NR-EZ (TY19 and prior).

    2. FLC 21 will be assigned to any Form 1040-PR or Form 1040-SS.

    3. FLC 21 will be assigned to any Form 1040, Form 1040-SR, Form 1040A (TY17 and prior), or Form 1040EZ (TY17 and prior) with any U.S. territory criteria as follows:

    • Territory address in the caption area

    • IRC 931

    • IRC 932

    • IRC 933

    • IRC 934

    • IRC 935

    • Form W-2AS, Form W-2GU, Form W-2VI, Form W-2CM, 499R-2/W-2PR

    • Form 4563

    • Form 5074

    • Form 8689

    • Form 8898

      Exception:

      All returns that have a valid Form 2555 or Form 2555-EZ (TY18 and prior) must be blocked under FLC 20.

  3. The following table contains the international programs worked in Code & Edit (C&E):

    Program Description
    46110 Form 1040 (Form 1040-SR) OTFP Current Year
    46112 Form 1040 (Form 1040-SR) Prior Year
    46114 Form 1040 (Form 1040-SR) Non Refund Current Year
    46115 Form 1040 (Form 1040-SR) - Dual Status
    46116 Form 1040 Conversions
    46117 Form 1040 (Form 1040-SR) - Streamlined Filing Compliance Procedures
    46120 Form 1040-NR (Effectively Connected) Current Year
    46123 Form 1040-PR/Form 1040-SS - RIVO
    46124 Form 1040-NR (Effectively Connected) Prior Year
    46127 Form 1040-PR OTFP Current and Prior Year
    46128 Form 1040-SS OTFP Current and Prior Year
    46140 Form 1040-NR (Non-Effectively Connected) Current Year
    46142 Form 1040-NR (Non-Effectively Connected) Prior Year
    46160 Form 1040-NR (SP) (Effectively Connected) Current Year
    46170 Form 1040 (Form 1040-SR) ITIN Current Year
    46172 Form 1040 (Form 1040-SR) ITIN Prior Year
    46175 Form 1040 (Form 1040-SR) ITIN - RIVO Current Year
    46180 Form 1040-NR (SP) (Non-Effectively Connected) Current Year
    46220 Form 1040 (Form 1040-SR) Full Paid Current Year
    46227 Form 1040-PR Full Paid Current Year
    46228 Form 1040-SS Full Paid Current Year
    46810 Spanish Form 1040 (Form 1040-SR) OTFP Current Year
    46812 Spanish Form 1040 (Form 1040-SR) OTFP-Prior Year
    46870 Spanish Form 1040 (Form 1040-SR) ITIN Current Year
    46910 Spanish Form 1040 Full Paid

Misblocked International Returns

  1. All documents in a block of work must be the same type of return. A misblocked return is a return found in a block with a different type of work.

  2. Rebatch returns that are blocked in the wrong FLC.

    Note:

    All returns that have a valid Form 2555 or Form 2555-EZ (TY18 and prior) must be blocked under FLC 20.

  3. If the return is unnumbered, code and edit the return and slot it into the appropriate program.

  4. If the return is numbered, edit Action Code "610" and attach Form 4227 with instructions "re-sort to FLC 20" or"re-sort to FLC 21," as appropriate.

    Note:

    Rebatch if a Domestic return has been numbered as International.

Uncomputed Returns

  1. An uncomputed return is one filed by a taxpayer who expects the IRS to compute their tax. Do not confuse an uncomputed return with a return where the taxpayer has computed no tax due.

  2. An uncomputed return can be identified when:

    1. Form 1040, Form 1040-SR, or Form 1040-NR has no entries on Lines 16, 17, 18, 22, 24, 34, 35a, 36, and 37.

    2. Form 1040-PR or Form 1040-SS has no entries on lines 6, 13, 14a, 15, and 16.

General Instructions for All International Forms

  1. The general instructions for all International returns are provided here. The general instructions in this section include:

    • Stamping Tax Examiner (TE) numbers

    • Action Trails

    • Attachments

    • Detached Documents

  2. Use Form 1040 instructions when processing Form 1040-SR, 1040(SP), and 1040-SR(SP)

  3. Form 1040A and Form 1040EZ are historical and must be converted to Form 1040.

  4. Form 1040-NR-EZ is valid for TY19 and prior only. Convert all Forms 1040-NR-EZ to Forms 1040-NR.

  5. Form 1040, Schedules 4, 5, and 6 are valid for TY18 only.

Stamping Tax Examiner (TE) Numbers

  1. For complete instructions, see IRM 3.11.3.3.1.

Action Trail

  1. For all international returns, see IRM 3.11.3.3.5 and Job Aid 2513-701 for complete instructions.

Attachments to Returns

  1. Examine all attachments to the return. Leave the attachments with the return unless specifically instructed otherwise. Refer to the Attachment Guide in Exhibit 3.21.3-1 for specific attachment-by-attachment instructions. Research either an attachment or a notation on the return, as appropriate.

    Note:

    If an attachment is not found in Exhibit 3.21.3-1, refer to Exhibit 3.11.3-1.

  2. For additional instructions, see IRM 3.11.3.3.6.

Detached Documents

  1. Always leave an Action Trail on the return when an attachment is removed.

    Example:

    When a form or letter is detached from a return, notations such as "Det F1040X" or "Det TP correspondence" must be made on the tax return.

  2. An Action Trail must also be written on the detached document (unless it is an original document).

  3. The following must always be edited on all detached items:

    • Tax period of the return in "YYMM" format

    • Form from which detached

  4. All of the following must be present or edited on all detached items:

    • Current date if current year return processed before ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, otherwise use the received date in "MMDDYY" format

      Note:

      For ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on a timely return with no received date, edit a date of "041823"

    • Taxpayer Name(s)

    • Primary/Secondary taxpayer’s identification number(s)

    • Taxpayer’s address

International Correspondence Procedures

  1. Correspondence is necessary when a return cannot be processed because it is incomplete or illegible. To determine all correspondence issues, you must use both IRM 3.11.3 and IRM 3.21.3 and follow line-by-line instructions.

  2. When the first correspondence condition is identified, correspond for all missing required forms, schedules, and/or withholding documentation, regardless of correspondence tolerances identified in the line-by-line instructions.

    Exception:

    Only correspond for Form 1116, Form 8283, Schedule 8812, and Schedule EIC when the tolerance in line-by-line IRM instructions is met.

  3. Do Not Correspond With A Taxpayer More Than One Time.

    Exception:

    Code & Edit will correspond a second time if the taxpayer sends back a return with a signature not located in the appropriate Sign Here area under the jurat. The taxpayer's signature must appear in the space provided under the jurat, unless the taxpayer arrowed their own signature to the appropriate place.

  4. For additional instructions, see IRM 3.11.3.5.1.

Correspondence When Sending Returns Back to the Taxpayer

  1. Signature Issues: A valid signature is an original signature that appears below a jurat statement.

    Exception:

    A signature is valid if the taxpayer arrows their own signature to the appropriate place.

  2. When the first correspondence condition is identified, correspond for all missing required forms, schedules, and/or withholding documentation, regardless of correspondence tolerances identified in the line-by-line instructions.

    Exception:

    Only correspond for Form 1116, Form 8283, Schedule 8812, and Schedule EIC when the tolerance in line-by-line IRM instructions is met.

  3. Route secured returns with a missing or invalid signature to Collections. Do not correspond.

  4. Returns missing a valid signature(s) will be sent back to the taxpayer via the following:

    Tax Form Correspondence Type
    Form 1040 Form 9143
    Form 1040-SR Form 9143
    Form 1040 (SP) Form 9143
    Form 1040-SR (SP) Form 9143
    Form 1040-NR Form 9143
    Form 1040-NR-EZ (TY19 and prior) Form 9143
    Form 1040A (TY17 and prior) Form 9143
    Form 1040EZ (TY17 and prior) Form 9143
    Form 1040-SS Form 13557 (English side)
    Form 1040-PR Form 13557 (Spanish side)

    Exception:

    Do not mail back numbered returns, disaster returns, Streamlined Filing Compliance Procedures returns, or signed returns missing documentary evidence.

  5. Sending other returns back to the taxpayer: The following table provides situations when the return should be sent back to the taxpayer:

    If Correspondence Issue Is: Then:
    Misfiled returns: a business (BMF) return filed on individual (IMF) tax form See IRM 3.11.3.6.2.16
    Loose Schedule H for TY23 Correspond with Notice 1208
    Current year loose Schedule H received on or before 04/18/2023 Correspond with Notice 1207
    Early filed Form 8288-A: Date of Transfer is for TY23 See IRM 3.21.3.15.1.28
    Missing or invalid signature See "Signature Issues" above
    Filer's U.S. status: Form 1040 with Form 1042-S See IRM 3.21.3.3.1 and IRM 3.21.3.15.1.28
    Filer’s U.S. status: Form 1040-NR indicating resident in the U.S. all year See IRM 3.21.3.82
    Form 1040-PR or Form 1040-SS filed with a U.S. Form W-2 See IRM 3.21.3.80
    Bona fide Puerto Rico resident with no U.S. filing requirement See IRM 3.21.3.79.1.1
    Bona fide Puerto Rico resident claiming Additional Child Tax Credit (Form 1040 or Form 1040A (2017 and prior)) See IRM 3.21.3.79.1.1
    Article XXV of the U.S.-Canada Income Tax Treaty claimed on Form 1040 and missing Form 1040-NR See IRM 3.21.3.15

  6. When sending the return back to the taxpayer for correspondence:

    1. Line through your TE number

    2. Remove Form 3471-E and any other internal documents, if attached

      Note:

      If second correspondence is required, remove the original Form 9143 or Form 13557.

    3. Do not detach attachments.

    4. Delete any IRS Received Date.

    5. If the address is missing, illegible or incomplete, perfect from an attached envelope or from a TY18 Schedule 6. If unable to perfect, research.

    6. If an international address and domestic address are both present, circle out International address and perfect the domestic address.

    7. When sending the return back only for a missing or invalid signature, edit an Action Trail indicating, "Returned for Signature" , along with the current date (i.e., Returned for Signature MMDDYY). If corresponding for additional items, add the correspondence form used and the boxes or items requested to the Action Trail (e.g., Returned for Signature, F9143 - 4, 13, MMDDYY). Do not leave an Action Trail if only a misfiled return is being sent back to the taxpayer.

    8. Stop editing the return.

    9. Complete Form 9143 or Form 13557.

    10. Attach the correspondence sheet to the return immediately below the caption area.

    11. Remove the return from the batch and place it in the designated area.

  7. When preparing Form 9143 or Form 13557:

    1. Write legibly to ensure that the taxpayer understands what information is being requested.

    2. Check the appropriate box(es).

    3. Complete all information required for each paragraph ( e.g., forms, lines, amounts, etc.)

    4. Edit money amounts in dollars and cents. Bracket negative amounts.

Correspondence When Not Sending Returns Back to the Taxpayer

  1. Complete all possible editing and identify all correspondence issues, when you are not sending the return back to the taxpayer.

  2. When the first correspondence condition is identified, correspond for all missing required forms, schedules, and/or withholding documentation, regardless of correspondence tolerances identified in the line-by-line instructions.

    Exception:

    Only correspond for Form 1116, Form 8283, Schedule 8812, and Schedule EIC when the tolerance in line-by-line IRM instructions is met.

  3. If the address is missing, illegible, or incomplete:

    1. Perfect from an attached envelope.

    2. If unable to perfect from an attached envelope, research.

    3. If an address cannot be found after research, see paragraph 4.

  4. When an address cannot be found through research:

    • Do not correspond.

    • Edit the local Campus address in the Caption area.

    • Follow No Reply instructions. See IRM 3.21.3.6.4.

  5. A correspondence action sheet (CAS) is a form used to generate a letter requesting information from a taxpayer. A CAS is used with a return that is not sent back to the taxpayer. The following CAS forms are used:

    1. Form 13900 is used to generate 4087C letters (International and Streamlined Filing Compliance Procedures returns). See Exhibit 3.21.3-15.

    2. Form 13975 is used to generate 2894C letter for Form 1040-SS and 2894SP letter for Form 1040-PR (International returns). See Exhibit 3.21.3-16.

    3. Form 3696-A is used to generate miscellaneous Correspondex (C) letters (e.g., Letter 369C used to deny reasonable cause).

  6. Prepare Form 13900 (Letter 4087C) or Form 13975 (Letter 2894C/Letter 2894SP) using the following steps:

    1. Write legibly.

    2. Check all appropriate boxes.

    3. Complete all information required for each paragraph selected (e.g., forms, lines, amounts, etc.)

    4. Edit money amounts in dollars and cents. Bracket negative amounts.

    5. On prior year returns only, edit the tax year in YYYY format in field (04).

    6. Always select the fax number paragraph applicable to your campus for paper returns.

  7. Prepare the CAS, and attach to the tax return face-up below the caption area.

  8. Edit Action Code "215" on all returns requiring correspondence if the return is not being mailed back to the taxpayer, unless Action Code "300" can be edited.

  9. If a received date is required and not present on the return, edit the received date before corresponding and see IRM 3.21.3.8 for received date editing instructions.

Replies to Correspondence

  1. Move all correspondence sheets to the back of the return. If second correspondence is required, remove Form 9143 or Form 13557.

  2. Ensure that the return has been perfected. See the Correspondence Action Table at IRM 3.21.3.6.5 for instructions to process "no reply" , "undeliverable" , and "incomplete reply" correspondence.

  3. Edit the received date on returns identified as Returned for Signature; following the instructions in IRM 3.21.3.8.1 (6).

  4. For additional "No Reply" instructions, see IRM 3.11.3.5.3.2.

No Reply/Incomplete Reply/Undeliverable Correspondence

  1. Move all correspondence sheets to the back of the return. If second correspondence is required, remove Form 9143 or Form 13557.

  2. Use the Correspondence Action Table and continue processing the return if any of the following are true:

    • Taxpayer does not provide ALL required information.

    • Correspondence is returned by the USPS as "undeliverable."

    • One or more correspondence conditions were not included when the first correspondence was sent.

  3. Edit CCC "U" on all no reply returns, except when either:

    1. The correspondence was not required, or

    2. One or more correspondence conditions were not included when the first correspondence was sent.

  4. When the correspondence sheet (Form 9143 or Form 13557) is not attached, assume all correspondence conditions were included when the correspondence was sent unless there is evidence to the contrary.

  5. If a no reply correspondence condition is not identified in IRM 3.21.3.6.5, Correspondence Action Table, edit CCC "U" and take no further action.

  6. If CCC "3" is required, edit it first.

Correspondence Action Table

  1. Form 1040:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Article XXV of the U.S.-Canada Income Tax Treaty and Form 1040-NR not attached Convert to Form 1040-NR.
    Bona fide resident of Puerto Rico filing Form 1040 or Form 1040A (TY17 and prior) "X" any exclusion pertaining to IRC 933 and continue processing.
    Line 25d - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form W-2, Form 1042-S, Form 8805, Form 8288-A and/or Form 8959 are not attached "X" line 25d.

    Caution:

    If a letter is attached signed by the U.S. Competent Authority, accept the letter as proof of Form 1042-S withholding and do not "X" line 25d.

    Line 25d - Early-filed Form 8288-A and Form 843 is not attached "X" line 25d.
    Line 25d - Filer’s U.S. Status and Form 1040-NR not attached Move amount on line 25d to dotted portion of line 33.
    Line 25d - SSA-1042S or RRB-1042S attached and no green card and/or declaration statement attached "X" line 25d.
    Line 33 (dotted portion) - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8689 is not attached "X" line 33.
    Loose Schedule H - Cannot determine if Schedule H should be filed loose or attached to a Form 1040
    • Process Schedule H with a dummied Form 1040. See IRM 3.11.3.46.15 and IRM 3.21.3.48.

    • If signature or documentary evidence missing, also edit CCC "3" .

    Loose Schedule H-PR - Cannot determine if Schedule H-PR should be filed loose or attached to a Form 1040-PR
    • Process Schedule H-PR with a dummied Form 1040-PR. See IRM 3.21.3.48.

    • If signature or documentary evidence missing, also edit CCC "3" .

  2. Schedule 1:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Schedule 1, Line 9 - Form 2555 or Form 2555-EZ (TY18 and prior) is not attached and one or more of these indications are present:
    • IRC 911

    • Notation of Form 2555 or Form 2555-EZ (TY18 and prior)

    • Foreign Earned Income Exclusion (Schedule 1, line 8d)

    • Foreign Housing Exclusion (Schedule 1, line 8d)

    • Foreign Housing Deduction (Schedule 1, line 24j)

    1. "X" Schedule 1, line 9 and line 25, and

    2. Edit CCC "U" .

    Note:

    If there is no other foreign aspect of the return, rebatch the coded return as domestic.

    Schedule 1, Line 9 - Incomplete Treaty information "X" Schedule 1, line 9 and ensure amount is present on line 1a, Form 1040.
    Schedule 1, Line 9 - IRC 893 and the number of the Executive Order and written evidence not attached "X" Schedule 1, line 9.
    Schedule 1, Line 9 - Sec. "965" noted and "IRC 965 Transition Tax Statement" is not attached
    • Edit RPC "F" .

    • TY17 only: also edit Action Code "300" .

  3. Form 2555 and Form 2555-EZ (TY18 and prior):

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    If any of the following are missing or incomplete:
    • page 1

    • page 2

    • page 3

    1. "X" Schedule 1, line 9 and line 25,

    2. "X" Form 2555 or Form 2555-EZ (TY18 and prior), and

    3. Edit CCC "U"

    Note:

    If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Bona Fide Residence or Physical Presence Dates are missing
    1. "X" Schedule 1, line 9 and line 25,

    2. "X" Form 2555 or Form 2555-EZ (TY18 and prior), and

    3. Edit CCC "U" .

    Note:

    If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Taxpayer enters beginning and ending dates that do not include part of the tax year of the return
    1. "X" Schedule 1, line 9 and line 25,

    2. "X" Form 2555 or Form 2555-EZ (TY18 and prior), and

    3. Edit CCC "U" .

    Note:

    If the deleted Form 2555 or Form 2555-EZ (TY18 and prior) is the only foreign aspect of the return, rebatch the coded return as domestic.

    Joint return with an indication each spouse has their own income and only one Form 2555 or Form 2555-EZ (TY18 and prior) is attached
    1. "X" Schedule 1, line 9 and line 25,

    2. "X" Form 2555 or Form 2555-EZ (TY18 and prior), and

    3. Edit CCC "U" .

    Note:

    If the deleted Form 2555 or Form 2555-EZ (TY18 and prior) is the only foreign aspect of the return, rebatch the coded return as domestic.

    Exception:

    If the joint filers are a missionary team, divide the income equally between the two filers on separate Forms 2555.

  4. Form 2555-EZ Only (TY18 and prior):

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Form 2555-EZ (TY18 and prior) is attached and any of the following is claimed:
    • Foreign earned income is more than the maximum allowed for the tax year

    • Self-employment income

    • Business/moving expenses

    • Foreign housing exclusion or deduction

    • Other than a calendar year return that covers a 12-month period

    1. "X" Schedule 1, line 9 and line 25,

    2. "X" Form 2555-EZ (TY18 and prior), and

    3. Edit CCC "U" .

    Note:

    If the deleted Form 2555 or Form 2555-EZ (TY18 and prior) is the only foreign aspect of the return, rebatch the coded return as domestic.

  5. Form 4563 or IRC 931:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Form 1040 indicates IRC 931 or Income from American Samoa and Form 4563 is not attached
    1. "X" Schedule 1, line 9 and line 25, and

    2. Edit CCC "U" .

  6. Form 1040-PR and Form 1040-SS:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Form W-2 attached and Form 1040 not filed Convert.
    Part I, line 3 has an amount and Part V is missing
    1. Divide Self-Employment Tax amount by .153 to determine the subtotal amount.

    2. Divide the subtotal amount by .9235 to determine the total self-employment income amount.

    3. Prepare a dummy Part V for the primary taxpayer if the Social Security Wages are $147,000 or less for TY22.

      Note:

      For prior year, see IRM 3.21.3.85.3.3.1

      .

    4. Edit the total self-employment income amount on Part V, line 3.

    Part I, Line 4 has an amount, and Schedule H or Schedule H-PR is not attached. "X" Part I, line 4.
    All are true:
    • Part I, line 12 has a non-zero amount

    • The dotted line by Part I, line 12 has an indication of "Form 8959"

    • Form 8959 is not attached

    "X" Part I, line 12.
    One Part V is submitted for 2 taxpayers
    1. Divide Self-Employment Tax amount by .153 to determine the subtotal amount.

    2. Divide the subtotal amount by .9235 to determine the total self-employment income amount.

    3. Prepare a dummy Part V for the primary taxpayer if the Social Security Wages are $147,000 or less for TY22.

      Note:

      For prior year, see IRM 3.21.3.85.3.3.1

      .

    4. Edit the total self-employment income amount on Part V, line 3.

  7. Form 1040-NR, Page 1:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Filed for two taxpayers: Two names present, two incomes reported, and two signatures
    1. Circle out secondary taxpayer,

    2. Edit CCCs "3" , "U" , and "Y" , and

    3. Edit action trail: "no reply two taxpayers."

    Invalid treaty information provided, or taxpayer does not reference a valid treaty benefit
    1. "X" the exclusion amount,

    2. Ensure the amount is included in lines 1a - 9, and

    3. Edit CCC "U" .

  8. Form 1040-NR, Page 2:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Line 25d is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and supporting Form W-2 series, Form 1099 series, Form 4852, Form 8959, or supporting documentation is not attached "X" line 25d.

    Note:

    DO NOT edit CCC "U" .

    Line 25e - Section 1446 credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8805 or similar withholding document is not attached "X" line 25e.

    Note:

    DO NOT edit CCC "U" .

    Line 25f - Entry is present and Form 8288-A is not attached "X" line 25f.

    Note:

    DO NOT edit CCC "U" .

    Line 25f - Early-filed Form 8288-A and Form 843 is not attached "X" line 25f.

    Note:

    DO NOT edit CCC "U" .

    Line 25g shows an entry and Form 1042-S, Form SSA-1042S, or Form RRB-1042S is not attached "X" line 25g.

    Note:

    DO NOT edit CCC "U" .

    Caution:

    If a letter is attached signed by the Competent Authority, accept the letter as proof of Form 1042-S withholding and do not "X" line 25g.

  9. Form 1040-NR, Schedule A (Sequence 7A - Itemized Deductions):

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Line 3 -
    • Amount present more than $500 and Form 8283 is not attached

    • $20,000 or more, Art indicated on Form 8283, and separate appraisal not attached

    • $500,000 or more, and separate appraisal not attached

    • Form 8283, page 2, has significant entries but not signed

    "X" Line 3.
    Line 6 - Entry is present and Form 4684 is not attached
    1. "X" line 6, and

    2. Edit CCC "U" .

  10. Form 1040-NR, Schedule NEC (Sequence 7B - Tax on Income Not Effectively Connected With a U.S. Trade or Business)

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Cannot determine correct country of permanent address
    1. Multiply the gross not effectively connected income (sum of 13a, 13b, 13c, and 13d) by 30%, and

    2. Edit the result to Form 1040-NR, page 2, line 23a.

  11. Dual-Status Returns:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    If a determination cannot be made about which return to process or the "Dual-Status Statement" is missing Edit CCC "U" ,and do one of the following:
    1. When both Form 1040, and Form 1040-NR or Form 1040-NR-EZ are present, process Form 1040-NR, or convert Form 1040-NR-EZ to Form 1040-NR and process, as the "Dual Status Return," and use the Form 1040 as the "Dual Status Statement."

    2. When only one form is present, always process as a Form 1040-NR.

      Note:

      Dummy Form 1040-NR, if missing.

    Filing Status Code (FSC) is 2 and both taxpayers have income
    1. Circle out the name of the secondary taxpayer,

    2. Edit CCCs "3," "U" , and "Y" , and

    3. Edit action trail: "no reply with two incomes."

  12. Form SSA-1042S and/or Form RRB-1042S:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Withholding claimed and no U.S. documentation submitted
    1. "X" withholding amount and income where found,

    2. Edit CCC "3," "U" , and "Y" , and

    3. Edit action trail: "SSA/RRB-1042S" .

  13. For additional no reply instructions, see IRM 3.11.3.5.3.2.

Editing for ALL International Returns

  1. Editing prepares returns and attachments for transcription and computer processing.

  2. In addition to the following subsections, see IRM 3.11.3.4.1 - 3.11.3.4.2.6.

Transcription Lines (T-Lines) and Transcription Compute Lines (T-Compute Lines)

  1. For complete instructions, see IRM 3.11.3.3.2.

Sequence of Transcribed Schedules and Forms

  1. In the upper right margin of each form or schedule is a preprinted number called a sequence code. The Integrated Submission and Remittance Processing (ISRP) operators transcribe forms and schedules by their sequence code. ISRP sequence codes range from 01 through 78.

  2. Any form or schedule with a sequence number between 01 and 78 that is not transcribed must be deleted. See the table in IRM 3.21.3.7.2 (11) for a list of the sequence codes for all transcribed schedules and forms.

  3. Delete any document, form, or schedule that will not be transcribed when there is a transcribed form/schedule after it. For a large number of non-transcribed forms, "X" the top page and combine the remaining pages together with a rubber band, staple, or clip. Leave all non-transcribable forms/schedules intact after the last transcribed page.

    Note:

    Form 8938, Statement of Specified Foreign Financial Assets is transcribed in a separate program. Refer to Exhibit 3.21.3-1

    .

  4. Delete any form that shares a sequence number with a transcribed form.

    Note:

    Examples include, but are not limited to, the following:

    Form or Schedule Sequence Number
    Form 2106 54A (TY07 and prior)
    Form 3468 52 (TY09 and prior)
    Form 3903 62 (TY10 and prior)
    Form 4563 68 (TY18 and prior)
    Form 5884-B 65
    Form 8621 69
    Form 8801 74 (TY19 and prior)
    Form 8829 66 (TY09 and prior)
    Form 8862 43A
    Form 8949 12A (TY18 and prior)
    Schedule D-1 12A (TY10 and prior)

  5. "X" a transcribed schedule or form if it is blank or has no significant T-line entries, unless specifically instructed otherwise.

    Exception:

    Do not "X" Form 8938 when there are no significant entries on T-Lines.

  6. If any schedule or form is attached with "Alt Min Tax" , "AMTCR" , "AMT" or "Alternative Minimum Tax" or similar statement notated across the top, "X" the form or schedule.

  7. Delete duplicate forms or schedules with identical amounts that are filed for the same taxpayer.

  8. For transcribed forms or schedules with multiple pages, ensure the pages are together and in the proper order (page 1, page 2, etc.).

  9. Arrange Schedules 1 through 3 in sequential order behind Form 1040 or Form 1040-NR. When processing Form 1040-NR, keep Schedule A, Schedule NEC, and Schedule OI together as page 1, page 2, and page 3 of Sequence 07.

    Exception:

    When a transcribed form or schedule is found on the back side of Form 1040 or Form 1040-NR, it is not necessary to photo copy and move behind Schedules 1-3.

  10. Leave Form W-2, Form 1099, other U.S. withholding documents, Form 1040-V, taxpayer statements, deposit slips, small forms, or other items where they were found, if they do not obstruct T-lines or any part of the caption area.

  11. List of sequence codes for all transcribed schedules and forms:

    Note:

    If the return is converted, refer to the form type of the converted return.

    Forms/Schedules Sequence Code 1040 1040-NR 1040-PR/1040-SS
    Schedule 1 01 Yes Yes No
    Schedule 2 02 Yes Yes No
    Schedule 3 03 Yes Yes No
    Schedule A,
    Form 1040
    07 Yes No No
    Schedule A, Form 1040-NR 7A No Yes No
    Schedule NEC 7B No Yes No
    Schedule OI 7C No Yes No
    Schedule B 08 Yes No No
    Schedule C or Schedule C-EZ (TY18 and prior) 09, 10, 11 Yes Yes No
    Schedule D 12 Yes Yes No
    Form 8949 (TY19 and later) 12A Yes Yes No
    Schedule E 13 Yes Yes No
    Schedule F 14, 15 Yes Yes No
    Schedule R 16 Yes No No
    Schedule SE 17, 18 Yes Yes (only Sequence Code 17) Yes
    Form 1116 19 Yes Yes No
    Schedule J 20 Yes Yes No
    Form 2441 21 Yes Yes No
    Form 3800 22 Yes Yes No
    Form 4136 23 Yes Yes No
    Form 4137 24, 25 Yes Yes (only sequence code 24) No
    Form 4684 26 Yes Yes No
    Form 4797 27 Yes Yes No
    Form 4972 28 Yes Yes No
    Form 5329 29, 30 Yes Yes (only sequence code 29) No
    Form 6198 31 Yes Yes No
    Form 6251 32 Yes Yes No
    Form 8615 33 Yes Yes No
    Form 2555 and Form 2555-EZ (TY18 and prior) 34, 35 Yes No No
    Form 4835 37 Yes Yes No
    Form 8839 38 Yes Yes No
    Form 8853 39 Yes Yes No
    Form 8814 40, 41, 42 Yes Yes No
    Schedule EIC 43 Yes No No
    Schedule H and Schedule H-PR 44, 45 Yes Yes (only Sequence Code 44) Yes
    Schedule 8812 (TY11 and prior it was Form 8812) 47 Yes Yes No
    Form 8606 48, 49 Yes Yes No
    Form 8863 50 Yes No No
    Form 4952 51 Yes Yes No
    Form 8889 52, 53 Yes Yes (only sequence code 52) No
    Form 8880 54 Yes Yes No
    Form 8995 (TY19 and later) 55 Yes Yes No
    Form 8995-A (TY19 and later) 55A Yes Yes No
    Form 8995-A, Schedule C (TY20 and later) 55D Yes Yes No
    Form 8888 56 Yes Yes Yes
    Form 8978 (TY19 and later) 57 Yes No No
    Form 5405 58, 59 Yes No No
    Form 8917 (TY20 and prior) 60 Yes Yes No
    Form 8919 61, 62 Yes Yes (only sequence code 61) Yes
    Form 8958 63 Yes Yes No
    Form 461 (TY21 and later) 64 Yes Yes No
    Form 8941 65, 66 Yes Yes (only sequence code 65) No
    Form 6252 (TY19 and later) 67 Yes Yes No
    Form 8910 68 Yes Yes No
    Form 8936 69 Yes Yes No
    Form 8867 70 Yes Yes Yes
    Form 8959 71 Yes Yes Yes
    Form 8960 72 Yes Yes No
    Form 8962 73, 74 Yes Yes No
    Form 965-A (TY19 and later) 76 Yes No No
    Form 9000 (TY21 and later) 77 Yes Yes Yes
    Schedule LEP (TY19 and later) 77A Yes Yes Yes
    Form 8997 (TY21 and later) 78 Yes Yes No
    Form 8938 938 Yes Yes No

Form 3471-E

  1. Edit money amounts on Form 3471-E in dollars only for all form types.

  2. Staple Form 3471-E to the last page of the tax return with Form 3471-E facing out.

Dollars and Cents Editing

  1. Allow the taxpayers to round or truncate (drop the cents) amounts.

  2. Use only dollar amounts when computing amounts on forms or schedules.

    Exception:

    Use dollars and cents when computing withholding and excess Social Security tax.

  3. For TY18 and prior, draw a vertical line between the dollars and cents figures when dollars or cents are in the wrong column:

    1. on each line that is to be transcribed, or

    2. down the entire front of the form or schedule

    Exception:

    It is not required to draw a vertical line when column(s) are not present and the dollars and cents have been separated by a decimal.

  4. Dollars and cents editing is required on certain T-lines if any of the following conditions exist:

    1. A substitute form is used with dollars and cents not clearly separated by a decimal point or slash.

      Exception:

      Do not draw a vertical line to separate dollars and cents when only dollar amounts are present on a dollars and cents T-line.

    2. An entry is illegible.

    3. When computing and editing an entry as directed by line-by-line instructions.

      Exception:

      It is not necessary to edit "00" to indicate no cents.

  5. The following line numbers require dollars and cents editing when adjusting or editing:

    1. Form 1040 - lines 24 through 38

    2. Form 1040-NR - lines 24 through 38

    3. Schedule 3 - lines 9 through 14

    4. Form 1040-PR - Part I, lines 6 through 16

    5. Form 1040-SS - Part I, lines 6 through 16

    6. Form 13900 and Form 13975

    7. Form 9143 and Form 13557

Action Codes

  1. An Action Code consists of three numeric characters and is used to reject a document and identify the reason for rejection.

  2. Edit Action Codes on page 1 of the return in the bottom center margin.

  3. Assign only one Action Code to a document. Edit Action Codes in the following priority:

    1. "300"

    2. "310"

    3. "4XX"

    4. "6XX"

    5. "2XX"

    6. "3XX"

  4. These Action Codes are for international processing:

    1. "215" - International correspondence

    2. "420" - Verification of Form 8288-A withholding for numbered returns

    3. "651" - Transship international returns to AUSC

      Note:

      When processing returns that were transshipped, delete the Action Code "651" and continue processing.

  5. For a complete list of Action Codes, see Exhibit 3.11.3-2.

Audit Codes

  1. An Audit Code is an alpha or numeric character used to identify a questionable condition for Examination.

  2. Edit Audit Codes horizontally on page 1 of the return in the bottom right margin.

  3. The most commonly used international Audit Codes are:

    Code Explanation
    H
    • Schedule B, line 8, Yes box is marked, or

    • One or more of the following are attached: Form 926, Form 3520, Form 3520-A, Form 5471, or Form 5472

    K Expatriation return (Form 1040-NR with Form 8854 attached)
    L
    • IRC 6501(d): request for prompt audit or assessment, or

    • Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands, is attached to Form 1040

  4. For a list of additional Audit Codes, see Exhibit 3.11.3-3.

Computer Condition Codes (CCCs)

  1. A Computer Condition Code (CCC) is an alpha or numeric character.

  2. Edit CCCs horizontally in the following locations:

    • Form 1040: page 1 in the blank space to the right of the sentence, Spouse itemizes on a separate return or you were a dual-status alien

    • Form 1040-NR: page 1 above Dependent’s identifying number

    • Form 1040-PR and Form 1040-SS: page 1 centered to the right of Part I Total Tax and Credits

  3. Edit Computer Condition Code "C" when Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached to Form 1040-NR. CCC "C" is unique to international processing.

  4. When CCC "3" is edited, it must appear first (to the left of any other CCC).

  5. Always edit an Action Trail when CCC "Y" is edited.

    Exception:

    An Action Trail is not required when CCC "Y" is edited to indicate that a return is Dual-Status.

  6. For a list of additional Computer Condition Codes (CCCs), see Exhibit 3.11.3-4.

Form Processing Codes (FPCs)

  1. A Form Processing Code (FPC) is an alpha or numeric character that indicates when a specific form or schedule is attached to a return.

  2. Edit FPCs vertically in the following locations:

    • Form 1040 and Form 1040-NR: page 1 to the right of Line 7

    • Form 1040-PR and Form 1040-SS: page 1 in the margin to the right of Line 7

  3. For TY16 and later, edit FPC "D" if there is a federally declared disaster loss claimed on Schedule A and Form 4684.

  4. For a list of other Form Processing Codes (FPCs), see IRM 3.11.3.

Return Processing Codes (RPCs)

  1. A Return Processing Code (RPC) is an alpha or numeric character used to alert the computer to a special condition or computation.

  2. Edit RPCs horizontally on page 1 of the return in the bottom left margin.

  3. For a complete list of Return Processing Codes (RPCs), see Exhibit 3.21.3-3 and Exhibit 3.11.3-5.

Special Processing Codes (SPCs)

  1. A Special Processing Code (SPC) is an alpha or numeric character used to flag a condition or trigger a computation. SPCs are used for computer processing and do not post to the Master File. SPCs supplement the Return Processing Codes.

  2. Edit SPCs vertically in the following locations:

    • Form 1040: page 1 to the right of Presidential Election Campaign section

    • Form 1040-NR: page 1 to the right of Your identifying number

    • Form 1040-PR and Form 1040-SS: page 1 to the right of Spouse's social security number

  3. Edit SPC "P" on all Streamlined Filing Compliance returns. Special Processing Code "P" is unique to international processing.

  4. For a list of additional Special Processing Codes (SPCs), see Exhibit 3.11.3-6.

Received Dates for All International Returns

  1. The received date is the date a return was received by the IRS.

  2. When a received date is required, edit it in "MMDDYY" (Month/Month, Day/Day, Year/Year) format, using the instructions below:

    1. Form 1040: edit in the empty space to the right of "Dependents (see instructions):"

    2. Form 1040A (TY17 and prior): edit to the left of line 6d

    3. Form 1040EZ (TY17 and prior): edit in the center to the left of line 6

    4. Form 1040-PR: edit in the dotted portion to the left of line 5

    5. Form 1040-SS: edit in the dotted portion to the left of line 5

    6. Form 1040-NR: edit in the empty space to the right of "Dependents (see instructions):"

    7. Form 1040-NR (TY19 and prior): edit in the dotted portion to the left of line 8

    Note:

    For prior year Form 1040, refer to Job Aid 2431-010 for editing location.

  3. If the received date is present in or above the caption area, delete, and edit the same received date, if required, as instructed above.

  4. If a received date is required but is not present on page 1 of the return, search the return and attachments for a received date, and edit that date as instructed above.

  5. A received date is always required when the return is:

    1. Amended

    2. Delinquent ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. For a fiscal year, prior year, or short year

    4. Early-filed for a decedent (filed before the close of the current year)

    5. Processed June 4, 2023 or later, or the Julian date in the DLN is 155 or later

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ Do not edit a received date if the return is determined to be timely.

    Note:

    A received date is not required for Current Year Programs 46140 or 46145, until after June 3, or until the Julian date in the DLN is 155 or later.

    Exception:

    Returns batched in Program 46220, 46227, or 46228 do not require a received date.

  6. Circle a received date when it is present on a return and it is not required.

  7. Circle all but the earliest received date when a return has multiple received dates and one is required.

    Exception:

    For transshipped returns see IRM 3.21.3.8 (12).

    Note:

    Circle all but the earliest valid received dates (including Statute or other valid IRS organization's received dates) when there are multiple received dates present and a received date is required. See IRM 3.21.3.8.1.1. Taxpayer Advocate Service (TAS) received dates are not valid received dates. If multiple received dates are identical, circle all but one received date.

    Exception:

    When the return has been mailed back for missing signature(s), and multiple received dates are present, see IRM 3.21.3.8.1.

  8. If a received date is "X" -ed, circle that received date stamp.

  9. Perfect the received date when it is required and it is not legible or is incomplete. When perfecting edit in the "MMDDYY" format.

  10. When multiple returns are mailed together, the envelope is attached to one return and a dual date stamp is used on the other returns. A dual date stamp has both the postmark date and the received date.

  11. Transshipped Returns - Any of the following are indications of a transshipped return:

    1. A Submission Processing Center received date stamp other than Austin (AUSC)

    2. A yellow Optional Form 41, Routing and Transmittal Slip

    3. A blue tag titled ROUTE with the box marked AUSC (Austin)

    4. Any other indications or evidence of a transshipped return which may be identified

  12. If a received date is required and the return was transshipped from any other Submission Processing Campus (Andover, Atlanta, Brookhaven, Cincinnati {Covington}, Fresno, Kansas City, Memphis, Ogden, or Philadelphia), follow the instructions below:

    Note:

    DO NOT refer to any other instructions in this IRM or in IRM 3.11.3 to determine the received date for any return that can be identified as being transshipped from another Submission Processing Campus.

    If Then
    The return has been stamped with an AUSC received date and another Submission Processing Campus stamped received date, Circle out the other Submission Processing Campus received date (including those that have ramped down), leaving only the AUSC date.
    The return has a Field Assistance/TAC received date stamp, Honor the Field Assistance/TAC received date. Circle any other received date(s).
    The return has only received date(s) stamped from another Submission Processing Campus,
    1. Circle the received date(s).

    2. Edit a received date (current date minus 10 days).

      Exception:

      If today's date minus 10 days makes the received date earlier than any of the other campus dates, edit the other campus date as the received date.

    The return has only an AUSC received date, Take no action.
    The return has no received date, Edit a received date (current date minus 10 days).

    Exception:

    If the return was transshipped and a determination was made that the return was not foreign or the foreign aspect was deleted, process the return as a domestic return and honor the original received date.

Determining Received Date

  1. Determine the received date in the following priority when it is required and there is no valid date stamp or written received date:

    1. Latest postmark on the envelope or latest date from a designated private delivery service or private metered postmark.

      Note:

      When the envelope or air-bill is not attached, use the postmark date stamped or handwritten on the return to determine the received date.

    2. Service Center Automated Mail Processing System (SCAMPS) digital dates stamped on the envelope.

    3. Latest date by the taxpayer's signature.

      Exception:

      Use the signature date on prior year returns only when it is within the current year. Also, do not use the signature date to determine the received date for replies to correspondence.

    4. Julian date in the DLN minus 10 days.

    5. Today's date minus 10 days.

    Exception:

    When editing a return carried over from any previous filing season and there is NO received date stamp and NO envelope attached, edit a timely received date. Example: For a 2021 return received in 2022, edit "041822" or "061522" , depending on the type of return.

  2. For current year returns due April 18: Determine the received date; then:

    If the determined date is And the return is being processed Then
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ June 3 or earlier, Do not edit a received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ June 4 or later, Edit "041823" as the received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ April 23 or later, Edit the determined date as the received date.

  3. For current year returns due June 15: Determine the received date; then:

    If the determined date is And the return is being processed Then
    June 3, 2023 or earlier June 3 or earlier, Do not edit a received date.
    June 14, 2023 or earlier Between June 4 and June 14, Edit the determined date as the received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ June 15 or later, Edit "061523" as the received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ June 23 or later, Edit the determined date as the received date.

  4. For all prior year returns: Edit the determined date as the received date.

  5. If the stamped received date is three months or more prior to the current date, search the return for an indication the received date is incorrect (such as a postmark or signature date after the received date). If the received date is determined to be incorrect, delete it and edit a new received date following instructions in IRM 3.21.3.8.1 (1).

    Note:

    In 2023, when processing TY21 returns received in 2022,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ check for an envelope postmark date. If the postmark date is "041822" or earlier, circle the received date and edit the postmark date as the new received date.

  6. ALWAYS review each return for the words, "Returned for Signature" or similar statement and a date present in the lower left corner of the return. These are returns that were originally received missing a signature and were mailed back to the taxpayer. If a date and the notation "Returned for Signature" or similar statement is present, refer to the following instructions for editing the received date:

    1. If the return is Balance Due and a received date is present showing a date within 30 days after the date present in the lower left corner, use the date sent back for signature as the received date. Delete any other received date(s) that may be present.

    2. If the return is Balance Due and a received date is present showing a date MORE than 30 days after the date present in the lower left corner, honor the latest received date. Delete any earlier received date(s) that may be present.

    3. If the return is a Refund, Credit Elect or Zero-balance return, honor the latest received date. Delete any earlier received date(s) that may be present.

    Exception:

    For statute returns only, if a received date is present showing a date within 30 days of the Returned for Signature date, circle out the latest received date and edit the earlier received date.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Caution:

    Take the following action on any International Form 1040, Form 1040-NR, Form 1040-PR, or Form 1040-SS transshipped from another Campus, Territory Office, or Foreign Post:

    If Then
    There is no Austin Submission Processing Center (AUSC) received date, Edit the received date using today's date minus 10 days.

Types of Received Dates
  1. A valid Received Date stamp has all of the following:

    1. The word "Received"

    2. Month (alpha or numeric), Day, and Year

    3. The name of the city or the name of the functional area (e.g., Statute, RIVO, CSCO, Exam, ICT, CIS, AM, etc.).

    Note:

    A received date from one of these cities is not valid: Andover, Atlanta, Brookhaven, Cincinnati {Covington}, Fresno, Kansas City, Ogden, or Philadelphia. Follow the instructions in IRM 3.21.3.8 (12) for transshipped returns.

  2. Accept a valid Received Date stamp from the following:

    1. Austin (AUSC/AUSPC)

    2. Charlotte, NC

    3. Field Assistance or TAC offices

    4. IRS area/territory

    5. IRS Offices in London, Paris, Beijing or Frankfurt only.

  3. Accept as valid a handwritten or typed received date if edited by an IRS employee in Submission Processing or Return Integrity Verification Operations (RIVO).

    Note:

    A clear indication that a handwritten or typed received date has been edited by RIVO will be the presence of SPC "B" , SPC "M" and/or "RIVO" noted or stamped in the upper left margin. Generally, the RIVO edited received date will be earlier than the original, stamped received date.

  4. Accept a received date on an IRS Received Date label (Form 14471) above the caption.

    Note:

    Delete and edit the same received date as instructed in IRM 3.21.3.8 (2).

Post Office Marks
  1. For complete instructions, see IRM 3.11.3.8.2.2.

Private Delivery Service (PDS) Marks
  1. For complete instructions, see IRM 3.11.3.8.2.3.

Timely-Filed Returns

  1. In 2023, a current year return is a return filed for tax year 2022. A current calendar-year return (2212) is considered timely filed when it is received on or before the due date:

    1. April 18, 2023 for Form 1040, Form 1040-PR, Form 1040-SS

    2. April 18, 2023 for Form 1040-NR (programs 46120 and 46160)

    3. April 18, 2023 for Dual-Status Form 1040 (program 46115), Dual-Status Form 1040-NR (program 46129)

    4. June 15, 2023 for Form 1040-NR (programs 46140 and 46180)

    5. June 15, 2023 for Dual-Status Form 1040-NR (program 46145)

  2. ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. For current calendar-year (2212) returns due April 18th (with the exception of Program 46220, 46227, 46228, or 46910), received on or before April 18, 2023:

    If the document is Then
    Processed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited or altered in green ink.

    Numbered with a Julian date of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the DLN, Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited or altered in green ink.

    Unnumbered and being processed on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or later, Edit "041823" as the received date if one is not present.
    Numbered with a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the DLN, Edit "041823" as the received date if one is not present.

  4. For current calendar-year returns that qualify for an automatic two-month extension, received on or before June 15,2023:

    If the document is Then
    Processed before ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited or altered in green ink.

    Numbered with a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited or altered in green ink.

    Unnumbered and being processed on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Determine the received date if one is not present.
    Numbered with a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the DLN, Determine the received date if one is not present.

Grace Period

  1. By law, a timely-mailed return is a timely-filed return. This applies to both United States Postal Service (USPS) and designated Private Delivery Service (PDS) mail.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Then
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡"
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Late-Filed Return/Reasonable Cause

  1. A return is delinquent when it is filed after the due date without an approved extension.

    Note:

    Taxpayers residing outside the United States and Puerto Rico are entitled to a two-month extension to file.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    "≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    "≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    "≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    "≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    "≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. Edit CCC "N" on a return that qualifies the taxpayer for a special extension when the received date is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there is an indication (on the return or an attachment) of any of the following:

    1. The taxpayer lived outside the United States and Puerto Rico on the due date of the return.

    2. Caption address outside United States and Puerto Rico.

    3. The taxpayer is in the military or naval service on duty outside the United States and Puerto Rico.

    4. The taxpayer has a APO/DPO/FPO address.

    5. Form 2555 dates indicate still there or continuing.

    6. Form 2555 has an ending date later than the tax year of the return (e.g., 2023, 2024, etc.).

    7. Return indicates Treasury Regulation 1.6081-5(a).

    Note:

    Do not edit CCC "N" on Form 1040-NR or Form 1040-NR-EZ. These taxpayers do not qualify for the special extension

    .

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. When the taxpayer's reasonable cause statement is not acceptable:

    1. Edit CCC "7"

    2. Route for correspondence. Letter 854C (Penalty Waiver or Abatement Disallowed Appeals Procedure Explained), must be issued.

  6. On a late-filed return when reasonable cause is established, take the following action:

    If Then
    Late filing Edit CCC "R" , unless CCC "N" has been edited.
    Late payment or a "Section 6020(b)" notation is present Edit CCC "M" .

  7. Edit CCC "R" and delete CCC "N" on a late filed return when the taxpayer has a Form 4868 or Form 6401 attached to the return and an ITIN or IRSN is present in the primary SSN field. Both ITINs and IRSNs begin with a 9.

  8. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    Returns filed by taxpayers with an extension are due October 16, 2023. Extension forms are not required to be attached to the return when filed.

    Reminder:

    Do not change the received date when the return was received between October 17, 2023 and October 22, 2023.

  9. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    International taxpayers may have an additional extension until December 15, 2022. Extension forms are not required to be attached to the return when filed.

    Reminder:

    Do not change the received date when the return was received between December 16, 2022 and December 22, 2022.

General Instructions for All International Returns

  1. Edit RPC "L" and CCC "B" if there are no significant T-line entries present or edited from attachments on lines:

    • Form 1040: 1a through 38

    • Form 1040A (TY17 and prior): 7 through 51

    • Form 1040EZ (TY17 and prior): 1 through 14

    • Form 1040-NR: 1a through 38

    • Form 1040-NR-EZ (TY19 and prior): 3 through 26

    Reminder:

    When applicable, the Dependency Status Indicator (DSI) (TY17 and prior) is required even if RPC "L" is edited.

  2. Form 1040-SS and Form 1040-PR: Edit RPC "L" if there are no significant T-line entries present or edited from attachments on line 3 through 16.

  3. Computer-generated returns are identified by a three-alpha character software code in the bottom margin of page 1 or 2 of Form 1040 or Form 1040-NR, or page 1, 2, 3, or 4 of Form 1040-SR, Form 1040-SS, or Form 1040-PR. Edit RPC "V" when the tax return is computer generated. Also, edit SPC "Y" if FFF (separate from the software code) is present in the bottom margin.

    Exception:

    Do not edit RPC "V" or SPC "Y" if the return is a prior year return, or there is an indication the return was prepared by Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) (e.g., the presence of an "S" within the P-TIN field).

  4. For TY19 and TY20 returns identified as Economic Impact Payment (EIP) returns, no special processing is required. Disregard any notations of EIP on the return, and process per current instructions.

  5. If the return contains page 1 from Form 1040 and page 2 from Form 1040-NR or vice-versa:

    • Convert and process as Form 1040-NR unless Schedule OI is attached and the taxpayer indicates presence in the U.S. for 365 or 366 days.

    • If the taxpayer indicates presence in the U.S. for 365 or 366 days, then convert and process return as Form 1040.

  6. All amounts are to be reported in U.S. currency only. If amounts are reported in foreign currency, give the return to the workleader, who will convert any amounts reported in foreign currency to U.S. dollars using the exchange rate table appropriate for the tax period of the filer's return. See https://www.fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/historical.html and use December rates for the tax year of the return. Divide the foreign currency amount by the exchange rate.

  7. For early-filed returns, such as gambling:

    1. Edit Action Code "480" ,

    2. Edit the tax period in YYMM format, and

    3. Edit the received date if not present.

  8. Some situations will require special editing procedures. Examine the return for indications of these conditions. Edit these returns using instructions in IRM 3.11.3.6, Special Situations and Returns, unless otherwise instructed in line-by-line instructions in IRM 3.21.3:

    Special Situations IRM Reference
    Combat Zone and other Military Operations IRM 3.11.3.6.1.1
    Examination Cases IRM 3.11.3.6.1.5
    Fiduciary Relationship (Minor Child, POA) IRM 3.11.3.11
    Frivolous Filer/Non-Filer Returns

    Note:

    Any return with a 1099-OID should be treated as frivolous.

    Note:

    There are also FRIV 1040-NR Sole Proprietor - UK returns

    IRM 3.11.3.6.1.6
    Hardship
    When the Taxpayer Advocate Service (TAS) Liaison walks a hardship return through Code & Edit:
    • Perform all normal editing.

    • Edit CCC "O" to freeze the refund

    • Edit CCC "Y" to send the return to Error Resolution System (ERS)

    • "X" the refund line on the return.

    • Do not correspond. If correspondence conditions are identified during editing, give the return back to TAS.

    IRM 3.11.3.6.1.4
    Identity Theft: Taxpayer submits Form 14039, Form 14039 (SP) or police report(s) claiming identity theft Exhibit 3.21.3-1
    Killed in Terrorist Action (KITA) IRM 3.11.3.6.1.2
    Natural Disaster/Emergency Relief Program IRM 3.11.3.6.1.3

    Exception:

    The exception applies to domestic withholding only. Follow normal IRM procedures for withholding from Form 8805, Form 8288-A and Form 1042-S.

    Refund Schemes IRM 3.11.3.6.1.7
    Suicide Threats IRM 3.11.3.6.1.9
    Special Returns IRM Reference
    Amended IRM 3.11.3.6.2.1
    Blank Returns IRM 3.11.3.6.2.3
    Blind Trust Returns IRM 3.11.3.6.2.22
    Blocked or Deferrable Income IRM 3.11.3.6.2.6
    Correspondence Imaging System (CIS) Returns IRM 3.11.3.6.2.7
    Combined Tax Liabilities IRM 3.11.3.6.2.8
    Community Property/Registered Domestic Partnership Returns IRM 3.11.3.6.2.9 and IRM 3.21.3.9.2
    52-53 Week Return IRM 3.11.3.6.2.21
    Form 8938 Exhibit 3.21.3-1 and IRM 3.11.3.6.2.10
    Incomplete Returns IRM 3.11.3.6.2.4
    Injured Spouse Returns IRM 3.11.3.6.2.11
    Innocent Spouse Relief Request IRM 3.11.3.6.2.12
    Misblocked Returns IRM 3.11.3.6.2.15 and IRM 3.21.3.4.1
    Misfiled Returns IRM 3.11.3.6.2.16
    Reinput Returns IRM 3.11.3.6.2.17
    Returns Secured by Collection IRM 3.11.3.6.2.18
    Short Period Returns IRM 3.11.3.6.2.19

    Note:

    Edit Action Code "215" on International Returns.

    Substitute for Return (SFR) IRM 3.11.3.6.2.20
    Unprocessable Return IRM 3.11.3.6.2.2

Streamlined Filing Compliance Procedures

  1. Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer Taxpayers (2012 Streamlined Procedures) became effective September 1, 2012 and provided procedures for certain US citizens living abroad who were non-filers to file delinquent tax returns without being charged failure to file (FTF) or failure to pay (FTP) penalties. The 2012 Streamlined Filing Compliance Procedures is a legacy procedure no longer available to taxpayers.

  2. Effective July 1, 2014, returns submitted under the Streamlined Filing Compliance Procedures are tracked using:

    • Programs 46117 for Form 1040, Form 1040A (TY17 and prior), and Form 1040EZ (TY17 and prior)

    • Blocking series from 850 - 899

  3. Treat as Streamlined Filing Compliance Procedures if any are present:

    • Notation of "Streamlined Foreign Offshore"

    • Notation of "Streamlined Domestic Offshore"

    • Package of returns addressed to Mail Stop 6063 AUSC

    • Taxpayer mentions the "Streamlined" procedures in an attached letter

  4. If a package contains a mixture of Form 1040, Form 1040A (TY17 and prior) and/or Form 1040EZ (TY17 and prior), convert to Form 1040. If a package contains a mixture of Form 1040-NR and Form 1040-NR-EZ (TY19 and prior), convert to Form 1040-NR.

  5. Returns postmarked on or after July 1, 2014 will follow the Streamlined Filing Compliance Procedures processing instructions as outlined at IRM 3.21.3.9.1.1.

  6. Submissions consisting only of Form 1040-NR are not processed using Streamlined Filing Compliance Procedures. Forms 1040-NR must have been reviewed by LB&I per IRM 3.21.3.9.1.1 LB&I will indicate this by leaving an action trail in the left margin.

  7. Streamlined packages may contain a mixture of Form 1040, Form 1040-NR, and Dual Status returns.

    • Fully code all returns.

    • Tag Forms 1040-NR for rebatch with a purple rebatch tag. Mark the Streamlined 1040-NR box.

    • Edit action trail "Streamlined Package Complete" in the left margin on each return in the package.

    Note:

    If the Form 1040 is the controlling document in a Dual Status return, do not tag the return for rebatching.

  8. Unless otherwise instructed, it is important that all returns submitted by a taxpayer be kept together. Streamlined packages tagged for rebatching will require special handling. Forms 1040-NR will be rebatched into appropriate programs. All program transmittals and returns must stay together through the remainder of the pipeline process.

  9. If Letter 4087C and/or an explanation stating that the taxpayer is responding to a 4087C is attached, or if there is an envelope addressed to MS 6126, treat as a "reply to Streamlined correspondence." Route the uncoded package to Rejects using the yellow Streamlined tag.

    Exception:

    Do not route to Rejects if a notation "Process as Original" or "PAO" is present on the return.

  10. All returns submitted under the Streamlined Filing Compliance Procedures must have a valid Taxpayer Identification Number (TIN). If a return submitted to the Streamlined Procedures is received without a Taxpayer Identification Number (TIN), search the package for a valid TIN. If no TIN is found, route the uncoded package to Entity Control for an IRSN using yellow Streamlined tag.

    Reminder:

    An IRSN must be assigned before the package can be routed to Statute. The assignment of an IRSN to a submission made by a taxpayer required to use an SSN does not constitute waiver by the IRS of the eligibility requirements for the Streamlined Filing Compliance Procedures.

  11. Any Streamlined package that contains any return marked amended/duplicate/copy or indication of Copy to ICT submitted under this procedure should be routed uncoded to LB&I at MS 4305 AUSC using yellow Streamlined tag.

    Note:

    If the Certification Form 14653 or Form 14654 is marked "Amended" , then the Streamlined package must be reviewed by LB&I before processing. If an amended certification form is attached to an amended return, and there isn’t an indication of prior LB&I review, then route the package to MS 4305 AUSC using yellow Streamlined tag.

    Note:

    LB&I will review the returns and determine the actions that need to be taken by Submission Processing. Follow the directives provided by LB&I when the return is received back from LB&I review. LB&I will make the notations in the lower left margin.

    Note:

    If a statute year Form 1040X without an "AM Streamlined Cover sheet" attached has not been cleared by Statute, route the entire package uncoded to LB&I at MS 4305 AUSC using yellow Streamlined tag.

  12. If a return in the package requires Statute Clearance, route the entire uncoded package to Statute using yellow Streamlined tag.

    Exception:

    Statute year Forms 1040X received with an "AM Streamlined Cover sheet" already attached do not need to be routed to Statute.

  13. When the Attachment Guide requires routing the actual return to another department (e.g., Collections, Exam), route to LB&I MS 4305 AUSC by attaching the yellow Streamlined tag to the uncoded package, checking the "other" box, and writing the reason for routing to LB&I.

  14. When the Attachment Guide requires research, route to LB&I MS 4305 AUSC by attaching the yellow Streamlined tag to the uncoded package, checking the "other" box, and writing the reason for routing to LB&I.

  15. When attachments are received separated from returns (FBARs, certifications, correspondence, etc.), attach them to corresponding tax years. If the attachment does not correspond to a tax year, attach to the latest Streamlined tax year.

    Exception:

    If original BMF forms are listed on the certification, route entire package to LB&I at MS 4305 AUSC. Otherwise, route BMF forms to R&C and leave action trail on related tax year (if any).

  16. Follow local procedures for completing and routing Forms 1040X with an Accounts Management cover sheet.

2014 Streamlined Filing Compliance Procedures
  1. Review all instructions in IRM 3.21.3.9.1 prior to processing with Streamlined Filing Compliance Procedures.

  2. All Streamlined returns should be coded with SPC "P" .

  3. When a complete Streamlined package is received, edit:

    • CCC "M"

    • CCC "P"

    • CCC "R"

      Note:

      Do not edit CCC "N" if editing CCC "M" , CCC "P" , and CCC "R" .

      Caution:

      Do NOT edit CCC "M" , CCC "P," and CCC "R" if corresponding for a Streamlined issue such as the certification. If CCC "M" , CCC "P" , and CCC "R" are not edited, see IRM 3.21.3.8.4 for CCC "N" instructions.

  4. The instructions for editing CCC "7" on Streamlined returns will not apply if the return has CCC "M" , CCC "P" , and CCC "R" edited.

  5. Follow normal coding instructions as outlined in IRM 3.21.3 and IRM 3.11.3.

  6. If the package is incomplete, see IRM 3.21.3.9.1.2.

  7. Once it has been determined that a Streamlined Package is complete:

    1. If a copy of the certification is not attached to each tax year in the package, photocopy and attach.

    2. If the taxpayer provides an explanation on a separate statement, the statement must also be copied and attached to the return.

    Note:

    Use pink tag to indicate the number of copies and which returns need copies.

  8. Once all returns have a photocopy of the certification, detach the certification with the original signature. Route this original certification to LB&I at MS 4305, using blue routing tag.

  9. If a package contains Form(s) 1040X AND the certification is complete with all tax years:

    1. A copy of the certification MUST be attached to each Form 1040X.

    2. Edit an action trail "Streamlined Package Complete" in the left margin on each return in the package.

    3. Separate the Form(s) 1040X.

    4. Place an Accounts Management cover sheet on each Form 1040X.

    5. Route to Accounts Management using blue routing tag. Keep the Form(s) 1040X together if there are multiple forms

    Exception:

    If Streamlined correspondence is required, follow IRM 3.21.3.9.1.2 (2).

Correspondence for 2014 Streamlined Filing Compliance Procedures
  1. If the items below are not submitted with a new Streamlined package, correspond:

    1. Items required for a complete Streamlined Foreign Offshore filing:
      - Original signature(s) of the taxpayer(s) under a jurat on at least one Certification.

      Note:

      If the tax return is married filing jointly then correspond if one or both signatures are missing.

      Exception:

      Any return received from LB&I with the notations of "Process as Streamlined" and "Reviewed by LB&I" and there is a copy of the original certification, do not correspond for original certification.


      - Form 14653 (Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures).

    2. Items required for a complete Streamlined Domestic Offshore filing:
      - Amount of taxpayer's miscellaneous offshore penalty (only packages with Form 1040X require a penalty computation).
      - An original signature is required under a jurat on at least one certification.

      Note:

      If the tax return is married filing jointly then correspond if one or both signatures are missing.

      Exception:

      Any return received from LB&I with the notations of "Process as Streamlined" and "Reviewed by LB&I" and there is a copy of the original certification, do not correspond for original certification.


      - Form 14654 (Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures).

      Note:

      If the taxpayer submits Streamlined package with Form 14438 questionnaire instead of a certification, correspond using paragraph "E" instructing the taxpayer to follow current Streamlined procedures.

    Note:

    A substitute certification form is acceptable as long as it contains all of the relevant information listed above including a signature under a jurat. Correspond if missing.

  2. If any Streamlined correspondence is required, follow the instructions below:

    • Use Form 13900 and only correspond on one tax year.

    • Use Action Code "215" on each return, except Form 1040X.

    • Keep the package together - including any Form(s) 1040X.

    • Place an Accounts Management cover sheet on each Form 1040X.

      Reminder:

      Keep the package together.

  3. If correspondence is required AND there are NO Streamlined issues, follow the instructions below:

    • Use Form 13900 to correspond.

    • Use Action Code "215" on each return, except Form 1040X.

    • Keep the package together with the exception of Form(s) 1040X,

    • Ensure each return has a copy of the certification and route the original certification to LB&I at MS 4305.

      Caution:

      If you are separating Form(s) 1040X, remember to use the AM cover sheet and attach a copy of the certification to the return(s). Edit an action trail "Streamlined Package Complete" on each return in the package.

Amended/Duplicate Returns Submitted for 2014 Streamlined Filing Compliance Procedures
  1. See IRM 3.21.3.9.1.1.

Community Property or Registered Domestic Partnership Returns - General Information

  1. If taxpayers are married and are subject to the community property laws of a foreign country, a United States state, or a United States Territory, they generally must follow those laws to determine their income for United States tax purposes unless:

    1. Both taxpayers are nonresident aliens.

    2. One taxpayer is a nonresident alien and the other is a United States citizen or resident and they do not both choose to be treated as United States residents.

  2. If one taxpayer is a nonresident alien, the following rules apply to community income.

    1. Earned income of a spouse, other than trade or business income and a partner’s distributive share of partnership income, is treated as the income of the taxpayer whose services produced the income. That taxpayer must report all of it on a separate tax return.

    2. Trade or business income, other than a partner distributive share of partnership income, is treated as the income of the person who exercises substantially all of the management and control over the trade or business. That taxpayer must report all of it on a separate return.

    3. Partnership income (or loss). A partner distributive share of partnership income is treated as the income (or loss) of the partner. The partner must report all of it on a separate return.

  3. Income derived from the separate property of one taxpayer (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that taxpayer. That taxpayer must report all of it on a separate return. Use the appropriate community property law to determine what is separate property.

    Note:

    Income can no longer be split under Community Property provisions.

  4. All other community income is treated as provided by the applicable community property laws.

Decedent Return

  1. For ALL international returns, see IRM 3.11.3.10 - 3.11.3.10.6.

  2. In addition to the instructions above, special editing is required when an Additional Information Line (AIL) is required for a foreign address. If a foreign address AIL is present, and a decedent AIL is present or has been edited as a second AIL, take the following actions for a refund return:

    1. DO NOT edit CCC "L" or CCC "W" .

    2. Edit CCC "Y" and an action trail of "Manual Refund" .

      Exception:

      Do not edit CCC "Y," if CCC "3" has been edited. If the taxpayer has elected to use Direct Deposit or has been issued an IRSN, do not edit CCC "Y" . (An IRSN begins with a 9 and the middle two digits are other than 50-65, 70-88, and 90-99. The middle two digits identify the campus location where it was issued.)

Tax Period for International Returns

  1. See IRM 3.21.3.83.1 for Form 1040-NR and Form 1040-NR-EZ specific instructions.

  2. Australian residents often use a June (06) fiscal tax period ending date that coincides with the Australian accounting period. Follow taxpayer intent and edit YY06 for the tax period when June 30th is indicated as the tax period ending date on the tax return for an Australian resident.

  3. New Zealand residents often use a March (03) fiscal tax period ending date that coincides with the individual New Zealand accounting period. Follow taxpayer intent and edit YY03 for the tax period when March 31st is indicated as the tax period ending date on the tax return for a New Zealand resident.

  4. U.K. residents use a fiscal tax period that ends on April 5th.

  5. For additional instructions refer to IRM 3.11.3.7.

    Caution:

    See IRM 3.21.3.83.1 for additional information Form 1040-NR or Form 1040-NR-EZ instructions.

General Instructions for Editing All International Returns

  1. The following subsections contain instructions for:

    • Caption Information

    • Taxpayer Identification Number

    • Name and Additional Information Line

    • Mailing Address

    • City and State

    • ZIP Code

    • Country Name

  2. Additional instructions may be found within form-specific instructions.

Caption Information and Editing

  1. Required Caption Information Includes:

    1. Primary Taxpayer Identification Number (P-TIN)

    2. Secondary Taxpayer Identification Number (S-TIN), if applicable

    3. Name(s)

    4. Additional Information Line (which may be present to further identify the taxpayer's location or representative)

    5. Mailing Address

    6. City/State

    7. Foreign Province/State or Territory/Foreign Mail Routing Code/Postal Code

    8. Country (if applicable)

    9. ZIP Code when available

  2. Do not change the name control when it has been edited in red by: Entity Unit, ITIN Operation, or RPS employee. Use the Entity/ITIN/RPS editing to perfect the:

    1. Name Control for the caption.

    2. TIN on attachments - Schedule C, Schedule EIC, Schedule H, Schedule SE, Form 2441, Form 4137, Form 5405, Form 8839, Form 8853, Form 8863, Form 8865, Form 8919, Form 8941, and Form 8958.

    Note:

    The name control for a newly assigned TIN or IRSN may have been edited and underlined by the ITIN Operation or Entity Unit.

  3. Search the return and attachments for any missing caption information and perfect the caption if all missing information is found. For TY18, edit international address information from Schedule 6 to the caption if not already present when a complete address cannot be found elsewhere on the return.

  4. For additional instructions, see IRM 3.11.3.9.1 and 3.11.3.9.2. In addition to these instructions, form specific instructions must be followed for Form 1040-NR and Form 1040-NR-EZ. See IRM 3.21.3.83.3 through IRM 3.21.3.83.5.

Taxpayer Identification Number

  1. For complete instructions see IRM 3.11.3.9.2.1.

Primary TIN
  1. If the P-TIN is missing or incomplete, examine the return and its attachments and edit the P-TIN, if found. Circle an incomplete P-TIN.

  2. If there is an indication the taxpayer has used a TIN that is not their own, take no action.

    Example:

    The taxpayer shows an ITIN on the return and an SSN on attached Form(s) W-2.

  3. If the primary taxpayer’s TIN includes a notation of “NRA” or “nonresident” and the secondary taxpayer has an SSN/ITIN and income, edit the secondary SSN/ITIN as the primary TIN and reverse the order of the names.

  4. See IRM 3.21.3.83.3.1.1 for Form 1040-NR and Form 1040-NR-EZ specific instructions.

  5. For additional instructions, see IRM 3.11.3.9.2.1.1.

Secondary TIN
  1. Edit the S-TIN from the return or attachments if it is missing or incomplete, and the Filing Status (FS) is "2," "3" or "6."

    Exception:

    A Secondary TIN is not allowed on a Form 1040-NR or Form 1040-NR-EZ.

  2. For additional instructions, see IRM 3.11.3.9.2.1.2 and IRM 3.21.3.83.4.1.

Canadian TIN
  1. Canadian TIN: Canada assigns a Canadian TIN in a 3-3-3 (000-000-000) format. If it can be determined that the TIN is a Canadian TIN, examine the return and attachments for a TIN in a 3-2-4 (000-00-0000) format:

    1. If found, circle the Canadian TIN, and edit the correct U.S. TIN (000-00-0000 format).

    2. If not found, circle the Canadian TIN.

ITIN
  1. ITINs are issued to individuals who do not qualify for Social Security Numbers (SSNs). The ITIN is issued for tax purposes only and is obtained by completing a Form W-7, Application for IRS Individual Taxpayer Identification Number.

  2. Stop editing the return and take the following actions when Form W-7 or Form W-7(SP) is attached to the return:

    1. Unnumbered:
      • Pull the return from the batch. Attach Form W-7 to the front of the return.
      • Edit the Received Date to the left of the line 6 area on Form W-7/W-7(SP) in "MMDDYY" format and route the entire return to the ITIN unit.

    2. Numbered: Edit Action Code "610" .

Internal Revenue Service Number (IRSN)
  1. These numbers are used for internal processing only when the taxpayer does not qualify for an SSN or ITIN. An IRSN will start with a 9 (nine) and the middle two digits are other than 50-65, 70-88, and 90-99. The middle two digits identify the Campus location where it was issued from. The fourth and fifth digits for the Austin Campus are 06, 18, and 66.

Name and Additional Information Lines

  1. Each return processed must have a legible last name. Research following local procedures when the name is illegible and cannot be perfected.

  2. There are two lines available for taxpayer identification:

    1. The name line is for the first name, middle initial and last name(s) of the primary and secondary (if present) taxpayer(s). This includes any suffix.

    2. The additional information line (AIL) is used to further identify the taxpayer or contain a foreign street address.

      Example:

      Additional name, address or representative information may be shown.

Name Line
  1. For complete instructions, see IRM 3.11.3.9.2.2 and IRM 3.11.3.9.2.2.1.

Additional Information Line
  1. An AIL can contain the following information:

    1. A fiduciary, taxpayer representative, or in-care-of (c/o or %) information

    2. A parent signing for a minor child (see Figure 3.21.3-1)

    3. A location other than a street address (e.g., building, college, company) (see IRM 3.11.3.9.2.2.2)

    4. Mailing address of a foreign country

      Note:

      A P.O. Box can be an AIL.

    5. Puerto Rico address (see IRM 3.21.3.12.3.3)

  2. If any of the above items listed in IRM 3.21.3.12.3.2 (1) are present, edit and/or underline the AIL.

    Exception:

    Do not underline the foreign mailing address if no province, city, or postal code is present.

  3. If a foreign address is present on Form 1040, Form 1040A, or Form 1040EZ and a name is present or has been edited as a second AIL, underline both. Then take the following actions for REFUND returns:

    1. For Decedent Returns, do not edit CCC "L" or CCC "W" .

    2. Edit CCC "Y" and an action trail of "Manual Refund" .

      Exception:

      Do not edit CCC "Y," if CCC "3" has been edited. If the taxpayer has elected to use Direct Deposit or has been issued an IRSN, do not edit CCC "Y" .(An IRSN begins with a 9 and the middle two digits are other than 50-65, 70-88, and 90-99. The middle two digits identify the Campus location where it was issued from. The fourth and fifth digits for the Austin Campus are 06, 18 and 66.)

  4. For additional instructions, refer to IRM 3.11.3.9.2.2.2.

    Figure 3.21.3-1

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Additional Information Line (Puerto Rico)
  1. The Additional Information Line (AIL) may be found anywhere in the caption area.

    Note:

    See IRM 3.21.3.12.3.3 (3)(g) below for examples of correct editing of address.

  2. Underline as the AIL, urbanizations, subdivisions, and buildings unless it is the only element of the mailing address. In the table below are common abbreviations used to refer to urbanizations, subdivisions, and buildings.

    Exception:

    If a building (edificio) is a necessary part of the main address instead of just additional information, don’t underline it as an AIL.

    Abbreviations Urbanizations, Subdivisions, and Buildings
    ALT Altura
    ALTS Alturas
    BDA Barriada
    BO Barrio
    COLINAS Colinas
    COND Condominio
    COOP Cooperativa
    DEPT Departamento
    EDIF or EDF Edificio
    EST Estancias
    EXT Extension
    IND Industrial
    JARD Jardines
    MANS Mansiones
    PARC Parcelas
    PARQ Parque
    PUERTO Puerto
    QBDA Quebrada
    QTAS Quintas
    RPTO Reparto
    RES Residencial
    SECC Seccion
    SECT Sector
    TERR Terraza
    URB Urbanizacion
    VILLA Villa

  3. For Puerto Rico only, the following are different types of address formats:

    1. Four-line address containing Name, Urbanization, House Number and Street Name, City, State and ZIP Code.

    2. Three-line address containing Name, House Number and Street Name, City, State and ZIP Code.

      Exception:

      Some areas in Puerto Rico do not have street names or repetitive house numbers. The urbanization name substitutes as the street name and becomes the primary identifier.

      Example:

      Name, House Number and Urbanization Name, City, State and ZIP Code.

    3. Public Housing Projects (residenciales) without street names or repetitive apartment numbers. In these cases, the apartment number is the primary number and the public housing project becomes the street name.

      Example:

      Name, Apartment Number and Residential Name, City, State and ZIP Code.

    4. Apartment Buildings and Condominiums with a physical (street) address containing Name, Building Name, Street Number Apartment Number, City, State and ZIP Code.

    5. Buildings without a physical address. Certain Condominiums are located on an unnamed street and may not have an assigned number. The name of the Condominium substitutes as the street name and the number 1 is used when no building number exists.

    6. Urbanization - denotes an area, sector or residential development within a geographic area. Commonly used in Puerto Rico urban areas, it is an important part of the addressing format, as it describes the location of a specific street. In Puerto Rico, identical street names and address number ranges can be found within the same ZIP Code. In these cases, the urbanization name is the only element that correctly identifies the location of a particular address. Generally, the abbreviation URB is placed before the urbanization name.

    7. Below is a table of examples of correct address coding:

      Tax Return Address Correct Coding
      URB. Jardines de San Blas A-4 URB. Jardines de San Blas A-4
      Estancias De Tortuguero,
      521 Calle Tulipa
      Estancias De Tortuguero
      521 Calle Tulipa
      Bo Rocha Comunidad LaSalle HC 02 Box 12811 Bo Rocha Comunidad LaSalle
      HC 02 Box 12811
      Puerto Nuevo 512 Calle Aragon Puerto Nuevo
      512 Calle Aragon
      Urb San Rafael EST Calle Violeta E-19 Buzon 246 Urb San Rafael EST
      Calle Violeta E-19 Buzon 246
      Cond. Hato Rey Plaza Jesus T Pinero #200 Apt 6-M Cond. Hato Rey Plaza
      Jesus T Pinero #200 Apt 6-M
      URB Ciudad Jardin de Bairoa 88 Calle Franca URB Ciudad Jardin de Bairoa
      88 Calle Franca
      Villa Fortuna / Via Leticia 4LS-10 Villa Fortuna
      Via Leticia 4LS-10
      Plaza Antillana 151 Calle Caesar Gonzalez Apt 6203 Plaza Antillana
      151 Calle Caesar Gonzalez Apt 6203
      Reina de Los Angeles U-11 Calle 1 Reina de Los Angeles
      U-11 Calle 1

Mailing Address

  1. There are two types of international mailing addresses:

    1. U.S. Territory address

    2. Foreign Country address (address not within the 50 United States, District of Columbia, or any U.S. Territory)

  2. For Domestic addresses, refer to IRM 3.11.3.

International Mailing Address
  1. A U.S. Territory Address includes:

    1. Street Address - if the street address is missing or incomplete, underline the name control.

      Caution:

      Do not delete any reference of Urbanization or URB for Puerto Rico.

      Note:

      For Puerto Rico address AIL editing, see IRM 3.21.3.12.3.3.

      Note:

      Multiple Addresses or no Mailing Address, see IRM 3.11.3

      .

    2. City

    3. U.S. Territory - must be abbreviated with a valid two (2) character state abbreviation. Circle out the U.S. Territory and edit the abbreviation listed below. See Figure 3.21.3-2:
      • AS - American Samoa
      • GU - Guam
      • MP - Commonwealth of the Northern Mariana Islands
      • PR - Puerto Rico
      • VI - Virgin Islands

    4. ZIP Code - edit the ZIP code if missing. See Exhibit 3.21.3-6 and Figure 3.21.3-3 if unable to edit the ZIP code.

      Figure 3.21.3-2

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      Figure 3.21.3-3

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  2. Federated States of Micronesia, Marshall Islands and Palau are not territories, but they use the same addressing method as U.S. territories:

    1. Street Address

    2. City

    3. Country name abbreviated with a valid two (2) character state abbreviation. Circle out the country name and edit the abbreviation listed below:
      FM - Federated States of Micronesia
      MH - Marshall Islands
      PW - Palau

    4. ZIP Code - edit the ZIP code if missing. See Exhibit 3.21.3-6 if unable to edit the ZIP code.

  3. A Foreign Country Address includes:

    1. Street Address - underline the street address or location as the additional information line

      Caution:

      When an address is short (no city, state, province, or postal code is present), such as those from Hong Kong, the use of an AIL is not needed - Do Not Underline the AIL, but do /country/$. See Figure 3.21.3-4.

      Note:

      If a P.O. Box and street address are present, underline both as the AIL.

      Note:

      If the street address is missing or incomplete, refer to IRM 3.11.3.9.2.3.

    2. City

    3. Foreign Province/State/County and Foreign mail routing code/postal code

    4. Foreign Country Name in a /country name/$ format (see Figure 3.21.3-5)

  4. If a domestic and foreign address are both present, circle out the foreign address.

    Note:

    If the deleted address is the only foreign aspect of the return, rebatch the coded return to a domestic program.

    Figure 3.21.3-4

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    Figure 3.21.3-5

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City
  1. Many cities share names with states/provinces or countries. Do not delete the city name.

  2. For domestic addresses, refer to IRM 3.11.3.9.2.4.

State
  1. For domestic addresses, refer to IRM 3.11.3.9.2.4.

Province/State/County of Foreign Addresses
  1. States/provinces/counties for the countries listed below must be abbreviated. Circle out the state/province/county and edit the abbreviation in its place. See Exhibit 3.21.3-5 for a list of abbreviations.

    • Australia

    • Brazil

    • Canada

    • Cuba

    • Italy

    • Mexico

    • Netherlands

    Caution:

    Many cities share names with states/provinces. Do not delete or abbreviate a city name.

    Note:

    See Figure 3.21.3-6 for coding examples.

    Figure 3.21.3-6

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ZIP Code and Foreign Postal Code (International Mail Routing)
  1. U.S. territories must have a ZIP Code; edit if missing. See Exhibit 3.21.3-6.

  2. A mail routing code/postal code for foreign addresses can contain alpha and/or numeric characters. If missing, edit the mail routing code following the state or province if it can be readily determined. See Figure 3.21.3-7

  3. For domestic addresses, see IRM 3.11.3.

    Figure 3.21.3-7

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APO/FPO/DPO Addresses

  1. APO/FPO/DPO addresses are military mail addresses. APO/FPO/DPO addresses are considered domestic addresses.

  2. APO, FPO or DPO serves as the city name in the mailing address and AA, AE or AP serves as the state code.

  3. Military mail is first mailed to a central processing center in a U.S. city and then transferred to the military mail system. If the taxpayer provides the U.S. city name, circle the city edit the appropriate state code using the table below:

    City State Code
    Miami, FL AA
    New York, NY AE
    San Francisco, CA AP

  4. If the taxpayer provides the name of a foreign city or country, circle the foreign city or country name and edit the appropriate state code using the table below:

    If the foreign city/country is located in Edit State Code
    Central America, South America or Caribbean AA
    Europe, Middle East, Africa or Canada AE
    Asia or the Pacific AP

  5. For additional instructions, see IRM 3.11.3.

Country Name

  1. The name of the country in a foreign address must be edited using "/Country/$."

    Caution:

    If a foreign city/country is present, along with an APO/DPO/FPO address, circle the foreign address, leaving the APO/DPO/FPO address.

  2. If a domestic and foreign address are both present, circle out the foreign address.

    Note:

    If the deleted address is the only foreign aspect of the return, rebatch the coded return as domestic.

  3. When an address is short (no city, state, province or postal code), such as those from Hong Kong, the use of an AIL is not needed - Do Not Underline the AIL, but do /country/$. See Figure 3.21.3-4.

  4. If the country is missing and it can be readily determined, edit the country. See Exhibit 3.21.3-7.

  5. The country name in a foreign address must be spelled out. See examples below and Figure 3.21.3-8:

    • UAE - circle and edit /United Arab Emirates/$

    • UK - circle and edit /United Kingdom/$

    • ROC - circle and edit /Taiwan/$

    • SAR - circle and edit /Hong Kong/$

    • PRC or PROC - circle and edit /China/$

    Exception:

    The countries listed below must be abbreviated as follows:

    Country Abbreviation
    Ashmore and Cartier Islands Ashmore and Cartier Is
    Bosnia and Herzegovina Bosnia Herzegovina
    British Indian Ocean Territory British Indian Oc Terr
    British Virgin Islands British VI
    Central African Republic Central African Rep
    French Southern and Antarctic Lands FR Southern Antarctic
    Heard Island and McDonald Islands Heard Is McDonald Is
    Macedonia, The Former Yugoslav Republic of Macedonia
    Saint Pierre and Miquelon St Pierre Miquelon
    Saint Vincent and The Grenadines St Vincent Grenadines
    Serbia and Montenegro Serbia Montenegro
    South Georgia and The South Sandwich Islands S Georgia S Sandwich
    Turks and Caicos Islands Turks and Caicos Is

    Figure 3.21.3-8

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  6. Hong Kong and China are considered separate countries for tax purposes. If the taxpayer puts "Hong Kong China" as the country in the caption area, circle out China.

  7. If the country name contains "Republic of" edit to leave the country name.

    Exception:

    If R.O.C. or Republic of China is present in the caption, circle and edit "/Taiwan/$."

  8. If any of the countries that are part of the United Kingdom (Great Britain, England, Northern Ireland, Scotland, and Wales) are present in the caption, circle and edit the country as "/United Kingdom/$" .

  9. Accept Palestine, Palestinian Territories, or similar as the country name when no other country is present in the caption area.

Filing Status Editing - General Information for Form 1040/Form 1040A/Form 1040EZ

  1. The filing status (FS) is used to determine the taxpayer’s standard deduction amount, eligibility for the earned income tax credit, and to compute their tax.

  2. The instructions in this subsection are for determining and editing the correct FS when processing Form 1040, Form 1040A, or Form 1040EZ.

    Reminder:

    Form 1040A and Form 1040EZ are valid for TY17 and prior only. See IRM 3.21.3.85.3.2 for additional processing instructions.

  3. Edit the filing status by either checking the appropriate box or by editing the Filing Status Code (FSC) to the appropriate area.

  4. The meanings of the filing status codes are:

    1. FSC "1" - Single

    2. FSC "2" - Married filing jointly

    3. FSC "3" - Married filing separately (MFS) (spouse dependent/exemption is not claimed)

    4. FSC "4" - Head of household (HOH)

    5. FSC "5" - Qualifying surviving spouse (QSS)

    6. FSC "6" - Married filing separately (MFS) (spouse dependent/exemption is claimed)

  5. Edit CCC "Q" when a qualifying non-dependent child (not listed in the return’s dependent section) is listed:

    • In the filing status section of the return,

    • On Form 2441,

    • On Form 8814, or

    • On Schedule EIC.

Determining the Filing Status

  1. For complete instructions see IRM 3.11.3.12.2 through IRM 3.11.3.12.2.5.

Dependents for Form 1040/Form 1040A

  1. For complete instructions, see IRM 3.11.3.13.

    Exception:

    The instruction to edit a dependent that did not live in the United States to position 5 does not apply when the dependent lived with the taxpayer in a foreign country or U.S. territory.

Dependent Coding

  1. For complete instructions, see IRM 3.11.3.13.1.

Dependent Name Control and TIN

  1. For complete instructions, see IRM 3.11.3.13.2.

Form 1040 - General Information

  1. Some returns require special editing procedures. The tax examiner must review the return for taxpayer notations or other indications of the conditions found in the Special Returns section in IRM 3.21.3.9 or IRM 3.11.3.

  2. If there is any indication that the taxpayer is claiming the benefit of Article XXV (Non-Discrimination) of the U.S.-Canada Income Tax Treaty (e.g., notated by the taxpayer in the top center margin of the tax return) and Form 1040-NR is not attached, correspond for Form 1040-NR using Form 9143.

    Note:

    Use the following literal when corresponding for Article XXV (Non-Discrimination), "If you are claiming Article XXV of the U.S. - Canada Income Tax Treaty, you must file Form 1040-NR. Please complete, sign, and return Form 1040-NR along with all necessary forms, schedules, and federal tax withholding statements."

Income, Adjustments, and Credits - Lines 1a Through 33

  1. Edit amounts on lines 1a through 23 in dollars only.

  2. Edit amounts on lines 24 through 33 in dollars and cents.

Line 1a - Total Amount from Form(s) W-2, Box 1
  1. If the taxpayer claims exempt income under IRC 933 on Form 1040, Form 1040A (TY17 and prior) or Form 1040EZ (TY17 and prior), see IRM 3.21.3.79.2.

  2. If the taxpayer claims an exclusion under IRC 931 on Form 1040, Form 1040A (TY17 and prior) or Form 1040EZ (TY17 and prior), see IRM 3.21.3.75.1.2.

  3. If the taxpayer claims exempt income under IRC 893 or 871, see IRM 3.21.3.16.8.

  4. If the taxpayer exempts income under IRC 911 or claims the Foreign Earned Income Exclusion on Schedule 1, line 8d or 8z, see IRM 3.21.3.42.1.

    Caution:

    If a Foreign Earned Income Exclusion is claimed on Schedule 1, line 8d or 8z, ensure that the income is reported on Form 1040, line 1a or Schedule 1, line 3, 5, or 6.

  5. For additional instructions, see IRM 3.11.3.

Line 1b - Household Employee Wages (HSH) (Not Transcribed)
  1. If an amount is present on line 1b, edit SPC "E" .

Line 1e - Taxable Dependent Care Benefits (DCB) - Form 2441 (Not Transcribed)
  1. If an amount is present on line 1e, Form 2441 must be attached. If missing, correspond for Form 2441.

Line 1f - Employer-Provided Adoption Benefits - Form 8839 (Not Transcribed)
  1. If an amount is present on line 1f, Form 8839 must be attached. If missing, correspond for Form 8839.

Line 1g - Wages - Form 8919 (Not Transcribed)
  1. If an amount is present on line 1g, Form 8919 must be attached. If missing, correspond for Form 8919.

Line 1i - Nontaxable Combat Pay Election
  1. Nontaxable Combat Pay is entered on line 1i. If found elsewhere on return, delete where found and edit to line 1i.

Line 1z - Total Wages
  1. Compute and edit line 1z when it is blank, dash, zero, or illegible and there are any entries on lines 1a through 1h.

Lines 2a and 2b - Tax-Exempt Interest and Taxable Interest
  1. For complete instructions, see IRM 3.11.3.

Lines 3a and 3b - Qualified Dividends and Ordinary Dividends
  1. For complete instructions, see IRM 3.11.3.

Lines 4a and 4b - IRA Distributions and Taxable IRA Distributions
  1. For complete instructions, see IRM 3.11.3.

Lines 5a and 5b - Pensions and Annuities and Taxable Pensions and Annuities
  1. For complete instructions, see IRM 3.11.3.

Lines 6a, 6b, and 6c- Social Security Benefits and Taxable Social Security Benefits
  1. If the taxpayer resides in one of the countries listed below, "X" any reported Social Security Benefits where found:

    • Canada

    • Egypt

    • Germany

    • Ireland

    • Israel

    • Italy (must also be a citizen of Italy for the exemption to apply)

      Note:

      In order for Italy to qualify, they must have an Italian address.

    • Romania

    • United Kingdom (including Great Britain, England, Northern Ireland, Scotland, and Wales)

  2. If Social Security income, Form SSA-1042S, Form RRB-1042S, and withholding are the only income/withholding reported on the return, see IRM 3.21.3.15.1.28

  3. If the taxpayer reports worldwide income (i.e., there are multiple types of income and/or withholding reported on the return) AND the only "questionable" aspect of the return is the presence of Form SSA-1042S, process the return as submitted and edit Form SSA-1042S withholding to the dotted portion of line 33 of Form 1040.

  4. Edit CCC "H" when the taxpayer marks the line 6c box.

  5. For additional instructions, see IRM 3.11.3.

Line 7 - Capital Gain or Loss
  1. For complete instructions, see IRM 3.11.3.

Line 8 - Other Income
  1. For complete instructions, see IRM 3.11.3.

Line 9 - Total Income
  1. Compute and edit line 9 when it is blank, dash, zero, or illegible and there are any entries on lines 1z, 2b, 3b, 4b, 5b, 6b, 7, or 8.

    Exception:

    Do not adjust or compute line 9 if making an adjustment to Form 1040, line 1a or Schedule 1, line 9.

Line 10 - Adjustments to Income
  1. For complete instructions, see IRM 3.11.3.

Line 11 - Adjusted Gross Income
  1. Compute and edit line 11 when it is blank, dash, zero, or illegible by subtracting line 10 from line 9.

Line 12 - Standard Deduction or Itemized Deductions (Not Transcribed)
  1. If there is an indication near line 12 or a statement for line 12 that the taxpayer is prorating their standard deduction under IRC 933, accept the taxpayer's prorated amount for the standard deduction. Do not correspond for Schedule A.

  2. For additional instructions, see IRM 3.11.3.

Line 13 - Qualified Business Income Deduction
  1. If a Qualified Business Income Deduction amount is present, Form 8995 or Form 8995-A must be attached. If missing, correspond for Form 8995-A.

    Note:

    See IRM 3.11.3.52, Form 8995/8995-A/8995-A Schedule C - Qualified Business Income Deduction, for possible editing of FPC "H" .

Line 15 - Taxable Income
  1. For complete instructions, see IRM 3.11.3.

Line 16 - Tax
  1. For complete instructions, see IRM 3.11.3.

Line 17 - Additional Taxes (Not Transcribed)
  1. For complete instructions, see IRM 3.11.3.

Line 19 - Child Tax Credit or Credit for Other Dependents - Schedule 8812
  1. If an amount is present on line 19, Schedule 8812 must be attached. If missing, correspond for Schedule 8812.

Line 20 - Nonrefundable Credits (Not Transcribed)
  1. If an amount is present on line 20, Schedule 3 must be attached. Correspond, if missing.

  2. For additional instructions, see IRM 3.11.3.

Line 21 - Total Statutory Credits
  1. Compute and edit line 21 when it is blank, dash, zero, or illegible by adding lines 19 and 20.

Line 23 - Other Taxes
  1. If an amount is present on line 23, and Schedule 2 is not attached or Schedule 2 is attached and lines 4 through 18 are blank, correspond for Schedule 2.

    Exception:

    If a Schedule 2 can be dummied from attachments, do not correspond unless already corresponding for other missing information.

  2. For additional instructions, see IRM 3.11.3.

Line 24 - Total Tax
  1. For complete instructions, see IRM 3.11.3.

Lines 25a through 25d - Withholding
  1. U.S. source income is reported on Form W-2, Form 1042-S, Form SSA-1042S, Form RRB-1042S, Form 1099 series, Form 8805, Form 8288-A, or a statement of income.

  2. Valid sources of U.S. Withholding include Form W-2, Form SSA-1042S, Form RRB-1042S, Form 1042-S, Form 1099 series, Form 8805, Form 8288-A, and Form 8959. Review all withholding documents to ensure that the withholding amounts claimed by the taxpayer are U.S. Withholding (Federal Income Tax Withheld). Withholding from Guam and CNMI can be claimed on lines 25a through 25d.

    Caution:

    If the only income on the return is from Guam, see IRM 3.21.3.76 or from the Commonwealth of the Northern Mariana Islands, see IRM 3.21.3.77.

  3. If the return contains withholding from American Samoa (Form W-2AS), Puerto Rico (Form 499R-2/Form W-2PR), or Virgin Islands (Form W-2VI), take one of the following actions:

    1. If all of the withholding is from American Samoa (Form W-2AS), Puerto Rico (Form 499R-2/Form W-2PR), or Virgin Islands (Form W-2VI), "X" withholding on line 25d.

      Caution:

      If the only income on the return is from American Samoa, see IRM 3.21.3.75; from Virgin Islands, see IRM 3.21.3.78; or from Puerto Rico, see IRM 3.21.3.79.

    2. If U.S. withholding is also claimed, adjust the withholding amount to include only the U.S. withholding.

  4. If line 25d is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and a source of withholding is not attached, correspond for withholding support if unable to verify the amount through research. Minimum requirements for substitute statement are: Name of Employer or EIN, Income, and Withholding.

    Exception:

    If the research indicates the withholding is claimed from Form 1042-S, correspond for withholding support.

    Note:

    Research IRP (when available) before corresponding. Do not research if corresponding for other missing information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Follow the instructions below for line 25d:

    If Line 25d is And Then
    Blank, Dash, or Zero At least one source of withholding is present on Form W-2, Form W-2G, Form 1099 (series), or IRS Transcript Edit the withholding amount(s) to line 25d.

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Any amount and support for the withholding is present Any withholding is from:
    • Form 1099-OID or

    • Form 1099-A

    Refer the return to Frivolous Return Program (FRP).
    Any amount The supporting withholding document is a foreign document "X" line 25d.

  6. Edit CCC "8" on a refund return when withholding is significant and there is only a single supporting document attached that is one of the following:

    • A substitute statement (e.g., substitute Form W-2 or employer-provided earnings statement with year-to-date totals) or attachment or worksheet

      Note:

      If the only support for withholding is from a single or multiple Forms 4852 and there are no other withholding documentation is present, edit CCC "8" .

    • Handwritten

    • Other than computer-printed Form W-2

    • Altered name, SSN, wages, or federal income tax withheld

      Exception:

      Do not edit CCC "8" when Form 1099-R, Form W-2G, or IRS income document is attached, or if the return is identified as a military or combat zone return.

      Note:

      To be considered a "single supporting document," the document must show support from only one employer. Consider Form 4852 and an employer-provided earnings statement with the same employer and identical amounts to be a "single supporting document" .

  7. If Form 1042-S is attached to Form 1040, take the following actions:

    If Then
    Refund and the only income reported is from the Form 1042-S Correspond for filer's U.S. status, using Form 9143, box 24.

    Exception:

    Do not correspond if the taxpayer states they are a U.S. Resident Alien or the taxpayer has provided a copy of their resident alien card. Delete Form 1042-S withholding from line 25d and edit to the dotted portion of line 33.

    "Worldwide Income" is reported or the return is other than a refund Delete Form 1042-S withholding from line 25d and edit to the dotted portion of line 33.

    Note:

    If the taxpayer files Form 1040A (TY17 and prior) or Form 1040EZ (TY17 and prior), the return must be converted to Form 1040, unless corresponding for the filer’s U.S. status.

  8. Delete Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax, withholding from line 25d, and edit to the dotted portion of line 33, Form 1040.

    1. If the TIN on Form(s) 8805 is missing or other than the TIN in the caption area, and the credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"X" the credit where reported.

      Exception:

      If a TIN has been newly assigned, but is not on Form 8805 Do Not "X" the credit.

      Note:

      Any statement or document from a withholding agent that is submitted in lieu of Form 8805 must include the name and address of the U.S. withholding agent, the agent’s U.S. TIN (EIN or SSN), and the name in which the tax withheld was reported. If the name or TIN of the taxpayer claiming the refund is different or withholding agent information is not included, "X" the credit.

  9. If Form 8288-A is attached or noted on any line, follow the instructions in IRM 3.21.3.15.1.28 (10), IRM 3.21.3.15.1.28 (11), and IRM 3.21.3.15.1.28 (12).

  10. If any Form 8288-A credit is claimed, verify that Form 8288-A is attached and the Date of Transfer on Form 8288-A (box 1) is within the Tax Period of the return being filed.

    1. If Form 8288-A is not attached, correspond.

    2. If the Date of Transfer on Form 8288-A (box 1) is not within the Tax Period of the return, "X" the entry where reported and edit only the credit(s) that are within the tax period of the return. If the return is being filed for a fiscal period, verify that the Date of Transfer falls within the fiscal period.

      Caution:

      If "Original DOT" is notated on the top right side of Form 8288-A, accept that date as the official Date of Transfer.

  11. If the Date of Transfer on Form 8288-A is in 2023 and:

    1. The return is numbered, "X" the credit(s).

    2. The return is unnumbered and Form 843 is attached, detach Form 843 along with Form 8288-A and route to Accounts Management. "X" line 25d and process the return.

    3. The return is unnumbered and Form 843 is not attached, send the return back to the taxpayer. Correspond using Form 9143, box 25.

    Reminder:

    If "Original DOT" is notated on the top right side of Form 8288-A, accept that date as the official Date of Transfer.

  12. Form 8288-A - Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests. All Form 8288-A credits must be verified. If Form 8288-A is attached with a Date of transfer within the Tax Period and the return is:

    1. Numbered, attach a verification slip to request verification of the credit from the FIRPTA Unit and edit Action Code "420" .

    2. Unnumbered, follow the table below:

      If And Then
      Credits have not been verified   Completely code and edit the return, then place return in designated area for verification.

      Note:

      The verification slip (Form 13698) or printout is attached to the tax form after the credit verification is completed.

      Credits are verified The verified amount is the same or greater than the amount the taxpayer reported, Delete the Form 8288-A credit from line 25d and edit the taxpayer’s entry on the dotted portion of line 33.
      Credits are verified The verified amount is less than the amount the taxpayer reported,
      1. "X" the amount reported by the taxpayer.

      2. Delete the amount from line 25d and edit the verified amount to the dotted portion of line 33.

  13. Form 1040 filed with Form SSA-1042S/Form RRB-1042S:

    1. Forms 1040 on which the taxpayer reports worldwide income (wages, interest, investment income, self-employment income, SE tax, etc.) along with Form SSA-1042S/Form RRB-1042S benefits are not subject to the 30% tax rate and should be processed without citizenship or residency documentation. Process per normal Form 1040 procedures. Delete the Form SSA-1042S/Form RRB-1042S withholding from line 25d and edit Form SSA-1042S/Form RRB-1042S withholding to the dotted portion of line 33, Form 1040.

    2. Nonresident aliens who file jointly with a U.S. citizen and elect to be treated as resident aliens for tax purposes are not subject to the 30% tax rate. Process per normal Form 1040 procedures. Delete the Form SSA-1042S/Form RRB-1042S withholding from line 25d and edit Form SSA-1042S/Form RRB-1042S withholding to the dotted portion of line 33, Form 1040.

    3. Residents of U.S. Territories are not subject to the 30% tax rate. Process per normal Form 1040 procedures. Delete the Form SSA-1042S/Form RRB-1042S withholding from line 25d and edit Form SSA-1042S/Form RRB-1042S withholding to the dotted portion of line 33, Form 1040.

  14. A resident alien (without worldwide income) can receive a refund for incorrectly withheld taxes on Social Security Benefits reported on Form SSA-1042S/Form RRB-1042S from SSA or IRS. If SSA cannot refund the taxes withheld, the IRS will process a tax return and refund the withholding when ALL the criteria below is met:

    • The taxpayer files either Form 1040 or Form 1040A (TY17 and prior)

    • A copy of the "green card" is attached

    • A signed declaration is attached that includes the following statement (or a signed statement with similar wording):
      "The SSA withheld taxes erroneously because I am a U.S. permanent resident and my green card has neither been revoked nor administratively or judicially determined to have been abandoned. I am filing a U.S. income tax return for the taxable year as a resident alien reporting all of my worldwide income. I have not yet claimed benefits for the taxable year under an income tax treaty as a nonresident alien."

    Note:

    If the taxpayer has filed Form 1040EZ (TY17 and prior), convert to Form 1040.

    1. If the taxpayer is filing to claim a refund and does not attach a green card and/or declaration statement (see criteria above), "X" the withholding and correspond for the following if missing:
      • Green card

      Note:

      The reference made to green card includes, Form I-551 for all years after 1996 and Form I-151 is only acceptable as proof of permanent residency for TY96 and prior. See Exhibit 3.21.3-13


      • A signed declaration statement

    2. If the taxpayer is claiming a refund, both green card and declaration statement are attached, and none of the conditions in IRM 3.21.3.15.1.28 (13) are met, "X" the withholding.

Line 26 - Estimated Tax Payments
  1. For complete instructions, see IRM 3.11.3.

Line 27 - Earned Income Credit (EIC)
  1. Taxpayers residing outside of the U.S. are generally not entitled to EIC.

  2. If the taxpayer is not claiming EIC, edit RPC "B" .

  3. If a taxpayer is claiming EIC and attaches a valid Form 2555 or Form 2555-EZ (TY18 and prior), and excludes foreign earned income, "X" both the Form 1040, line 27 amount and Schedule EIC, if attached.

  4. If the taxpayer is claiming EIC and claims income is exempt under IRC 933, disallow EIC. "X" both Form 1040, line 27 and Schedule EIC, if attached.

  5. If the taxpayer is claiming EIC and resided outside of the U.S. for the entire year, disallow EIC. "X" both Form 1040, line 27 and Schedule EIC, if attached.

    Note:

    Do not use the caption address to determine if the taxpayer resided outside the U.S. for the entire year.

  6. If the return has a U.S. address and all income is from a U.S. territory (e.g., wages or self-employment), then "X" both Form 1040, line 27 and Schedule EIC, if attached.

  7. If none of the conditions in paragraphs (3) through (6) are present, the taxpayer may qualify for EIC if they resided inside the U.S. for more than half of the tax year and they also meet all requirements for EIC at IRM 3.11.3.14.2.33. Indications that the taxpayer resided inside the U.S. for more than half of the tax year are either:

    • The taxpayer's address on Form(s) W-2 is one of the 50 states or District of Columbia or

    • The taxpayer paid state or local taxes to one of the 50 states or District of Columbia

    Note:

    The taxpayer’s address in the caption and the employer’s address on Form(s) W-2 are not indications.

    1. If the taxpayer qualifies, allow EIC.

    2. If the taxpayer does not qualify, "X" line 27 and Schedule EIC, if attached.

  8. U.S. military personnel stationed outside of the U.S. on extended active duty are considered to live in the U.S. during that duty period for purposes of the EIC. They must also meet all requirements for EIC at IRM 3.11.3.14.2.33. If the taxpayer meets all requirements, allow EIC. To determine whether the taxpayer is military personnel, search the signature area, Forms W-2(s) and/or attachments for any of the following indications:

    1. The occupation in signature area indicates U.S. Air Force, U.S. Army, U.S. Coast Guard, U.S. Marines, U.S. Navy, etc.

    2. DCPS CIVPAY DIRECTORATE

    3. DFAS - PE/P

    4. DFAS - ATTN: DFAS - PMTC/IN

    5. Defense Finance and Accounting Service Cleveland Center

    6. USAF - Active Duty

    7. DFAS - PMJFC/DE

    8. Commanding Office USCG Human Resources Service Information Center

  9. Correspond when EIC is being claimed and the source of income is not indicated or attached (W-2) and cannot be determined through research:

    1. If using Form 13900, use paragraph a.

    2. If using Form 9143, use paragraph 10.

  10. For additional instructions, see IRM 3.11.3.

Line 28 - Additional Child Tax Credit (Schedule 8812)
  1. If the taxpayer is a resident of Puerto Rico, reporting earned income in Puerto Rico (Form(s) 499R-2/W-2PR), and claiming the additional child tax credit, see IRM 3.21.3.79.1.1 (2).

    Exception:

    If you can determine the taxpayer is U.S. military personnel, see instructions in (3) below.

    Note:

    Do not convert Form 1040 or Form 1040A (TY17 and prior) to Form 1040-PR/SS.

  2. If the taxpayer is a resident of CNMI, Guam, American Samoa, or Virgin Islands "X" line 28 unless IRM 3.21.3.15.1.31 (3) applies.

  3. If the taxpayer is a resident in any of the U.S. territories and you can determine the taxpayer is U.S. Military personnel, the taxpayer is considered a resident of the U.S. for the entire year and the return should be processed using the domestic instructions in IRM 3.11.3. Search the occupation area, Forms W-2, and/or attachments for any indications such as the following:

    1. The occupation in the signature area indicates military, U.S. Air Force, U.S. Army, U.S. Coast Guard, U.S. Marines, or U.S. Navy.

    2. DCPS CIVPAY DIRECTORATE

    3. DFAS-PE/P

    4. DFAS-ATTN:DFAS-PMTC/IN

    5. Defense Finance and Accounting Service Cleveland Center

    6. USAF- Active Duty

    7. DFAS-PMJFC/DE

    8. Commanding Office USCG Human Resources Service Information Center

  4. If an amount is present on line 28 and one or more children with SSNs are claimed as dependents, Schedule 8812 must be attached. If missing, correspond for Schedule 8812.

    Exception:

    If Form W-2 series or Form 499R-2/W-2PR is attached, dummy Schedule 8812, line 21.

  5. For additional instructions, see IRM 3.11.3.

Line 29 - Refundable American Opportunity Credit
  1. If an amount is claimed on line 29, Form 8863 must be attached. If missing, correspond for Form 8863.

    Note:

    If the taxpayer has an entry on both Schedule 3, line 3 and Form 1040, line 29, correspond for only one missing Form 8863. Use the first entry amount and line number on the return/Schedule.

Line 31 - Other Payments and Refundable Credits
  1. For complete instructions, see IRM 3.11.3.

Line 32 - Total Other Payments and Refundable Credits
  1. Compute and edit line 32 when blank and there are entries leading to a total.

    Note:

    Do not include "888" when it has been edited on line 27.

Line 33 - Total Payments
  1. Take one of the following actions when there is an amount on line 33, lines 25d through 32 are blank, and no withholding documents are present:

    If there is an amount on line 33 of And Then
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ there is a significant entry on Form 1040, line 1a, 4b, or 5b or Schedule 1, line 7 Correspond for an explanation of Form 1040, line 33.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ there is no significant entry on Form 1040, line 1a, 4b, or 5b or Schedule 1, line 7 Edit the amount to Form 1040, line 26.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ there is a significant entry on Form 1040, line 1a, 4b, or 5b or Schedule 1, line 7 Edit the amount to Form 1040, line 25d, and edit RPC "G" .
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ there is no significant entry on Form 1040, line 1a, 4b, or 5b or Schedule 1, line 7 Edit the amount to Form 1040, line 26.

  2. For additional instructions, see IRM 3.11.3.

Refund or Amount Owed - Lines 34 through 38

  1. Edit amounts on lines 35 through 38 in dollars and cents.

  2. Line 34 is not a T-line. Lines 35a and 37 are T-Compute lines.

Line 35a - Refund
  1. For complete instructions, see IRM 3.11.3.

Lines 35b, 35c, and 35d - Direct Deposit Information
  1. For complete instructions, see IRM 3.11.3.

Line 36 - Estimated Tax Credit Elect
  1. For complete instructions, see IRM 3.11.3.

Line 37 - Amount You Owe (Balance Due)
  1. For complete instructions, see IRM 3.11.3.

Line 38 - Estimated Tax Penalty (Form 2210 or Form 2210-F)
  1. For complete instructions, see IRM 3.11.3.

Third Party Designee

  1. Reserved

Signature

  1. For complete instructions, see IRM 3.11.3.

Occupation

  1. Reserved

Identity Protection Personal Identification Number (IP-PIN)

  1. Identity Protection Personal Identification Number (IP PIN) is located in the "Sign Here" area of the return.

  2. For additional instructions, see IRM 3.11.3.

Paid Preparer Data

  1. For complete instructions, see IRM 3.11.3.

Preparer Code
  1. For complete instructions, see IRM 3.11.3.

Preparer TIN (PTIN)
  1. For complete instructions, see IRM 3.11.3.

Preparer Phone Number
  1. For complete instructions, see IRM 3.11.3.

Schedule 1 (Sequence 01) - Additional Income and Adjustments to Income

  1. The following information pertains to Schedule 1 only.

  2. For TY20 and later, Schedule 1 may be filed with Form 1040 or Form 1040-NR. See IRM 3.21.3.83.19.

  3. The following are the T-lines and T-Compute lines on Schedule 1:

    T-Lines T-Compute Lines
    Line 1 Line 9
    Line 2a Line 25
    Lines 3 through 7  
    Line 8r (TY22 and later)  
    Line 9  
    Lines 11 through 18  
    Lines 19a and 19b  
    Lines 20 and 21  
    Line 22 (TY20 and prior only)  
    Line 23  
    Line 25  
    Form 982 Indicator (dotted area left of Line 11)  

  4. Lines 1 through 10 are for additional income and lines 11 through 26 are for adjustments to income.

  5. For additional instructions, see IRM 3.11.3.

Schedule 1, Line 1 - Taxable Refunds

  1. Reserved

Schedule 1, Lines 2a and 2b - Alimony Received and Date of Divorce

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 3 - Business Income or Loss

  1. If a foreign earned income exclusion is claimed on Schedule 1, line 8d, 8z, or elsewhere, ensure that the income is reported on Form 1040, line 1a or Schedule 1, line 3, 5, or 6.

  2. If a taxpayer residing in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or U.S. Virgin Islands files Form 1040, reporting self-employment tax on Schedule 2, line 4, and the only income on the return is from Schedule C, Schedule E (Part II), and/or Schedule F, prepare a dummy Form 1040-SS as follows:

    1. Edit the caption and transcription lines.

    2. "X" Form 1040, and attach all information behind the dummy Form 1040-SS.

    Caution:

    If the taxpayer is claiming wages and/or withholding, do not convert.

  3. If Schedule 1, line 3 contains self-employment income of $434 or more and Schedule SE is not attached and Schedule 2, line 4 does not have a significant entry:

    • Edit RPC "S" if the taxpayer resides in one of the following countries:

      RPC "S" Countries:
      Australia
      Austria
      Belgium
      Brazil
      Canada
      Chile
      Czech Republic
      Denmark
      Finland
      France
      Germany
      Greece
      Hungary
      Iceland
      Ireland
      Italy
      Japan
      Luxembourg
      Netherlands
      Norway
      Poland
      Portugal
      Slovak Republic (Slovakia)
      Slovenia
      South Korea
      Spain
      Sweden
      Switzerland
      United Kingdom

      Reminder:

      Includes Great Britain, England, Northern Ireland, Scotland, and Wales

      Uruguay

  4. For additional instructions, see IRM 3.11.3.

    Exception:

    Do not correspond for SE tax liability when the taxpayer resides in one of the countries listed in IRM 3.21.3.16.3 (3) above.

Schedule 1, Line 4 - Other Gains or Losses

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 5 - Rental Real Estate, Royalties, Partnerships, S Corporations, and Trusts

  1. If a foreign earned income exclusion is claimed on Schedule 1, line 8d, 8z, or elsewhere, ensure that the income is reported on Form 1040, line 1z or Schedule 1, line 3, 5, or 6.

  2. If a taxpayer residing in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or U.S. Virgin Islands files Form 1040, reporting self-employment tax on Schedule 2, line 4, and the only income on the return is from Schedule C, Schedule E (Part II), and/or Schedule F, prepare a dummy Form 1040-SS as follows:

    1. Edit the caption and transcription lines.

    2. "X" Form 1040, and attach all information behind the dummy Form 1040-SS.

    Caution:

    If the taxpayer is claiming wages and/or withholding, do not convert.

  3. For additional instructions, see IRM 3.11.3.

Schedule 1, Line 6 - Farm Income or Loss

  1. If a foreign earned income exclusion is claimed on Schedule 1, line 8d, 8z, or elsewhere, ensure that the income is reported on Form 1040, line 1z or Schedule 1, line 3, 5, or 6.

  2. If a taxpayer residing in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or U.S. Virgin Islands files Form 1040, reporting self-employment tax on Schedule 2, line 4, and the only income on the return is from Schedule C, Schedule E (Part II), and/or Schedule F, prepare a dummy Form 1040-SS as follows:

    1. Edit the caption and transcription lines.

    2. "X" Form 1040, and attach all information behind the dummy Form 1040-SS.

    Caution:

    If the taxpayer is claiming wages and/or withholding, do not convert.

  3. If Schedule 1, line 6 contains Self-Employment income of $434 or more and Schedule SE is not attached and Schedule 2, line 4 does not have a significant entry:

    • Edit RPC "S" if the taxpayer resides in one of the following countries:

      RPC "S" Countries:
      Australia
      Austria
      Belgium
      Brazil
      Canada
      Chile
      Czech Republic
      Denmark
      Finland
      France
      Germany
      Greece
      Hungary
      Iceland
      Ireland
      Italy
      Japan
      Luxembourg
      Netherlands
      Norway
      Poland
      Portugal
      Slovak Republic (Slovakia)
      Slovenia
      South Korea
      Spain
      Sweden
      Switzerland
      United Kingdom

      Reminder:

      Includes Great Britain, England, Northern Ireland, Scotland, and Wales

      Uruguay

  4. For additional instructions, see IRM 3.11.3.

    Exception:

    Do not correspond for SE tax liability when the taxpayer resides in one of the countries listed in IRM 3.21.3.16.6 (3) above.

Schedule 1, Line 7 - Unemployment Compensation (UEC)

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Lines 8a through 8z - Other Income

  1. For international entries on Lines 8a through 8z, follow the table below:

    If And Then
    Line 8z indicates Article XXV (Non-Discrimination) of the U.S.-Canada Income Tax Treaty Form 1040-NR is not attached Correspond for Form 1040-NR. See IRM 3.21.3.82.5.

    Note:

    Use Form 9143 and the following literal when corresponding for Article XXV, "If you are claiming Article XXV of the U.S.-Canada Income Tax Treaty, you must file Form 1040-NR. Please complete, sign, and return Form 1040-NR along with all necessary forms, schedules, and federal tax withholding statements."

    Entry on line 8d, or line 8z indicates Form 2555 or Form 2555-EZ (TY18 and prior) Exclusion Form 2555 or Form 2555-EZ (TY18 and prior) is missing Correspond.
    Entry on line 8d, or line 8z indicates Form 2555 or Form 2555-EZ (TY18 and prior) Exclusion Taxpayer resides in:
    • Baker Island

    • Howland Island

    • Jarvis Island

    • Johnston Atoll

    • Kingman Reef

    • Midway Atoll

    • Palmyra Atoll

    • Wake Island

    Take the following actions:
    1. "X" Schedule 1, line 9,

    2. "X" Form 2555 or Form 2555-EZ,

    3. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9, and

    4. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Exception:

    If a return shows income earned in the Federated States of Micronesia, Marshall Islands, or Palau Islands and Form 2555 or Form 2555-EZ is attached and valid, ALLOW the exclusion.

    Entry on line 8d, or line 8z indicates Form 2555 or Form 2555-EZ (TY18 and prior) Exclusion Two Forms 2555 and/or Form 2555-EZ (TY18 and prior) are submitted, and only one Form 2555 and/or Form 2555-EZ is valid
    1. Adjust Schedule 1, line 9 by deleting the amount for the invalid Form 2555 or Form 2555-EZ,

    2. "X" the invalid Form 2555 or Form 2555-EZ, and

    3. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9.

    Line 8z indicates Form 2555 or Form 2555-EZ (TY18 and prior) Exclusion It is a positive amount Take one of the following actions:
    1. If amount is verified to be a valid exclusion, ensure the exclusion is included as a negative in the total on Schedule 1, line 9, and ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9.

    2. If amount is not a valid exclusion, "X" Schedule 1, line 9, "X" Form 2555 or Form 2555-EZ, and ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9.

    Line 8z indicates IRC 871 (Capital Gains) Taxpayer excludes this on Schedule 1, line 8z and/or 9 If the income is not included on Form 1040, line 7 or Schedule 1, line 4, edit the income to Form 1040, line 7.
    Line 8z indicates IRC 893 or employee of international organization or foreign government Taxpayer provides all of the following:
    • Evidence of non-U.S. citizen status (e.g., copy of an A or G visa, or green card),

    • Written evidence from the U.S. Citizenship and Immigration Services (USCIS) confirming USCIS Form I-508 has not been signed and filed,

    • If an employee of a foreign government, a copy of the U.S. State Department Internal Revenue Code (IRC) Section 893(b) certification or other evidence of meeting the requirements of IRC Section 893(a)(2) and (3), and

    • If an employee of an international organization, either the number of the Presidential Executive Order or an international organization that is listed in Exhibit 3.21.3-4.

      Note:

      IRC 893 does not apply to the North Atlantic Treaty Organization (NATO) or the Ottawa Agreement.

    Allow the exempt amount on Schedule 1, line 9. If the income is not reported on Form 1040, line 1a or Schedule 1, line 3, 5, or 6, edit the income to Form 1040, line 1a.
    Line 8z indicates IRC 893 or employee of international organization or foreign government Taxpayer does not provide all items listed in the box above Correspond. When using Form 13900, mark box K.
    Line 8z indicates IRC 911   See rows 2-5 of this table relating to claim of Form 2555 Exclusion.
    Line 8z indicates IRC 931   See IRM 3.21.3.75.1.2.
    Line 8z indicates IRC 933   See IRM 3.21.3.79.2.
    Line 8z shows a negative amount Taxpayer notates foreign income Correspond for an explanation.
    Line 8z shows one or more of the following:
    • Self-Employment income

    • Form 1099-NEC, box 1 amount

    • Form 1099-MISC, box 7 amount

    Form 2555 or Form 2555-EZ is attached to exclude the income If the income is not reported on Form 1040, line 1a or Schedule 1, line 3, 5, or 6, edit the Self-Employment income, Form 1099-NEC, box 1 amount and/or Form 1099-MISC, box 7 amount to Form 1040, line 1a.
    Line 8z shows one or more of the following:
    • Self-Employment income

    • Form 1099-NEC, box 1 amount

    • Form 1099-MISC, box 7 amount

    Self-Employment income is $434 or more, Schedule SE is not attached, and Schedule 2, line 4 does not have a significant entry Take one of the following actions:
    1. If the taxpayer resides in one of the following countries, edit RPC "S" :

      • Australia

      • Austria

      • Belgium

      • Brazil

      • Canada

      • Chile

      • Czech Republic

      • Denmark

      • Finland

      • France

      • Germany

      • Greece

      • Hungary

      • Iceland

      • Ireland

      • Italy

      • Japan

      • Luxembourg

      • Netherlands

      • Norway

      • Poland

      • Portugal

      • Slovak Republic (Slovakia)

      • Slovenia

      • South Korea

      • Spain

      • Sweden

      • Switzerland

      • United Kingdom

        Reminder:

        Includes Great Britain, England, Northern Ireland, Scotland, and Wales)

      • Uruguay

    2. If the taxpayer does not reside in one of the countries listed above, edit RPC "N" .

    Line 8z indicates a treaty Taxpayer provides:
    • The name of the foreign country of which the taxpayer is a citizen or resident and whose tax treaty with the U.S. provides the exempt status,

    • The treaty article number that allows the exemption, and

    • The amount of "exempt" income during the tax year

    Verify the treaty article and maximum exemption amounts using Exhibit 3.21.3-10:
    1. If valid, ensure the allowed amount of exempt income is included as a negative in the Schedule 1, line 9 total. If the taxpayer has not already reported the income, edit the income to the appropriate line.

      Exception:

      Taiwan and Hong Kong are not considered to be China and are not allowed to exclude income based on China treaties.

    2. If invalid, "X" Schedule 1, line 9, and make sure the income is reported.

    Line 8z indicates a treaty Taxpayer does not provide ALL items listed above. Correspond.

  2. Line 8r, "Scholarship and fellowship grants not reported on Form W-2," is a T-line. If there is an entry on this line, see IRM 3.21.3.16.9 for instructions.

  3. A Fulbright Grant received by a U.S. citizen or U.S. resident alien taxpayer for the purpose of lecturing or teaching in a foreign country is considered a payment for services and is subject to U.S. tax.

    Note:

    If the Fulbright Grant was paid by an agency of the U.S. government, the income may be excluded under the IRC 911, provided the taxpayer is not a U.S. government employee.

  4. If the Housing Deduction amount from Form 2555, line 50 is entered on Schedule 1, line 8z or 9, "X" Schedule 1, line 9, and add the Housing Deduction amount to Schedule 1, line 25. If both the Housing Deduction and the Foreign Earned Income Exclusion are claimed together on Schedule 1, line 8d or 8z, adjust line 9 to remove the Housing Deduction, and add the Housing Deduction to line 25. See IRM 3.21.3.42.9 (7).

  5. Qualified airline employees may exclude some income reported as wages on Form W-2, box 1. This income will be included on Form 1040, line 1a and excluded as a negative on Schedule 1, line 8d or line 8z as "airline payment" . Accept as filed.

  6. For additional instructions, see IRM 3.11.3.

Schedule 1, Line 8r - Scholarship and Fellowship Grants Not Reported on Form W-2

  1. A taxpayer’s entry on Schedule 1, line 8r should include only the scholarship and fellowship grants that were not spent on tuition and course-related expenses.

  2. Scholarship and fellowship income shown on Form W-2 should be reported on Form 1040, line 1a. If it is determined this Form W-2 income is included in the line 8r entry:

    1. Edit the Form W-2 gross income to Form 1040, line 1a, if not already included,

    2. Do not adjust or compute Form 1040, line 9 or 11, and

    3. "X" or adjust the line 8r amount to exclude the income moved to Form 1040, line 1a.

  3. If it can be determined that the scholarship or fellowship grant entered on line 8r is exempt under a tax treaty, take the following actions:

    1. "X" line 8r,

    2. Ensure the amount exempt by treaty is included in the Schedule 1, line 9 total,

    3. Ensure the income is reported on the appropriate line, and

    4. "X" the treaty exemption if found elsewhere on the return.

  4. One or more of the following documents must be attached to support an entry on line 8r. If missing, correspond:

    • Form 1098-T

    • A statement from the college or educational institution (on their letterhead) that states the amount of the grant(s), the grantor's name, the dates it covers, and the expenses the grant covers

  5. If an amount is present on line 8r and at least one of the items in IRM 3.21.3.16.9 (4) is attached, follow the instructions in the table below:

    If And Then
    You calculate (1) minus (2) below by:
    1. Adding:

      • All Form 1098-T scholarships or grants, box 5 amounts, and

      • All grant income from educational institution letters

    2. Subtracting:

      • All Form 1098-T payments received for qualified tuition and related expenses, box 1 amounts, and

      • All tuition and course-related expenses (fees, books, supplies, equipment) from educational institution letters, receipts, etc.

    The amount calculated by adding all the items in (1) and then subtracting all the items in (2) is greater than the line 8r entry Adjust line 8r to equal the calculated amount.

Schedule 1, Line 9 - Total Other Income

  1. If line 9 is blank, dash, zero, or illegible and there are any entries on lines 8a through 8z, compute and edit line 9 by adding lines 8a through 8z.

Schedule 1, Line 11 Dotted Portion - Form 982 Indicator

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 11 - Educator Expenses

  1. Reserved.

Schedule 1, Line 12 - Certain Business Expenses of Reservists, Performing Artists, and Fee-Basis Government Officials (Form 2106)

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 13 - Health Savings Account Deduction (Form 8889)

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 14 - Moving Expenses for Members of the Armed Forces (Form 3903)

  1. If an amount is present on Schedule 1, line 14 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 3903 (or similar statement) must be attached. If missing, correspond for Form 3903.

    Note:

    If the taxpayer is only claiming an expense for storage fees while out of the United States, Form 3903 is not required.

Schedule 1, Line 15 - Deductible Part of Self-Employment Tax

  1. Reserved

Schedule 1, Line 16 - Self-Employed SEP, SIMPLE, and Qualified Plans

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 17 - Self-Employed Health Insurance Deduction

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Lines 19a, 19b, and 19c - Alimony Paid, Recipient's TIN, and Date of Divorce

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 20 - IRA Deduction

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Line 21 - Student Loan Interest Deduction

  1. Reserved

Schedule 1, Line 22

  1. Reserved

Schedule 1, line 23 - Archer MSA Deduction

  1. For complete instructions, see IRM 3.11.3.

Schedule 1, Lines 24a through 24z - Other Adjustments (Not Transcribed)

  1. Delete the following adjustments from Schedule 1, lines 11 through 23, and ensure the amounts are included in the Schedule 1, line 25 total:

    • "403(b)" - contributions by certain chaplains to section 403(b) plans

    • "501(c)(18)(D)" - contributions to certain pension plans

    • "ED67(e)" - (TY18 and later) Excess Deductions of section 67(e) expenses from Form 1041 Schedule K-1

    • "Housing Deduction" - Form 2555, line 50

    • "Jury Pay" - jury duty pay

    • "PPR" - Personal Property Rental deductible expenses

    • "RFST" - Reforestation amortization and expenses

    • "Sub-Pay TRA" - repayment of Supplemental Unemployment Benefit (SUB) payments received in a prior year under the Trade Act of 1974 (TRA)

      Exception:

      "X" the SUB pay amount where found and subtract the amount from Form 1040, line 1a when there is no indication that the adjustment is for benefits received in a prior year.

    • "UDC" - legal fees for Unlawful Discrimination Claims

    • "USOC" - United States Olympic Committee-deduction for Olympic and Paralympic medals and prize money

    • "WBF" - Whistle Blower Fees

  2. Delete the adjustments in (1) above when found elsewhere on the return, and edit the amounts to be included in the Schedule 1, line 25 total.

  3. If there is an amount on Schedule 1, line 24j, or if Schedule 1, line 24z has an amount identified as "Form 2555" , "IRC 911" , "Housing Deduction" , "IRC 931" , or something similar:

    If And Then
    Taxpayer resides in:
    • Baker Island

    • Howland Island

    • Jarvis Island

    • Johnston Atoll

    • Kingman Reef

    • Midway Atoll

    • Palmyra Atoll

    • Wake Island

      Take the following actions:
    1. "X" Schedule 1, line 25,

    2. "X" Form 2555 or Form 2555-EZ (TY18 and prior),

    3. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 9, and

    4. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    The taxpayer does NOT reside in one of the areas mentioned above Form 2555 is missing Correspond for Form 2555.

  4. Edit the Housing Deduction amount from Form 2555, line 50 to the total of Schedule 1, line 25, if not already done by the taxpayer.

  5. If a taxpayer claims an adjustment to income on Schedule 1, line 24z for anything other than the items listed in (1) above, "X" Schedule 1, line 25.

  6. If there is an amount on Schedule 1, line 24z with no explanation present, "X" Schedule 1, line 25.

Schedule 1, Line 25 - Total Other Adjustments

  1. If line 25 is blank, dash, zero, or illegible and there are any entries on lines 24a through 24z, compute and edit line 25 by adding lines 24a through 24z.

Schedule 1, Line 26 - Total Adjustments to Income

  1. For complete instructions, see IRM 3.11.3 .

Schedule 2 (Sequence 02) - Additional Taxes

  1. The following information pertains to Schedule 2 only.

  2. For TY20 and later, Schedule 2 may be filed with Form 1040 or Form 1040-NR. See IRM 3.21.3.83.20.

  3. The following are the T-lines and T-Compute Lines on Schedule 2:

    T-Lines T-Compute Lines
    Lines 1 and 2 Line 7
    Line 4 Line 18
    Lines 7-10  
    Lines 11 and 12 (TY22 and later)  
    Lines 13-16  
    Line 18  
    Line 19 (TY21 only)  
    Line 20  

  4. Lines 1 through 3 are for tax and lines 4 through 21 are for other taxes

  5. For additional instructions, see IRM 3.11.3.

Schedule 2, Line 1 - Alternative Minimum Tax (Form 6251)

  1. If an amount is present on Schedule 2, line 1, Form 6251 must be attached. Correspond, if missing.

Schedule 2, Line 2 - Excess Advance Premium Tax Credit Repayment (Form 8962)

  1. If an amount is claimed on Schedule 2, line 2, Form 8962 must be attached. Correspond, if missing.

    1. When corresponding for Form 8962 on Form 13900, also correspond for Form 1095-A, if not attached, using paragraph "s" .

    2. When corresponding for Form 8962 on Form 9143, also correspond for Form 1095-A, if not attached, using the following literal:
      "Send a copy of your Form 1095-A, Health Insurance Marketplace Statement, to support your entries on Form 8962, Premium Tax Credit. If you didn't receive one or your Form 1095-A is incorrect, visit www.healthcare.gov or your state Marketplace website."

Schedule 2, Line 3 - Total

  1. Reserved

Schedule 2, Line 4 - Self-Employment Tax (Schedule SE)

  1. If a taxpayer residing in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or U.S. Virgin Islands files Form 1040, reporting self-employment taxes on Schedule 2, line 4, and the only income on the return is from Schedule C, Schedule E (Part II) and/or Schedule F, prepare a dummy Form 1040-SS as follows:

    1. Edit the caption and transcription lines.

    2. "X" Form 1040, and attach all information behind the dummy Form 1040-SS.

    Caution:

    If the taxpayer is claiming wages and/or withholding, do not convert.

  2. For additional instructions, see IRM 3.11.3.

Schedule 2, Line 7 - Total Additional Social Security and Medicare Tax (Form 4137 or Form 8919)

  1. For complete instructions, see IRM 3.11.3.

Schedule 2, Line 8 - Additional Tax on IRAs or Other Tax-Favored Accounts (Form 5329)

  1. For complete instructions, see IRM 3.11.3.

Schedule 2, Line 9 - Household Employment Taxes (Schedule H)

  1. If an amount is present on line 9, Schedule H must be attached. Correspond for Schedule H, if missing.

Schedule 2, Line 11 - Additional Medicare Tax (Form 8959)

  1. If an amount is present on line 11, Form 8959 must be attached. Correspond for Form 8959, if missing.

Schedule 2, Line 12 - Net Investment Income Tax (Form 8960)

  1. If an amount is present on line 12, Form 8960 must be attached. Correspond for Form 8960, if missing.

Schedule 2, Line 16 - Recapture of Low-Income Housing Credit (Form 8611)

  1. If Form 8611 is missing and the line 16 amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡, correspond for Form 8611.

Schedule 2, Lines 17a through 17z - Other Additional Taxes (Not Transcribed)

  1. For complete instructions, see IRM 3.11.3.

Schedule 2, Line 18 - Total Additional Taxes

  1. If line 18 is blank, dash, zero, or illegible and there are any entries on lines 17a through 17z, compute and edit line 18 by adding lines 17a through 17z.

Schedule 2, Line 19 - Reserved

  1. Reserved. For TY21 instructions, see IRM 3.11.3.

Schedule 2, Line 20 - Section 965 Net Tax Liability Installment (Form 965-A)

  1. If an amount is present on line 20, and Form 965-A is missing, correspond for Form 965-A only if corresponding for other missing information.

  2. If an amount is present on line 20, edit RPC "F" .

    Note:

    If Form 965-A is attached and there is no entry on line 20, do not edit RPC "F" .

Schedule 2, Line 21 - Total Other Taxes

  1. Reserved

Schedule 3 (Sequence 03) - Additional Credits and Payments

  1. The following information pertains to Schedule 3 only.

  2. For TY20 and later, Schedule 3 may be filed with Form 1040 or Form 1040-NR. See IRM 3.21.3.83.21.

  3. The following lines are T-lines and T-Compute lines on Schedule 3:

    T-Lines T-Compute Lines
    Lines 1 through 5 Line 7
    Lines 6a through -6g Line 14
    Lines 6h-6l (first line with amount)  
    Line 7  
    Lines 9 through 12  
    Line 13a  
    Line 13b (TY20 and later)  
    Line 13d (TY22 and later)  
    Line 13e (TY20 only)  
    Line 13g (TY21 only)  
    Line 13h (TY21 and TY22 only)  
    Line 14  

  4. Lines 1 through 8 are for nonrefundable credits and lines 9 through 15 are for other payments and refundable credits.

  5. For additional instructions, see IRM 3.11.3.

Schedule 3, Line 1 - Foreign Tax Credit (Form 1116)

  1. If more than $300 (more than $600, for FS 2) is claimed on Schedule 3, line 1, Form 1116 or similar statement must be attached. If missing, or if no significant amount is present on line 7, 8, 24, or 35, correspond for Form 1116.

  2. Taxpayers earning income in the following countries are not allowed to take a foreign tax credit for foreign taxes paid to these countries. If the taxpayer takes the foreign tax credit (see Form 1116, Part II, line 8) with respect to taxes paid to any of the following countries (see Form 1116, Part I, line i, columns A, B, and C), "X" both Form 1116, line 8 and Schedule 3, line 1.

    Country Starting Date Ending Date
    Iran January 1, 1987 Still in Effect
    North Korea January 1, 1987 Still in Effect
    Sudan February 12, 1994 Still in Effect
    Syria January 1, 1987 Still in Effect

Schedule 3, Line 2 - Credit for Child and Dependent Care Expenses (Form 2441)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 3 - Education Credits (Form 8863, line 19)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 4 - Retirement Savings Contributions Credit (Form 8880)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 5 - Residential Energy Credits (Form 5695)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Lines 6a through 6z - Other Nonrefundable Credits

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 7 - Total Other Nonrefundable Credits

  1. If line 7 is blank, dash, zero, or illegible and there are any entries on lines 6a through 6z, compute and edit line 7 by adding lines 6a through 6z.

Schedule 3, Line 9 - Net Premium Tax Credit (Form 8962)

  1. If an amount is claimed on Schedule 3, line 9, Form 8962 must be attached. If missing, correspond.

    1. When corresponding for Form 8962 on Form 13900, also correspond for Form 1095-A, if not attached, using paragraph "s" .

    2. When corresponding for Form 8962 on Form 9143, also correspond for Form 1095-A, if not attached, using the following literal:
      "Send a copy of your Form 1095-A, Health Insurance Marketplace Statement, to support your entries on Form 8962, Premium Tax Credit. If you didn't receive one or your Form 1095-A is incorrect, visit www.healthcare.gov or your state Marketplace website."

Schedule 3, Line 10 - Amount Paid with Request for Extension to File (Form 4868)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 11 - Excess Social Security and Tier 1 RRTA Tax Withheld

  1. Taxpayers in U.S. Territories may claim excess Social Security and RRTA taxes withheld. However, the withholding must be verified via attached Form(s) W-2AS, Form(s) W-2CM, Form(s) W-2GU, Form(s) W-2VI, Form(s) 499R-2/W-2PR, and Form(s) W-2.

  2. For additional instructions, see IRM 3.11.3.

Schedule 3, Line 12 - Credit for Federal Tax on Fuels (Form 4136)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 13a - Form 2439

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 13b - Credit for Qualified Sick and Family Leave Wages (Schedule H)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 13d - Credit for Repayment

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 13g - Reserved

  1. Reserved

Schedule 3, Line 13h - Qualified Sick and Family Leave Credits for Leave Taken After March 31, 2021 (Schedule H and Form 7202)

  1. For complete instructions, see IRM 3.11.3.

Schedule 3, Line 13z - Other Payments or Refundable Credits (Not Transcribed)

  1. If line 13z was used for other refundable credits that do not have a specific line, follow the table below:

    If the credit claimed is Then
    Form 8689 "X" line 14, and see IRM 3.21.3.78.1.2 for additional instructions.
    Form 8805
    1. If Form 8805 is attached, "X" line 14, and edit Form 8805 withholding to the dotted portion of Form 1040, line 33.

    2. If Form 8805 is not attached, correspond.

    Form 1042-S
    1. If Form 1042-S is attached, "X" line 14, and edit Form 1042-S withholding to the dotted portion of Form 1040, line 33.

    2. If Form 1042-S is not attached, correspond.

    Form 8288-A
    1. If Form 8288-A is attached with a Date of Transfer within the tax period of the return, "X" line 14, and edit the verified amount of the Form 8288-A withholding to the dotted portion of Form 1040, line 33.

    2. If Form 8288-A is not attached, or is attached with a Date of Transfer not within the tax period of the return, correspond.

Schedule 3, Line 14 - Total Other Payments or Refundable Credits

  1. If line 14 is blank, dash, zero, or illegible and there are any entries on lines 13a through 13z, compute and edit line 14 by adding lines 13a through 13z.

Conversion of Form 1040A (TY17 and prior) and Form 1040EZ (TY17 and prior)

  1. Convert every Form 1040A and Form 1040EZ to Form 1040.

  2. Convert international conditions as follows:

    Attached to or Entry on Form 1040A or Form 1040EZ Action on Form 6114 or appropriate schedules
    • Form 1042-S with "Worldwide Income"

    • Form SSA-1042S attached to Form 1040EZ

    • Form 8288-A (after FIRPTA verification)

    • Form 8689

    • Form 8805

    Edit withholding to the dotted portion of Form 6114, line 33.
    Form 4563 or IRC 931 See IRM 3.21.3.75.1.3.
    Housing Deduction Edit housing deduction from Form 2555, line 50 to Schedule 1, line 25.
    IRC 871 Edit capital gain income to Form 6114, line 7, and edit exempt amount to Schedule 1, line 9 as a negative.
    IRC 893 Edit earned income to Form 6114, line 1a, and edit exempt amount to Schedule 1, line 9 as a negative.
    Valid Form 2555 or Form 2555-EZ, or IRC 911 Edit foreign income to Form 6114, line 1a, and edit foreign earned income exclusion to Schedule 1, line 9 as a negative.
    Valid Treaty Exempt Income Edit gross income amount to Form 6114, line 1a, and edit verified amount exempt by treaty to Schedule 1, line 9 as a negative.

  3. For additional conversion instructions, see IRM 3.11.3.72.3.5 for Form 1040A and IRM 3.11.3.72.3.6 for Form 1040EZ.

  4. For general conversion instructions, see IRM 3.11.3.72 and IRM 3.11.3.72.1.1.

Schedule A (Sequence 07) - Itemized Deductions

  1. The following lines on Schedule A are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 Line 4
    Line 3 Line 7
    Line 4 Line 10
    General Sales Tax Checkbox Line 14
    Lines 5a through 5c Line 17
    Lines 6 and 7  
    Lines 8a through 8c  
    Line 8d (TY21 and prior)  
    Lines 9 through 17  
    Line 18 Checkbox  

  2. A taxpayer may take a deduction on line 5a, 5b, and/or 5c for taxes imposed by a U.S. possession.

  3. A taxpayer may take a deduction on line 6 for income taxes paid or accrued during the year to:

    • a foreign country

    • any political subdivision, agency, or instrumentality of the country

  4. If the taxpayer is prorating their itemized deductions (Schedule A) under IRC 933, accept the taxpayer’s prorated amount for itemized deductions. When two amounts are present on line 17 "X" the larger amount.

  5. Schedule A (sequence 7A), Schedule NEC (sequence 7B), and Schedule OI (sequence 7C) are attachments for Form 1040-NR.

  6. For additional instructions, see IRM 3.11.3.

Schedule B (Sequence 08) - Interest and Ordinary Dividends

  1. The following lines on Schedule B are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 2: edited to the left of line 2 There are no T-Compute Lines
    Line 3  
    Line 6: edited above the instructions for line 6  
    Foreign Account Indicator  
    FinCEN Form 114 Indicator, Report of Foreign Bank and Financial Accounts (FBAR)  

  2. For additional instructions, see IRM 3.11.3.

Schedule C (Sequence 09, 10, 11) - Profit or Loss from Business

  1. The following lines on Schedule C are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    SSN Line 1
    Lines A, B, C, D, F, H, I, and J Line 2
    Statutory Employee Indicator Box Line 3
    Lines 1 through 4 Line 28
    Line 6  
    Line 9  
    Line 13  
    Line 15  
    Line 16a  
    Line 17  
    Line 18  
    Line 21  
    Lines 24a and 24b  
    Line 25  
    Lines 26 through 27a  
    Line 28  
    Line 30  
    Line 32, "At Risk" Indicator (No editing required)  
    Line 35  
    Line 41  

  2. If the taxpayer is a bona fide resident of PR and indicates Schedule C income is excluded under IRC 933, take the following actions:

    1. "X" the Schedule C,

    2. Prepare a dummy Schedule C, and

    3. When dummying Schedule C, edit $1 for Gross Receipts (line 1), and edit the NAICS code if furnished by the taxpayer. Do not compute line 3.

  3. For additional instructions, see IRM 3.11.3.

Schedule D (Sequence 12) - Capital Gains and Losses

  1. The following lines on Schedule D are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Yes/No Checkbox (TY19 and later) Line 7
    Line 1a, columns (d) and (e) Line 15
    Lines 1b-3, columns (d), (e), and (g)  
    Line 5  
    Line 7  
    Line 8a, columns (d) and (e)  
    Lines 8b-10, columns (d), (e), and (g)  
    Line 12  
    Line 13  
    Line 15  
    Line 18  
    Line 19  

  2. For additional instructions, see IRM 3.11.3.

Form 8949 (Sequence 12A) - Sales and Other Dispositions of Capital Assets

  1. The following lines on Form 8949 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Entries with "Z" Code: There are no T-Compute lines
    Part I, columns (a), (b), and (g)  
    Part I indicator, edited to the right of Part I, column h  
    Part II, columns (a), (b), and (g)  
    Part II indicator, edited to the right of Part II, column h  
    Entries with "Y" Code (TY20 and later):  
    Part I, columns (a), (c), and (g)  
    Part I indicator, edited to the right of Part I, column h  
    Part II, columns (a), (c), and (g)  
    Part II indicator, edited to the right of Part II, column h  

  2. For complete instructions, see IRM 3.11.3.

Schedule E (Sequence 13) - Supplemental Income and Loss

  1. The following lines on Schedule E are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Checkboxes A and B Lines 23a through 23e
    Line 14, columns A-C Lines 24 and 25
    Lines 23a through 23e Line 29a, columns (h) and (k)
    Lines 24 and 25 Line 29b, columns (g) and (i)
    Line 27, checkboxes Lines 30 and 31
    Line 29a, columns (h) and (k) Lines 35 and 36
    Line 29b, columns (g) and (i) Line 39
    Lines 30 and 31  
    Line 34a, column (d)  
    Line 34b, column (c)  
    Lines 35 and 36  
    Line 37 - edited to the left of line 37  
    Lines 39 and 40  
    Lines 42 and 43  

  2. For additional instructions, see IRM 3.11.3.

Schedule F (Sequence 14, 15) - Profit or Loss from Farming

  1. The following lines on Schedule F are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines B, D, F, and G Line 9
    Line 1b Line 33
    Line 2 Line 44
    Lines 3a and 3b Line 50
    Lines 4a and 4b  
    Line 5b  
    Lines 6a and 6b  
    Line 7  
    Line 9  
    Line 13  
    Line 19  
    Line 21a  
    Line 25  
    Line 28  
    Line 33  
    Line 36, "At Risk" Indicator (no editing required)  
    Lines 38a and 38b  
    Line 39a  
    Line 40b  
    Line 44  
    Line 50  

  2. If the taxpayer is a bona fide resident of PR and indicates Schedule F income is excluded under IRC 933, take the following actions:

    1. "X" the Schedule F,

    2. Prepare a dummy Schedule F, and

    3. When dummying Schedule F, edit $1 for Gross Income (line 9), and edit the NAICS code, if furnished by the taxpayer.

  3. For additional instructions, see IRM 3.11.3.

Schedule R (Sequence 16) - Credit for the Elderly or the Disabled

  1. The following lines on Schedule R are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1 through 9 Line 13c
    Line 11  
    Line 13c  

  2. For additional instructions, see IRM 3.11.3.

Schedule SE (Sequence 17, 18) - Self-Employment Tax

  1. The Schedule SE Section A ("short form" ) is valid for TY19 and prior only.

  2. The following lines on Schedule SE are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    TIN Line 3
    Lines 1a through 3 Line 8d
    SE Quarters Covered - edited to the right of line 4c Line 26 (TY20 only)
    Line 5a  
    Line 8d  
    Line 26 (TY20 only)  
    SE Farm Code - edited in the center-bottom margin  

  3. For additional instructions, see IRM 3.11.3.

Form 1116 (Sequence 19) - Foreign Tax Credit

  1. The following lines on Form 1116 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Number of additional Forms 1116 filed - edited to right margin of Part I heading Line 1a
    Line 1a Lines 6 through 8
    Lines 6 through 8 Line 14
    Line 14 Line 17
    Lines 16 and 17 Line 21
    Lines 21 through 24 Line 23
    Lines 34 and 35 Line 35

  2. If the amount on Form 1116, line 1a is the same as the amount reported on Form 2555, line 26 or Form 2555-EZ, line 17 (TY18 and prior), then:

    1. Adjust Form 1116, line 1a by subtracting the greater of Form 2555, line 42 or 45, or Form 2555-EZ, line 18 (TY18 and prior) from Form 1116, line 1a. See Figure 3.21.3-9.

    2. If Form 1116, line 1a is reduced to zero, "X" the amount on Schedule 3, line 1.

    Caution:

    If more than one Form 2555 or Form 2555-EZ (TY18 and prior) (each taxpayer can use either Form 2555 or Form 2555-EZ (TY18 and prior)) is attached, use the combined amounts for Forms 2555, lines 26 and/or Forms 2555-EZ, lines 17 (TY18 and prior) to compare to line 1a.

  3. If the taxpayer's intent is not to use Form 1116 or if the taxpayer claims a negative or zero on Form 1116, line 35 "X" Form 1116.

  4. Taxpayers earning income in the following countries are not allowed to take a foreign tax credit for foreign taxes paid to these countries. If the taxpayer takes the foreign tax credit (see Form 1116, Part II, Line 8) with respect to taxes paid to any of the following countries (see Form 1116, Part I, letter i, column A, B, or C), "X" both Form 1116, line 8 and Schedule 3, line 1.

    Country Starting Date Ending Date
    Iran January 1, 1987 Still in Effect
    North Korea January 1, 1987 Still in Effect
    Sudan February 12, 1994 Still in Effect
    Syria January 1, 1987 Still in Effect

  5. For additional instructions, refer to IRM 3.11.3.

    Exception:

    Do not refer to IRM 3.11.3 when Form 1116 has been deleted per IRM 3.21.3.29 (3) above.

    Figure 3.21.3-9

    This is an Image: 34010009.gif

    Please click here for the text description of the image.

Schedule J (Sequence 20) - Income Averaging for Farmers and Fishermen

  1. The following lines on Schedule J are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 2a and 2b There are no T-Compute lines
    Line 8  
    Line 12  
    Line 16  
    Lines 19 through 21  

  2. For additional instructions, see IRM 3.11.3.

Form 2441 (Sequence 21) - Child and Dependent Care Expenses

  1. The following lines on Form 2441 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Checkbox A Line 3
    Checkbox B (TY22 and later)  
    Checkbox B (For TY21, edit "ABD" )  
    Line 1, columns (a) and (c)  
    Line 1, column (d) (TY22 and later)  
    Line 2, Checkbox (not edited)  
    Line 2, columns (a), (b), and (c) - (for the first 2 qualifying persons)  
    Lines 3 through 5  
    Line 9b  
    Line 12  
    Line 16  
    Line 25  
    Line 26  

  2. For additional instructions, see IRM 3.11.3.

Form 3800 (Sequence 22) - General Business Credit

  1. The following lines on Form 3800 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1 through 5 There are no T-Compute Lines
    Lines 24 through 26  
    Line 36  
    Part III, Checkbox I  
    Form 3468 Indicator - edited to the right of Part III, line 1a, column (c)  
    Line 1a, column (c)  
    Lines 1c through 1zz, column (c)  
    Line 3, column (c)  
    Line 4h, column (c)  
    Line 4j, column (c)  
    Line 5, column (c)  
    Form 3468, line 11f amount - edited to bottom right margin, page 3  

  2. For additional instructions, see IRM 3.11.3.

Form 4136 (Sequence 23) - Credit for Federal Tax Paid on Fuels

  1. The following lines on Form 4136 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1 through 16, column (d) There are no T-Compute lines

  2. For additional instructions, see IRM 3.11.3.

Form 4137 (Sequence 24, 25) - Social Security and Medicare Tax on Unreported Tip Income

  1. The following lines on Form 4137 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Taxpayer TIN Line 2
    Lines 1A through 1E, columns (a) through (d)  
    Lines 2 and 3  
    Lines 5 and 6  
    Line 8  

  2. For additional instructions, see IRM 3.11.3.

Form 4684 (Sequence 26) - Casualties and Thefts

  1. The following lines on Form 4684 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    FEMA Disaster Declaration Number Line 13
    Line 1, Property A ZIP Code Line 14
    Line 13 Line 16
    Line 14  
    Line 16  

  2. For additional instructions, see IRM 3.11.3.

Form 4797 (Sequence 27) - Sale of Business Property

  1. The following lines on Form 4797 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1a through 1c Line 9
    Lines 7 through 9  
    Gain on sale of animals - edited to Page 1, bottom center margin  

  2. For additional instructions, see IRM 3.11.3.

Form 4972 (Sequence 28) - Tax on Lump-Sum Distributions

  1. The following lines on Form 4972 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1 through 5b Line 12
    Line 6  
    Lines 11 and 12  
    Line 18  
    Line 30  

  2. For additional instructions, see IRM 3.11.3.

Form 5329 (Sequence 29, 30) - Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

  1. The following lines on Form 5329 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Spousal Indicator - edited to the left of the form title Line 4
    Loose form indicator - edited to the right of the entity area Line 8
    Line 4 Line 55
    Line 8  
    Line 17  
    Line 25  
    Line 33  
    Line 41  
    Line 49  
    Line 51  
    Line 55  
    IRA Condition Code - edited to Page 2, bottom right margin  

  2. For additional instructions, see IRM 3.11.3.

Form 6198 (Sequence 31) - At-Risk Limitations

  1. The following lines on Form 6198 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 5 Line 5
    Lines 20 and 21  

  2. For additional instructions, see IRM 3.11.3.

Form 6251 (Sequence 32) - Alternative Minimum Tax - Individuals

  1. The following lines on Form 6251 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 2c through 3 There are no T-Compute lines
    Line 8  

  2. For additional instructions, see IRM 3.11.3.

Form 8615 (Sequence 33) - Tax for Certain Children Who Have Unearned Income

  1. The following lines on Form 8615 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines A and B There are no T-Compute lines.
    Lines 1 and 2  
    Line 18  

  2. For additional instructions, see IRM 3.11.3.

Form 2555 and Form 2555-EZ (Sequence 34, 35) - Foreign Earned Income Exclusion

  1. Form 2555-EZ is valid for TY18 and prior only.

  2. The following lines on Form 2555 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Post of Duty (POD) Code - top center margin Line 22g (total allowances)
    Line 10 (Bona Fide Residence beginning date ) Line 33 (housing expenses)
    Line 10 (Bona Fide Residence ending date) Line 42 (Foreign Earned Income Exclusion)
    Line 13a (declaration question - right margin) Line 50 (Housing Deduction)
    Line 14 (number of days in U.S. on business - right margin, just above 15a)  
    Line 16 (Physical Presence qualifying period beginning date)  
    Line 16 (Physical Presence qualifying period ending date)  
    Line 18 (number of days in U.S. on business - right margin)  
    Line 19 (foreign wages)  
    Line 22g (total allowances)  
    Line 25 (excludable Meals and Lodging)  
    Line 33 (housing expenses)  
    Line 36 (Housing Exclusion)  
    Line 42 (Foreign Earned Income Exclusion)  
    Line 45 (Housing Exclusion, Foreign Earned Income Exclusion, or both)  
    Line 50 (Housing Deduction)  

  3. For TY18: The following lines on Form 2555-EZ are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Post of Duty (POD) Code - top center margin Line 18
    Line 1b (Bona Fide Residence beginning and ending dates)  
    Line 2b (Physical Presence qualifying period beginning and ending dates)  
    Line 12 (number of days in U.S. on business - right margin, just above Part IV)  
    Line 17 (foreign wages)  
    Line 18 (Foreign Earned Income Exclusion)  

General Information for Form 2555 and Form 2555-EZ

  1. U.S. citizens or resident aliens living abroad are taxed on worldwide income and may qualify to exclude from gross income up to $112,000 for tax year 2022 (per IRC 911(d)(2)(4)) of their foreign earnings. In addition, they can exclude or deduct certain foreign housing amounts.

  2. To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, the taxpayer must satisfy all three of the following requirements:

    • The taxpayer’s tax home must be in a foreign country or countries,

    • The taxpayer must have foreign earned income, and

    • The taxpayer must be one of the following:

    A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes any tax year in its entirety and includes part of the tax year of the return.

    Note:

    An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis.

    A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect that has a nondiscrimination clause and who is a bona fide resident for an uninterrupted period that includes an entire tax year and includes part of the tax year of the return.
    A U.S. citizen or resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, which also includes part of the tax year of the return.

  3. If the tax home on Form 2555 and Form 2555-EZ (TY18 and prior) is in a foreign country, the taxpayer is entitled to elect the IRC 911 foreign earned income exclusion even if the address on the Form 1040 is an address in the U.S. or in a U.S. territory.

  4. Taxpayers claiming a foreign earned income exclusion are not entitled to claim a credit for foreign taxes paid on the income that is being excluded. Editing is required if the amount on Form 1116, line 1a is the same as the total foreign earned income claimed by the taxpayer on Form 2555 or Form 2555-EZ. See IRM 3.21.3.29 for processing instructions.

  5. Form 2555-EZ is valid for TY18 and prior only.

General Editing Instructions for Form 2555 and Form 2555-EZ

  1. Use the following table for general editing instructions for Form 2555 and Form 2555-EZ:

    Reminder:

    Form 2555-EZ is valid for TY18 and prior only.

    If And Then
    Taxpayer claims unearned income, including any of the following:
    • Alimony

    • Annuities

    • Capital gains

    • Dividends

    • Gambling winnings

    • Interest

    • Pensions

    • Retirement

    • Social Security benefits

    • Unemployment benefits

    Earned income is also claimed
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, adjust Schedule 1, line 9 to only exclude the earned income,

    2. "X" the amount(s) on Form 2555, lines 42 and/or 45 or Form 2555-EZ, line 18, and

    3. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9.

    Taxpayer claims unearned income, including any of the following:
    • Alimony

    • Annuities

    • Capital gains

    • Dividends

    • Gambling winnings

    • Interest

    • Pensions

    • Retirement

    • Social Security benefits

    • Unemployment benefits

    No earned income is included
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, "X" Schedule 1, line 9,

    2. If the housing deduction is claimed in the total reported on Schedule 1, line 25, "X" Schedule 1, line 25,

    3. "X" Form 2555 or Form 2555-EZ,

    4. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9, and

    5. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Taxpayer claims self-employment income from Schedule C or Schedule F
    • Reports a net amount on Schedule 1, line 3 or Schedule 1, line 6 and

    • Claims a foreign earned income exclusion for the gross amount by including it in the total reported on Schedule 1, line 9

    Adjust Schedule 1, line 9 to only exclude the net amount.
    Taxpayer:
    1. U.S. Military or

    2. Lives and works in a U.S. territory or

    3. Resides in:

      • Baker Island

      • Howland Island

      • Jarvis Island

      • Johnston Atoll

      • Kingman Reef

      • Midway Atoll

      • Palmyra Atoll

      • Wake Island

     
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, "X" Schedule 1, line 9,

    2. If the housing deduction is claimed in the total reported on Schedule 1, line 25, "X" Schedule 1, line 25,

    3. "X" Form 2555 or Form 2555-EZ,

    4. Ensure income is reported on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9, and

    5. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Exception:

    If a return shows income earned in the Federated States of Micronesia, Marshall Islands, or Palau Islands and Form 2555 or Form 2555-EZ is attached and valid, ALLOW the exclusion.

    Taxpayer makes no attempt to exclude income on Form 1040 or Schedule 1 Form 2555 or Form 2555-EZ does not include a claim for excluded income "X" Form 2555 or Form 2555-EZ.
    Multiple Forms 2555 and/or Form 2555-EZ are attached for one taxpayer  
    1. Combine related T-lines onto one Form 2555,

    2. "X" the other Form(s) 2555 and Form(s) 2555-EZ,

    3. Use the appropriate POD code for the Form 2555 or Form 2555-EZ with the most income on Form 2555, line 26, or Form 2555-EZ, line 17,

    4. Edit dates to include the entire period reported on all forms, and

    5. When combining Form(s) 2555 with Form(s) 2555-EZ, always combine onto Form 2555. Combine Form 2555-EZ, line 17 with Form 2555, line 19 and Form 2555-EZ, line 18 with Form 2555, lines 42 and 45.

    Note:

    Convert to Form 2555 when only Form(s) 2555-EZ are present and their combined foreign earned income is over the maximum for the year. For TY22, the maximum is $112,000.

    Taxpayer enters beginning and ending dates that do not include part of the tax year of the return   Correspond:
    • If using Form 9143, check box 14.

    • If using Form 13900, use the following literal:
      "To exclude foreign earned income, the qualifying dates on Form 2555 or Form 2555-EZ must cover a part of the tax year of your tax return. Please verify your beginning and/or ending dates, and re-submit your Form 2555."

  2. If Form 2555 or Form 2555-EZ is valid:

    • Ensure all foreign earned income is included on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9, and

    • Ensure the exclusion (taken from the greater of Form 2555, line 42 or 45, or Form 2555-EZ, line 18) is included in the total reported on Schedule 1, line 9. If not, adjust Schedule 1, line 9 to reflect its inclusion as a negative amount.

  3. If Form 2555 or Form 2555-EZ is invalid:

    • Ensure all foreign earned income is included on Form 1040, lines 1a through 7 or Schedule 1, lines 1 through 7 or 9,

    • "X" Schedule 1, line 9,

    • "X" Form 2555 or Form 2555-EZ, and

    • If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

Form 2555 for Joint Filers

  1. Only two forms can be processed:

    • One for the primary taxpayer (sequence code 34)

    • One for the secondary taxpayer (sequence code 35)

    Note:

    Taxpayers might file Form 2555-EZ for prior years or the current year. Conversion of Form 2555-EZ to Form 2555 is not required at this point, unless one of the criteria at IRM 3.21.3.85.3.2.5.1 (2) is met.

  2. If a Form 2555 or Form 2555-EZ is for the secondary taxpayer, edit Sequence Code "35" .

  3. If two forms are submitted and only one is valid:

    1. Adjust Schedule 1, line 9 by deleting the amount for the invalid Form 2555 or Form 2555-EZ, if applicable,

    2. Adjust Schedule 1, line 25 by deleting the amount for the invalid Form 2555 or Form 2555-EZ, if applicable,

    3. "X" the invalid Form 2555 or Form 2555-EZ, and

    4. Make sure income is reported on the appropriate line.

  4. If two forms are submitted and neither one is valid:

    1. "X" Schedule 1, line 9, if foreign earned income exclusion is claimed,

    2. "X" Schedule 1, line 25, if foreign earned housing deduction is claimed,

    3. "X" both Forms 2555 or Forms 2555-EZ,

    4. Make sure income is reported on the appropriate line, and

    5. If the deleted Forms 2555 or Forms 2555-EZ are the only foreign aspects of the return, rebatch the coded return as domestic.

  5. If only one Form 2555 or Form 2555-EZ is submitted for both taxpayers, correspond for separate Forms 2555 or Forms 2555-EZ. See Figure 3.21.3-10.

    Caution:

    If the spouses are a missionary team, see IRM 3.21.3.42.3 (6) below.

  6. If the spouses are a missionary team and only one Form 2555 or Form 2555-EZ is submitted, DO NOT correspond. Divide the income equally between the two filers on separate Forms 2555.

    Exception:

    If it can be determined that the income was earned by only one spouse, DO NOT divide the income. Process the Form 2555 or Form 2555-EZ as filed.

    Figure 3.21.3-10

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Post of Duty (POD) Code

  1. A POD Code must be edited to all Forms 2555 or Form 2555-EZ (TY18 and prior).

  2. Edit the appropriate 2 alpha character POD Code in the top center margin of Page 1, Form 2555 or Form 2555-EZ according to Exhibit 3.21.3-7. See Figure 3.21.3-11.

    Figure 3.21.3-11

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  3. Examine Form 2555 or Form 2555-EZ to determine where the foreign income was earned. Use the following priority order when determining the POD assignment:

    1. Address: Form 2555, line 1; Form 2555-EZ, line 4

    2. Tax Home: Form 2555, line 9; Form 2555-EZ, line 11a

    3. Principal Country: Form 2555, line 17

    4. Foreign address on Form 1040

    5. Employer’s foreign address: Form 2555, line 4b: Form 2555-EZ, line 8

    6. Income statement

    Note:

    If multiple countries are present, edit the first with a listed POD.

    Reminder:

    If combining Forms 2555 or Form 2555-EZ (TY18 and prior), edit the POD for the Form 2555 or Form 2555-EZ with the most income on Form 2555, line 26 or Form 2555-EZ, line 17.

  4. If the country in which the foreign income is earned is not listed in the POD Table, edit POD Code "XX" .

  5. If you cannot determine the POD after using instructions in IRM 3.21.3.42.4 (3) above, edit POD Code "XX" .

Determining Bona Fide Residence and Physical Presence Dates

  1. A U.S. citizen is considered a bona fide resident of a foreign country if his tax home has been in that foreign country for an uninterrupted period of time which includes a full calendar year and part of the tax year of the return. Before editing bona fide dates for restricted countries (Cuba, Iraq and Libya), see IRM 3.21.3.42.5 (3).

    Note:

    Waiver of minimum time requirements - the minimum time requirements for bona fide residence and physical presence can be waived if the taxpayer must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. The following are the only countries that can claim a waiver for 2022:

    Country Date of Departure on or after
       
       
       
       
       

    Note:

    Edit dates to cover a full calendar year using the dates provided by the taxpayer, if available. Otherwise, use the tax year of the return to determine the applicable dates.

  2. To qualify for bona fide residence, the taxpayer must reside in a foreign country for an uninterrupted period that includes an entire tax year and includes part of the tax year of the return.

    Note:

    An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis.

    Example:

    For TY22, the taxpayer enters bona fide dates of 11/01/2021 to 01/15/2023. The taxpayer completed an uninterrupted period of residence for a full tax year (2022) and therefore meets the bona fide residence test. The taxpayer would also qualify for tax years 2021 and 2023.

    Example:

    For TY22, the taxpayer enters bona fide dates of 10/01/2021 to 11/30/2022. The taxpayer did not complete an uninterrupted period of residence for a full tax year (2021 or 2022) and therefore does not meet the bona fide residence test in either year, but qualifies for physical presence.

  3. A taxpayer living and working in a restricted country cannot claim the benefits under "IRC 911" :

    Caution:

    If the taxpayer meets either bona fide residence or physical presence, but the beginning date was within the restricted period, edit qualifying dates based on the end of the restriction.

    Restricted Country Beginning Date Ending Date
    Cuba

    Exception:

    If a non-military taxpayer files a Form 1040 with a Form 2555 exclusion from United States Naval base at Guantanamo Bay, allow the exclusion.

    January 1, 1987 Still in effect
    Iraq August 2, 1990 July 29, 2004
    Libya January 1, 1987 September 20, 2004

  4. Edit Beginning and Ending Dates in YYMM format for bona fide residence dates:

    • Form 2555 - Part II, line 10 area

    • Form 2555-EZ (TY18 and prior) - Part I, below line 1b

    Exception:

    If the beginning date is 1950 or earlier, then perfect the date in a YYYYMM format (e.g., September 1947 will be edited as "194709" ).

  5. Edit Beginning and Ending Dates in YYMM format for physical presence dates:

    • Form 2555 - Part III, line 16 area

    • Form 2555-EZ (TY18 and prior) - Part I, below line 2b

    Exception:

    If the beginning date is 1950 or earlier, then perfect the date in a YYYYMM format (e.g., September 1947 will be edited as "194709" ).

  6. On a TY22 return, if the dates are missing or don't meet either the bona fide residence or physical presence test, and one of the following notations is present:

    • Adverse conditions or

    • Could not meet 330-day requirement for physical presence due to an emergency (e.g., medical condition or travel restrictions),

    Then allow the foreign earned income exclusion, and edit the physical presence dates provided. If dates are missing, edit dates for the calendar year (beginning date of "2201" and ending date of "2212" ).

  7. If both beginning and ending dates are present or can be determined, follow the table below. (If dates cannot be determined, see IRM 3.21.3.42.5 (8).)

    If And Then
    Only Bona Fide Residence dates are present
    • The dates cover any full calendar year, and

    • The dates include part of the current tax year

    Edit the dates in YYMM format in the Bona Fide Residence section.

    Example:

    If the taxpayer indicates the beginning date as January, 2022 and the ending date as December, 2022, edit "2201" as the beginning date and "2212" as the ending date.


    See Figure 3.21.3-12.
    Only Bona Fide Residence dates are present
    • The dates do not cover any full calendar year, but

    • The dates cover at least 330 days

    Edit the dates in YYMM format in the Physical Presence section. See Figure 3.21.3-13.
    Only Bona Fide Residence dates are present The dates are less than 330 days (unless IRM 3.21.3.42.5 (6) applies)
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, "X" Schedule 1, line 9,

    2. If the housing deduction is claimed in the total reported on Schedule 1, line 25, "X" Schedule 1, line 25,

    3. "X" Form 2555 or Form 2555-EZ, and

    4. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Only Physical Presence dates are present The dates cover at least 330 days Edit the dates in YYMM format in the Physical Presence section.
    Only Physical Presence dates are present The dates do not cover at least 330 days (unless IRM 3.21.3.42.5 (6) applies)
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, "X" Schedule 1, line 9,

    2. If the housing deduction is claimed in the total reported on Schedule 1, line 25, "X" Schedule 1, line 25,

    3. "X" Form 2555 or Form 2555-EZ, and

    4. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Both Bona Fide Residence and Physical Presence dates are present
    • The dates are different, and

    • Both dates meet the criteria for their tests

    Edit the dates for the longest period in the appropriate section. See Figure 3.21.3-14.
    Both Bona Fide Residence and Physical Presence dates are present
    • The dates are the same, and

    • Both dates meet the criteria for their tests

    Edit Bona Fide Residence dates. See Figure 3.21.3-15.
    Both Bona Fide Residence and Physical Presence dates are present Only one set of dates meets the criteria for its test Edit the dates which meet the criteria for its test.
    Both Bona Fide Residence and Physical Presence dates are present Neither sets of dates meets the Bona Fide Residence or Physical Presence tests (unless IRM 3.21.3.42.5 (6) applies)
    1. If the foreign earned income exclusion is claimed in the total reported on Schedule 1, line 9, "X" Schedule 1, line 9,

    2. If the housing deduction is claimed in the total reported on Schedule 1, line 25, "X" Schedule 1, line 25,

    3. "X" Form 2555 or Form 2555-EZ, and

    4. If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, rebatch the coded return as domestic.

    Caution:

    If the taxpayer enters an ending date beyond the received date of the return, edit the received date as the ending date (e.g., if the taxpayer’s ending date is June 1, 2023 and the return received date is April 25, 2023, then edit the ending date as "2304" ).

    Figure 3.21.3-12

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    Figure 3.21.3-13

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    Figure 3.21.3-14

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    Figure 3.21.3-15

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  8. If beginning and/or ending dates are not present:

    If And Then
    The taxpayer indicates the tax home in the country is for a full calendar year by including notations such as:
    • "since birth"

    • "all my life"

    • "still here"

    • "continues"

    • "N/A"

    • "-"

    Reminder:

    These notations are not all-inclusive.

     
    1. If the beginning date is unknown, edit January of the tax year as the beginning date (e.g., for a TY22 return, edit "2201" ). See Figure 3.21.3-16.

    2. If the ending date is unknown on a current year return:

      • Edit the current date as the ending date if before "042323" .

      • After 042223, edit the received date as the ending date (e.g., if the received date is June 2023, edit "2306" ).

      • Edit CCC "N" on a late-filed return when the ending date is after the tax period of the return.

      See Figure 3.21.3-17.

    3. If the ending date is unknown on a prior year return, edit the received date as the ending date.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡

    Any of the following conditions are present:
    • No beginning date (ending date is present)

    • No ending date (beginning date is present)

    • No dates

    • Only months are present (e.g., Jan.-Dec.)

    The number of days on Form 2555, line 31 or 38 (Form 2555-EZ, line 14) is 365 or 366 Edit qualifying Bona Fide Residence dates to cover a full calendar year. See Figure 3.21.3-18.

    Note:

    If the beginning date is unknown, edit January, and if the ending date is unknown, edit December.

    Any of the following conditions are present:
    • No beginning date (ending date is present)

    • No ending date (beginning date is present)

    • No dates

    • Only months are present (e.g., Jan.-Dec.)

    The number of days on Form 2555, line 31 or 38 (Form 2555-EZ, line 14) is 330-364 Edit qualifying Physical Presence dates to cover a full calendar year. See Figure 3.21.3-19.

    Note:

    If the beginning date is unknown, edit January (YY01), and if the ending date is unknown, edit December (YY12).

    Any of the following conditions are present:
    • No beginning date (ending date is present)

    • No ending date (beginning date is present)

    • No dates

    • Only months are present (e.g., Jan.-Dec.)

    The number of days on Form 2555, line 31 or 38 (Form 2555-EZ, line 14) is less than 330 or blank (unless IRM 3.21.3.42.5 (6) applies) Correspond.

    Note:

    Do not "X" the exclusion (Form 2555 or Form 2555-EZ (TY18 and prior)) based on the number of days being less than 330 days before corresponding with the taxpayer.

    Only a year is provided for either the Bona Fide Residence or the Physical Presence dates   In whichever area the taxpayer entered the year:
    1. Edit the beginning date as YY01, and

    2. Edit the ending date as YY12.

    Figure 3.21.3-16

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    Figure 3.21.3-17

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    Figure 3.21.3-18

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    Figure 3.21.3-19

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Form 2555 - Page 1, Parts I and II

  1. If page 1 is missing, correspond.

    Exception:

    If page 2 is complete, including physical presence dates, and page 1 is missing, dummy page 1 of Form 2555. If Part III is complete, do not correspond for Part II.

  2. POD Code (top center of Form 2555): See IRM 3.21.3.42.4 and Exhibit 3.21.3-7. If the country cannot be determined, edit POD "XX" .

  3. Bona Fide residence dates, Line 10: See IRM 3.21.3.42.5.

  4. Declaration Questions: Edit a “4” in the margin to the right of line 13a if any of the following conditions are found. See Figure 3.21.3-20.

    1. Line 13(a): YES box checked

    2. Line 13(b): NO box checked

    3. Line 15(c): YES box checked

    4. Line 15(d): YES box checked

    Caution:

    Do not edit "4" for declaration questions if dates are being moved from bona fide residence to physical presence or if the only dates present are physical presence dates.

  5. Line 14 columns (c): Days in the United States on business:

    1. "Number of days in U.S. on business" (third and seventh columns under line 14): Add the number of days listed. See Figure 3.21.3-20.

      Exception:

      Do not include days in the U.S. with notations of "illness" , "personal" , or "vacation" .

    2. Edit the sum in the margin to the right of line 14 and just above line 15a. See Figure 3.21.3-20.

    Note:

    If dates are being moved from bona fide residence to physical presence, also move number of days in the U.S. on business, if present. If only physical presence dates are present, move the number of days entered by the taxpayer from page 1 to page 2.

    Figure 3.21.3-20

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Form 2555 - Page 2, Part III

  1. Physical Presence Dates, Line 16: See IRM 3.21.3.42.5.

  2. Line 18 column (e) - Days in the United States on Business:

    1. "Number of days in U.S. on business" (fifth column under line 18): Add the number of days listed.

      Exception:

      Do not include days in the U.S. with notations of "illness" , "personal" , or "vacation" .

    2. Edit the sum in the margin to the right of line 18 and just above the Part IV.

    3. If Line 18 column (e) is blank and only Physical Presence dates are present, edit number of days in U.S. on business from line 14c.

Form 2555 - Page 2, Part IV

  1. Page 2 of Form 2555 must be completed by the taxpayer. If page 2 is missing or there are no significant T-line entries present or edited, correspond.

    Note:

    All amounts are to be reported in U.S. currency ONLY. Convert any amounts reported in foreign currency to U.S. dollars using the exchange rate table appropriate for the tax period of the filer’s tax return.

  2. Line 19, Total Wages:

    1. If blank, dash, or zero and an amount is present on line 26, edit the line 26 entry to line 19.

    2. If lines 19 and 26 are blank, dash, or zero and an entry appears on line 20a, edit the amount to line 19.

  3. Line 22g, Total Allowances: Compute and edit when blank, dash, or zero and there are entries present on lines 22a through 22f.

  4. Line 26: Taxpayers claiming a foreign earned income exclusion are not entitled to claim the same amount on line 1a, Form 1116. See IRM 3.21.3.29.

Form 2555 - Page 3, Parts V, VI, VII, VIII, and IX

  1. If the taxpayer is claiming an exclusion from Form 2555, then page 3 must be completed. Either line 42 or line 45 must be present or edited. If both are missing, correspond for Form 2555, Page 3.

    Note:

    If the taxpayer enters zero on line 42 and/or 45, do not correspond; continue processing.

  2. Line 33, Housing Expense: Compute and edit when blank, dash, or zero by subtracting line 32 from line 30.

  3. Line 36, Housing Exclusion:

    1. Qualified individuals may separately elect to claim the housing exclusion or the housing deduction, in addition to the foreign earned income exclusion. The housing exclusion applies only to amounts considered paid for with employer-provided amounts. The housing deduction applies only to amounts paid for with self-employment earnings.

  4. Line 42, Foreign Earned Income Exclusion:

    1. If blank, and line 40 and/or line 41 have entries, then edit the smaller amount to line 42.

    2. If there is no amount present on line 45, ensure the line 42 amount (or combined line 42 amounts, if the primary and secondary taxpayers each submitted a Form 2555) is included as a negative in the total on Schedule 1, line 9.

  5. If the taxpayer is claiming an exclusion, line 42 cannot be edited, and line 45 is blank, then correspond for Form 2555, Page 3.

  6. Line 45, Housing Exclusion and/or Foreign Earned Income Exclusion:

    1. The taxpayer may include an amount for a prior year exclusion by making a notation on the dotted portion of line 45. If this notated amount is included in the total on line 45, accept the taxpayer’s figure. If this amount is the only Form 2555 exclusion claimed, accept the taxpayer’s figures. DO NOT correspond for dates. DO NOT edit POD or dates.

    2. If there is an amount present on line 45 (or on two lines 45, if the primary and secondary taxpayers each submitted a Form 2555), ensure this amount is included as a negative in the total on Schedule 1, line 9. See Figure 3.21.3-21.

  7. Line 50, Housing Deduction:

    1. If blank, dash, zero, or illegible, compute the housing deduction amount by adding lines 48 and 49.

    2. If not already included by the taxpayer, edit the housing deduction amount to be included in the total on Schedule 1, line 25.

    3. If the housing deduction amount is entered on any other line, "X" the entry, and edit it to be included in the total on Schedule 1, line 25.

    Figure 3.21.3-21

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Form 4835 (Sequence 37) - Farm Rental Income and Expenses

  1. The following lines on Form 4835 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 There are no T-Compute Lines
    Line 2a  
    Line 3a  
    Lines 4a and 4b  
    Line 5a  
    Line 6  

  2. For additional instructions, see IRM 3.11.3.

Form 8839 (Sequence 38) - Qualified Adoption Expenses

  1. The following lines on Form 8839 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1, columns (a) through (g) Line 21
    Supporting Documentation Indicator - edited below line 1, column (g) Line 29
    Line 3 - edited for Child 1, Child 2, and Child 3  
    Line 5 - edited for Child 1, Child 2, and Child 3  
    Line 11 - edited for Child 1, Child 2, and Child 3  
    Line 13  
    Line 21  
    Line 27 - Edited for Child 1, Child 2, and Child 3  
    Line 28  
    Line 29  
    Documentation Indicator - edited below Line 1, column (g)  

  2. For additional instructions, see IRM 3.11.3.

Form 8853 (Sequence 39) - Archer MSAs and Long-Term Care Insurance Contracts

  1. The following lines on Form 8853 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    TIN There are no T-Compute Lines
    Lines 1-4  

  2. For additional instructions, see IRM 3.11.3.

Form 8814 (Sequence 40, 41, 42) - Parents’ Election to Report Child's Interest and Dividends

  1. The following lines on Form 8814 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Child's Name Control Line 15
    Child's TIN  
    Lines 1a and 1b  
    Line 2a  
    Line 3  
    Line 15  

  2. For additional instructions, see IRM 3.11.3.

Schedule EIC (Sequence 43) - Earned Income Credit

  1. The following lines on Schedule EIC are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Checkbox - Qualifying Filing Separate Indicator There are no T-Compute Lines
    Line 1 - Child's Name Control (Child 1, 2, and 3)  
    Line 2 - Child's SSN (Child 1, 2, and 3)  
    Line 3 - Year of Birth (Child 1, 2, and 3)  
    Line 4a - Under Age 24 checkbox (Child 1, 2, and 3)  
    Line 4b - Disabled checkbox (Child 1, 2, and 3)  
    Line 5 - Relationship Code (Child 1, 2, and 3)  
    Line 6 - Number of Months (Child 1, 2, and 3)  

  2. If the taxpayer's address is outside the U.S., see IRM 3.21.3.15.1.30.

  3. For additional instructions, see IRM 3.11.3.

Schedule H (Sequence 44, 45) - Household Employment Taxes

  1. The following lines on Schedule H are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Employer's Name Control Line 8d
    Employer's TIN Line 18, column (h)
    Employer's EIN Line 19
    Line 1a Line 24
    Line 1b (TY20 and later)  
    Line 3  
    Lines 5 through 7  
    Line 8b (TY20 and later)  
    Line 8c (TY21 and later)  
    Line 8d  
    Line 8e (TY20 and later)  
    Line 8f (TY21 and later)  
    FUTA Indicator Code - edited under Yes/No boxes, Page 2, Part II  
    Lines 13 through 16  
    Line 17, column (a)  
    Line 18, column (h)  
    Lines 19 and 20  
    Lines 23 and 24  
    Additional States Indicator - edited in bottom left margin  

  2. If a current year loose Schedule H-PR contains no money amount entries, give the Schedule H-PR to your work leader. The work leader will dispose of the loose Schedule H-PR in accordance with classified waste procedures.

  3. Prepare a "dummy" Form 1040-PR for a loose Schedule H-PR. Follow these procedures when preparing a "dummy" Form 1040-PR:

    1. Complete the caption information using the information from the Schedule H-PR name line and Part IV address area.

    2. Edit FSC "1" or "2" based on the Schedule H-PR name line.

    3. Edit Form 1040-PR, lines 4, 6, and 16 from Schedule H-PR, line 16 or 24 (FUTA tax). (If Part II was not completed, use the amount from Schedule H-PR, line 8a.)

    4. Edit CCC "3" .

    5. Edit RPC "Y" .

    6. If Schedule H-PR is missing a valid signature or documentary evidence, correspond with Form 13975, using the following fill-in:
      "If you are not required to file a tax return, send us a completed Part IV, Schedule H-PR, with your original signature. If someone other than the taxpayer is signing Schedule H-PR, include a power of attorney, court certificate, or Form 2848."

  4. When a loose Schedule H is received, process the Schedule H using instructions in IRM 3.11.3.51.14.

  5. For additional instructions, see IRM 3.11.3.

Schedule 8812 (Sequence 47) - Credits for Qualifying Children and Other Dependents

  1. The following lines on Schedule 8812 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 13 There are no T-Compute Lines
    Line 18b  
    Line 21  

  2. If the only address on the return or attachments is Puerto Rico and Form 1040 or Form 1040A (TY17 and prior) is filed, treat the taxpayer as a bona fide resident of Puerto Rico, and correspond following the instructions at IRM 3.21.3.79.1.1 (2).

  3. Edit the total Social Security and Medicare tax amounts from all Forms W-2 (boxes 4 and 6), Forms 499R-2/W-2PR (boxes 18 and 20), or attachments on line 21 when both of the following conditions are present:

    • Line 16b is $4,500 or more, and

    • Line 21 is blank, dash, or zero, and there is an amount on Form 1040, line 28.

    Note:

    The notation "FICA" on an attachment indicates Social Security tax withheld.

  4. If unable to edit an amount to line 21 using the instructions above, "X" Form 1040, line 28.

    Exception:

    Do not "X" Form 1040, line 28 if you can determine that all income is from self-employment or HSH, or if there is an indication that the taxpayer has filed Form 4029.

  5. For additional instructions, see IRM 3.11.3.

Form 8606 (Sequence 48, 49) - Nondeductible IRAs

  1. The following lines on Form 8606 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Spousal Indicator - edited to the left of the form title Line 15c
    Line 7  
    Line 15c  
    Line 16  
    Line 17  
    Line 18  
    Line 22  

  2. For additional instructions, see IRM 3.11.3.

Form 8863 (Sequence 50) - Education Credits (American Opportunity and Lifetime Learning Credits)

  1. The following lines in Part I - Refundable American Opportunity Credit on Form 8863 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 Line 1

  2. The following lines in Part II - Nonrefundable Education Credits on Form 8863 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 10 Line 10

  3. The following lines in Part III - Student and Educational Institution Information on Form 8863 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 20 There are no T-Compute Lines
    Line 21  
    Line 22, Column A, Line 4  
    Line 22, Column B, Line 4  
    Line 23  
    Line 24  
    Line 25  
    Line 26  

  4. For additional instructions, see IRM 3.11.3.

Form 4952 (Sequence 51) - Investment Interest Expense Deduction

  1. The following lines on Form 4952 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 4e There are no T-Compute Lines
    Line 4g  

  2. For additional instructions, see IRM 3.11.3.

Form 8889 (Sequence 52, 53) - Health Savings Accounts (HSAs)

  1. Use Sequence Code "52" for the primary taxpayer and "53" for the secondary taxpayer, even if only one form is filed.

  2. The following lines on Form 8889 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1 through 21 Line 16

  3. For additional instructions, see IRM 3.11.3.

Form 8880 (Sequence 54) - Credit for Qualified Retirement Savings Contributions

  1. The following lines on Form 8880 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 6a and 6b There are no T-Compute Lines

  2. For additional instructions, see IRM 3.11.3.

Form 8995, Form 8995-A, and Form 8995-A Schedule C (Sequence 55/55A/55D) - Qualified Business Income Deduction

  1. Form 8995: The following lines on Form 8995 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 2 and 3 Line 5
    Lines 5 through 7 Line 9
    Line 9 Line 16
    Line 12 Line 17
    Lines 16 and 17  

  2. Form 8995-A: The following lines on Form 8995-A are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 27 through 29 Line 31
    Line 31 Line 40
    Line 34  
    Line 38  
    Line 40  

  3. Form 8995-A, Schedule C: The following lines on Form 8995-A, Schedule C are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 2 Line 6
    Line 6  
  4. For additional instructions, see IRM 3.11.3.

Form 8888 (Sequence 56) - Allocation of Refund (Including Savings Bond Purchases)

  1. The following lines on Form 8888 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 1a through 1d There are no T-Compute Lines
    Lines 2a through 2d  
    Lines 3a through 3d  
    Line 4  
    Lines 5a through 5c  
    Line 5c Checkbox  
    Lines 6a through 6c  
    Line 6c Checkbox  
    Line 7  

  2. For additional instructions, see IRM 3.11.3.

Form 8978 (Sequence 57) - Partner’s Additional Reporting Year Tax

  1. The following lines on Form 8978 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Review Year Adj Code Checkbox (below entity) Line 14
    Line 14 Line 16
    Line 16 Line 18
    Line 18  

  2. For additional instructions, see IRM 3.11.3.

Form 5405 (Sequence 58, 59) - Repayment of the First-Time Homebuyer Credit

  1. The following lines on Form 5405 (edit Sequence Code "58" for the primary taxpayer and "59" for the secondary taxpayer, even if only one form is filed) are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    TIN There are no T-Compute Lines
    Line 1  
    Line 3 Checkboxes  
    Lines 4and 5  
    Lines 7 and 8  

  2. For additional instructions, see IRM 3.11.3.

Form 8917 (Sequence 60) - Tuition and Fees Deduction

  1. Reserved

Form 8919 (Sequence 61, 62) - Uncollected Social Security and Medicare Tax on Wages

  1. The following lines on Form 8919 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Taxpayer TIN Line 6
    Lines 1 through 3, columns (a) through (f) Line 13
    Line 6  
    Line 8  
    Line 13  

  2. For additional instructions, see IRM 3.11.3.

Form 8958 (Sequence 63) - Allocation of Tax Amounts Between Certain Individuals in Community Property States

  1. The following lines on Form 8958 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Spouse's or Partner's First Name There are no T-Compute Lines
    Spouse's or Partner's Last Name  
    Spouse's or Partner's Social Security Number  

  2. For additional instructions, see IRM 3.11.3.

Form 461 (Sequence 64) - Limitation on Business Losses

  1. The following lines on Form 461 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 8 through 12 Line 9
    Line 16 Line 12
      Line 16

  2. For additional instructions, see IRM 3.11.3.

Form 8941 (Sequence 65, 66) - Credit for Small Employer Health Insurance Premiums

  1. Only 2 forms can be processed:

    • One for the primary taxpayer (sequence code 65)

    • One for the secondary taxpayer (sequence code 66)

  2. The following lines on Form 8941 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Identifying Number (Top Right) There are no T-Compute Lines
    A - SHOP (Small Business Health Options Program) Checkbox  
    B - Employment Taxes via Employer Identification Number  
    C - Two-Year Declaration Checkbox  
    Lines 1 through 5  
    Line 10  
    Lines 13 through 16  

  3. For additional instructions, see IRM 3.11.3.

Form 6252 (Sequence 67) - Installment Sale Income

  1. The following lines on Form 6252 are the T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 Line 7
    Lines 2a and 2b Line 19
    Line 7  
    Line 19  
    Line 21  
    Line 23  

  2. For additional instructions, see IRM 3.11.3.

Form 8910 (Sequence 68) - Alternative Motor Vehicle Credit

  1. The following lines on Form 8910 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1, columns (a) and (b) There are no T-Compute Lines
    Line 2, columns (a) and (b)  

  2. For additional instructions, see IRM 3.11.3.

Form 8936 (Sequence 69) - Qualified Plug-In Electric Drive Motor Vehicle Credit

  1. The following lines on Form 8936 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1, columns (a) and (b) There are no T-Compute Lines
    Line 2, columns (a) and (b)  

  2. For additional instructions, see IRM 3.11.3.

Form 8867 (Sequence 70) - Paid Preparer's Due Diligence Checklist

  1. The following lines on Form 8867 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    EIC checkbox There are no T-Compute Lines
    CTC/ACTC/ODC checkbox  
    AOTC checkbox  
    HOH checkbox  
    Line 15  

  2. For additional instructions, see IRM 3.11.3.

Form 8959 (Sequence 71) - Additional Medicare Tax

  1. The following lines on Form 8959 are T-Lines and T-Compute Lines.

    T-Lines T-Compute Lines
    Lines 1 through 3 There are no T-Compute Lines
    Lines 7 and 8  
    Lines 13 and 14  
    Lines 17 through 19  
    Lines 23 and 24  

  2. For additional instructions, see IRM 3.11.3.

Form 8960 (Sequence 72) - Net Investment Income Tax - Individuals, Estates, and Trusts

  1. The following lines on Form 8960 are T-Lines and T-Compute Lines.

    T-Lines T-Compute Lines
    Investment Income checkboxes Line 8
    Lines 1 through 3 Line 11
    Lines 4a and 4b  
    Lines 5a through 5c  
    Lines 6 through 8  
    Lines 9a through 9c  
    Lines 10 and 11  
    Line 13  
    Lines 16 and 17  

  2. For additional instructions, see IRM 3.11.3.

Form 8962 (Sequence 73, 74) - Premium Tax Credit (PTC)

  1. Sequence "73" is used for page 1. Sequence "74" is used for page 2 only if T-line entries are present.

  2. The following lines on Form 8962, Page 1 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Married Filing Separately PTC exception checkbox There are no T-Compute Lines
    Line 2b  
    Line 4 checkboxes  
    Line 8b  
    Lines 11 through 23, columns (a), (b),and (f)  
    Lines 24 and 25  

  3. The following lines on Form 8962, Page 2 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Lines 30 through 33, columns (a) through (g) There are no T-Compute Lines
    Lines 35 and 36, columns (a) through (d)  

  4. For additional instructions, see IRM 3.11.3.

Form 965-A (Sequence 76) - Individual Report of Net 965 Tax Liability

  1. The following lines on Form 965-A are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Part I, column a (first 5 lines) There are no T-Compute Lines
    Part I Additional Data Indicator, edited in margin to the right of Part I, line 1, column e  
    Part I, column j (first 5 lines)  
    Part I, column k (first 5 lines)  
    Part IV, column f (first 5 lines)  
    Part IV Additional Data Indicator, edited in margin to the right of Part IV, line 1, column i  
    Total Line, Page 3  

  2. For additional instructions, see IRM 3.11.3.

Form 9000 (Sequence 77) - Alternative Media Preference

  1. The following lines on Form 9000 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 There are no T-Compute Lines
    Taxpayer Indicator, edited in right margin by SSN  

  2. For additional instructions, see IRM 3.11.3.

Schedule LEP (Sequence 77A) - Request for Change in Language Preference

  1. The following lines on Schedule LEP are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Line 1 There are no T-Compute Lines
    Taxpayer Indicator, edited in right margin by SSN  

  2. For additional instructions, see IRM 3.11.3.

Form 8997 (Sequence 78) - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments

  1. The following lines on Form 8997 are T-Lines and T-Compute Lines:

    T-Lines T-Compute Lines
    Part I, 1st line, columns (a), (b), (d), (e), and (f) Part I, line 2, columns (e) and (f)
    Part I Additional Info Indicator - Part I, margin to right of column (f) Part II, line 2, columns (e) and (f)
    Part I, line 2, columns (e) and (f) Part III, line 2, columns (e) and (f)
    Part II, 1st line, columns (a), (b), (d), (e), and (f) Part IV, line 2, columns (e) and (f)
    Part II Additional Info Indicator - Part II, margin to right of column (f)  
    Part II, line 2, columns (e) and (f)  
    Part III, 1st line, columns (a), (b), (d), (e), and (f)  
    Part III Additional Info Indicator - Part III, margin to right of column (f)  
    Part III, line 2, columns (e) and (f)  
    Part IV, 1st line, columns (a), (b), (d), (e), and (f)  
    Part IV Additional Info Indicator - Part IV, margin to right of column (f)  
    Part IV, line 2, columns (e) and (f)  

  2. For additional instructions, see IRM 3.11.3.

American Samoa - Overview

  1. American Samoa (AS) has its own separate and independent income tax system.

  2. Bona fide residents of American Samoa are generally exempt from United States tax on their American Samoa source income.

  3. United States Armed Forces: Bona fide residents of American Samoa include military personnel whose official home of record (i.e., SLR) is American Samoa.

American Samoa (AS) - Filing Requirements Overview

  1. Generally, returns will be filed with both American Samoa and the United States. The income reported on each return depends on the taxpayer’s residency status in American Samoa.

  2. If the taxpayer is a bona fide resident of AS and a United States citizen, resident, or nonresident alien during the entire year, they may need to file two returns:

    1. An AS tax return.

    2. A U.S. tax return reporting gross worldwide income except income from sources within American Samoa (IRC 931). Form 4563 may be attached.

  3. A taxpayer does not have a United States income tax filing obligation if both are true:

    1. The taxpayer is a bona fide resident of American Samoa.

    2. The taxpayer only has income derived from sources in American Samoa.

    Exception:

    Income received for services performed as an employee of the United States government or any of its agencies cannot be excluded from the United States tax return. If the United States government wages are reported on both the United States and AS tax returns, Form 1116 can be attached to the United States tax return to claim a credit for the taxes paid to AS.

  4. If the taxpayer is not a bona fide resident of AS during the entire tax year and they are a United States citizen or resident alien, they may need to file two returns:

    1. An AS tax return.

    2. A U.S. tax return to report income from worldwide sources. Form 1116 can be used to claim a credit for income paid to American Samoa on American Samoa source income subject to double taxation for income taxes paid.

      Exception:

      Nonresident aliens report only U.S. source and U.S. effectively connected income.

  5. If the taxpayer is not a bona fide resident of AS during the entire tax year and they are a nonresident alien, they may need to file two returns:

    1. An AS tax return.

    2. A U.S. tax return reporting income from U.S. sources.

Processing Form 1040 With Income or Address From American Samoa
  1. If the only source of income is from a Form W-2AS AND there is an indication that the taxpayer is a bona fide resident:

    1. Correspond by preparing Form 3696-A to initiate Letter 86C, which informs the taxpayer that their return has been transshipped to the Tax Division Government of American Samoa for processing.

      Exception:

      Do not prepare Form 3696-A for photocopied returns with a U.S. Territory received date.

    2. Attach Form 3696-A to the tax return and route it to the ERS clerical unit. The ERS clerical unit will issue Letter 86C and transship the tax return to:
      American Samoa Tax Office
      Executive Office Building
      First Floor
      Pago Pago, AS 96799

    Note:

    For numbered returns, edit Action Code "640" , attach Form 4227, and notate "transship to American Samoa for processing" .

  2. If there is no indication that the taxpayer is a bona fide resident of American Samoa, continue processing the return.

  3. Taxpayers who reside outside the 50 U.S. states and the District of Columbia generally are not entitled to claim EIC.

    1. If the taxpayer is not claiming EIC, edit RPC "B" .

    2. If the taxpayer is claiming EIC, see IRM 3.21.3.15.1.30.

      Caution:

      If the taxpayer is not a bona fide resident of the U.S. territory and is U.S. Military personnel, the taxpayer is considered a resident of the U.S. for the entire year and may be able to claim EIC.

  4. "X" any amount claimed for Additional Child Tax Credit (ACTC) on line 28, unless you can determine the taxpayer is U.S. military personnel. See IRM 3.21.3.15.1.31.

  5. If the taxpayer is claiming withholding from American Samoa, see IRM 3.21.3.15.1.28.

  6. The taxpayer may claim excess Social Security and RRTA taxes withheld. Verify the withholding.

    Note:

    Consider all Forms W-2 submitted when verifying the withholding.

  7. For additional information on bona fide residence rules, military personnel, and military spouses, see IRM 3.21.3.3.6.

Form 1040 With Form 4563 - Exclusion of Income For Bona Fide Residents of American Samoa Under IRC 931
  1. Form 4563 is not transcribed. Do not perfect Form 4563. For TY18 and prior, "X" Form 4563 when it is attached.

  2. Form 4563 is used to figure the amount of income from sources within American Samoa that may be excluded in accordance with IRC 931 from gross income on Form 1040.

  3. This exclusion may be claimed if a taxpayer is a bona fide resident of American Samoa. Eligible taxpayers will file Form 1040 and:

    • Attach Form 4563, and

    • Report worldwide income.

  4. Income that can be excluded in accordance with IRC 931:

    • Income received from sources in American Samoa, and

    • Income effectively connected with the conduct of a trade or business in American Samoa.

  5. If wages and salaries paid by the U.S. government or any of its agencies was excluded under IRC 931:

    1. "X" the exclusion, and

    2. Include the income on the appropriate income line.

  6. If the taxpayer claims the exclusion in accordance with IRC 931, the following are examples of deductions and credits that will be limited on Form 1040:

    • The standard deduction

    • Certain itemized deductions such as medical and dental expenses, gifts to charity, and real estate taxes and mortgage interest on personal residence.

  7. If taxpayer reports only U.S. income and attaches a copy of the territory's return indicating that territory income was reported to the territory government, correspond for Form 4563 to exclude the income under IRC 931 or Form 1116 to claim a foreign tax credit on the U.S. return.

  8. If a taxpayer claiming an exclusion on Form 4563 has also claimed EIC, take the following actions:

    1. "X" Schedule EIC,

    2. "X" Form 1040, line 27, and

    3. Edit RPC "B" .

Processing Procedures When Form 4563 is Attached or IRC 931 Exclusion
  1. If the taxpayer is claiming the exclusion under IRC 931, Form 4563 must be attached:

    If And Then
    Form 4563 is attached The income and/or exclusion is not reported anywhere on Form 1040 Edit a "1" on Form 3471-E, line 8.
    Form 4563 is attached, Income and/or exclusion is reported and/or excluded
    1. Edit a "1" on Form 3471-E, line 8 (see Figure 3.21.3-22),

    2. "X" the IRC 931 entries on Form 1040 or Schedule 1, and

    3. If the deleted entries were the only entries, edit RPC "L" and CCC "B" .

    Form 4563 is not attached, The taxpayer claims the exclusion under IRC 931 Correspond for Form 4563.

    Figure 3.21.3-22

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    Please click here for the text description of the image.

Guam - Overview

  1. The Guam system of income taxation is generally based on the income tax laws of the United States. Guam has its own tax system based partly on the same tax laws and tax rates that apply to the United States.

  2. Individuals with income from Guam will only file one return, either with Guam or the IRS, unless the taxpayer is a nonresident alien and not a bona fide resident of Guam. See IRM 3.21.3.76.1 for filing requirements.

  3. Members of the U.S. Armed Forces who:

    1. Qualify as a bona fide resident of Guam in a prior tax year, and are absent from Guam solely in compliance with military orders, must file with Guam.

    2. Did not qualify as a bona fide resident of Guam in a prior tax year, and are present in Guam solely in compliance with military orders, must file with the IRS.

Guam - Filing Requirements Overview

  1. If the taxpayer is a United States citizen, resident alien, or nonresident alien and is a bona fide resident of Guam during the entire tax year, they must file their income tax return with Guam.

  2. If the taxpayer is a United States citizen, or resident alien and is not a bona fide resident of Guam during the entire tax year, they must file their income tax return with the IRS. The tax return will include:

    1. Form 1040, reporting income from worldwide sources

    2. All income tax withheld by either the United States or Guam

    3. Any credit for overpayment of income tax to either the United States or Guam

    4. Any payments of estimated tax to either the United States or Guam

    5. Payment of any balance of tax due

    6. Form 5074, if the adjusted gross income is $50,000 or more for the tax year and gross income of $5,000 or more is from sources within Guam

      Exception:

      Military employees do not require a Form 5074.

  3. If the taxpayer is a nonresident alien of the United States and is not a bona fide resident of Guam during the entire tax year, they must:

    1. File a Guam income tax return reporting only their Guam source income

      Note:

      In this situation, Guam source is any income received for services performed in Guam, even if they were paid by the U.S. government.

    2. A Form 1040-NR, reporting U.S. source income

Processing Form 1040 with Address or Income from Guam
  1. If there is an indication that the taxpayer is a bona fide resident of Guam:

    1. Correspond using Form 3696-A to initiate Letter 86C, which informs the taxpayer that their return has been transshipped to the Department of Revenue and Taxation, Government of Guam for processing.

      Exception:

      Do not prepare Form 3696-A for photocopied returns with a U.S. Territory received date.

    2. Attach Form 3696-A to the tax return and route it to the ERS clerical unit. The ERS clerical unit will issue Letter 86C and transship the tax return to:
      Department of Revenue and Taxation
      Taxpayer Services Division
      P.O. Box 23607
      Barrigada, GU 96921

    Note:

    For a numbered return, edit Action Code "640" , attach Form 4227, and notate "transship return to the Department of Revenue and Taxation, Government of Guam" .

  2. If there is no indication that the taxpayer is a bona fide resident of Guam ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, continue processing the return.

  3. Taxpayers who reside outside the 50 U.S. states and the District of Columbia generally are not entitled to claim EIC.

    1. If the taxpayer is not claiming EIC, edit RPC "B" .

    2. If the taxpayer is claiming EIC, see IRM 3.21.3.15.1.30.

      Caution:

      If the taxpayer is not a bona fide resident of the U.S. territory and is U.S. military personnel, the taxpayer is considered a resident of the U.S. for the entire year and may be able to claim the EIC.

  4. "X" any amount claimed for Additional Child Tax Credit (ACTC) on line 28, unless you can determine the taxpayer is a U.S. military personnel. See IRM 3.21.3.15.1.31.

  5. If the taxpayer files Form 1040 Guam Individual Income Tax Return, send the return to the Department of Revenue and Taxation. See instructions in IRM 3.21.3.76.1.1 (1).

  6. If the taxpayer is claiming withholding from Guam, allow the withholding.

  7. The taxpayer may claim excess Social Security and RRTA taxes withheld. Verify the withholding.

    Note:

    Consider all Forms W-2 submitted when verifying the withholding.

  8. For additional information on bona fide residence rules, military personnel, and military spouses, see IRM 3.21.3.3.6.

Processing Form 1040 with Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)
  1. Form 5074 provides information to the U.S. so that the IRS can figure the individual income tax that is due to Guam or the CNMI.

  2. Form 5074 is required when both are true:

    • A U.S. citizen or resident alien reports adjusted gross income of $50,000 or more, and

    • $5,000 or more of the gross income is derived from Guam or CNMI sources

  3. If Form 5074 is required but not attached, route to the workleader.

  4. The workleader will:

    1. Make one (1) copy of the entire return, including Forms W-2,

    2. Route the copy to IMF Classification (Exam), and

    3. Return the original to the tax examiner to be processed.

  5. When Form 5074 is attached to Form 1040, edit Audit Code "L" .

Commonwealth of the Northern Mariana Islands - Overview

  1. The Commonwealth of the Northern Mariana Islands (CNMI) system of income taxation is partly based on the income tax laws of the United States.

  2. Individuals with income from the CNMI will file only one return, either with the CNMI or IRS, unless the taxpayer is a nonresident alien and not a bona fide resident of CNMI. The taxpayer’s residency status under IRC 937(a) with respect to the CNMI determines which return they must file.

    1. Bona fide residents with worldwide income - If properly filed with CNMI, a taxpayer will not file a return with the U.S.

    2. Not bona fide residents with worldwide income - Taxpayer should claim withholding from the U.S. or CNMI on the corresponding U.S. or CNMI tax return.

    3. Taxpayers that reside in the CNMI cannot claim the Earned Income Credit, except in limited circumstances.

  3. Members of the U.S. Armed Forces who:

    1. Qualify as a bona fide resident of the CNMI in a prior tax year, and are absent from the CNMI solely in compliance with military orders must file with CNMI.

    2. Did not qualify as a bona fide resident of the CNMI in a prior tax year, and are absent from the CNMI solely in compliance with military orders must file with the IRS.

  4. For additional information on bona fide residence rules, military personnel, and military spouses, see IRM 3.21.3.3.6.

CNMI - Filing Requirements Overview

  1. If the taxpayer is a United States citizen, resident alien, or nonresident alien and is a bona fide resident of the CNMI during the entire tax year, they must file their income tax return with the CNMI.

  2. If the taxpayer is a United States citizen or resident alien, and is not a bona fide resident of CNMI during the entire tax year, they must file their income tax return with the IRS. The tax return will include:

    1. Form 1040, reporting income from worldwide sources

    2. All income tax withheld by either the United States or CNMI

    3. Any credit for overpayment of income tax to either the United States or CNMI

    4. Any payments of estimated tax to either the United States or CNMI

    5. Payment of any balance of tax due

    6. Form 5074, if the adjusted gross income is $50,000 or more for the tax year and gross income of $5,000 or more is from sources within CNMI

      Exception:

      Military employees do not require a Form 5074.

  3. If the taxpayer is a nonresident alien of the United States and is not a bona fide resident of CNMI during the entire tax year, they must:

    1. File a CNMI income tax return reporting only their CNMI source income, and

      Note:

      In this situation, CNMI source income is any income received for services performed in CNMI, even if they were paid by the U.S. government.

    2. File a Form 1040-NR reporting U.S. source income.

Processing Form 1040 with Address or Income from Commonwealth of the Northern Mariana Islands (CNMI)
  1. If the only source of income is from a Form W-2CM AND there is an indication that the taxpayer is a bona fide resident of CNMI:

    1. Correspond using Form 3696-A to initiate Letter 86C, which informs the taxpayer that their return has been transshipped to the Division of Revenue and Taxation of CNMI for processing.

      Exception:

      Do not prepare Form 3696-A for photocopied returns with a U.S. Territory received date.

    2. Attach Form 3696-A to the tax return and route it to the ERS clerical unit. The ERS clerical unit will issue Letter 86C and transship the tax return to:
      Commonwealth of the Northern Mariana Islands
      Division of Revenue and Taxation
      P.O. Box 5234, CHRB
      Saipan, MP 96950

    Note:

    For a numbered return, edit Action Code "640" , attach Form 4227, and notate "transship return to the Division of Revenue and Taxation of CNMI" .

  2. If there is no indication that the taxpayer is a bona fide resident of CNMI, continue processing the return.

  3. Taxpayers who reside outside the 50 U.S. states and the District of Columbia generally are not entitled to claim EIC.

    1. If the taxpayer is not claiming EIC, edit RPC "B" .

    2. If the taxpayer is claiming EIC, see IRM 3.21.3.15.1.30.

      Caution:

      If the taxpayer is not a bona fide resident of the U.S. territory and is a U.S. Military personnel, the taxpayer is considered a resident of the U.S. for the entire year and may be able to claim the EIC.

  4. "X" any amount claimed for Additional Child Tax Credit (ACTC) on line 28, unless you can determine the taxpayer is a U.S. military personnel. See IRM 3.21.3.15.1.31.

  5. If the taxpayer is claiming withholding from CNMI, allow the withholding.

  6. The taxpayer may claim excess Social Security and RRTA taxes withheld. Verify the withholding.

    Note:

    Consider all Forms W-2 submitted when verifying the withholding

    .

Processing Form 1040 with Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)
  1. Form 5074 provides information to the U.S. so that the IRS can figure the individual income tax that is due to Guam or the CNMI.

  2. Form 5074 is required when both are true:

    • A U.S. citizen or resident alien reports adjusted gross income of $50,000 or more.

    • $5,000 or more of the gross income is derived from Guam or CNMI sources.

  3. If Form 5074 is required but not attached, route to the workleader.

  4. The workleader will:

    1. Make one (1) copy of the entire return, including Forms W-2,

    2. Route the copy to IMF Classification (Exam), and

    3. Return the original to the tax examiner to be processed.

  5. When Form 5074 is attached to Form 1040, edit Audit Code "L" .

United States Virgin Islands (USVI) - Overview

  1. The USVI system of income taxation is generally based on the income tax laws of the United States.

  2. In general, a bona fide resident of the USVI files an income tax return with the USVI and not with the IRS.

  3. A United States citizen or resident alien who is not a bona fide resident of the USVI, but has USVI source income, will file an income tax return with the IRS and an identical copy of the U.S. return with the USVI.

United States Virgin Islands - Filing Requirements Overview

  1. In general, bona fide residents of the USVI pay taxes only to the USVI. U.S. citizens or resident aliens (but not bona fide residents of the USVI) with USVI source income pay a portion of tax to each jurisdiction.

    1. Bona fide residents include worldwide income on the USVI return and generally do not file a return with the United States unless using Form 1040-SS to report effectively connected net business income of more than $400 from a trade or business in USVI.

    2. Not bona fide residents with worldwide income file identical returns with the United States and the USVI, and the U.S. Form 8689 must be attached to both returns.

  2. For taxable years ending on or after December 31, 2006, all United States citizens, resident aliens, and nonresident aliens who are bona fide residents of the USVI must file with the USVI and report worldwide income.

  3. For taxable years ending before December 31, 2006, if the taxpayer is a United States citizen, resident alien, or nonresident alien and a bona fide resident of the USVI during the entire tax year, and their gross income is $75,000 or more, the taxpayer must file with:

    1. The USVI and report worldwide income and

    2. The IRS, in order to start the U.S. statute of limitations on assessment, as described in Notice 2007-19.

      Note:

      The tax return filed with the IRS will include taxpayer's name, address, Taxpayer Identification Number (TIN), and signature.

  4. If the taxpayer is a United States citizen or resident alien and not a bona fide resident of the USVI during the entire tax year, the taxpayer must file identical tax returns with the IRS and the USVI if the taxpayer has:

    1. Income from sources in the USVI or

    2. Income effectively connected with the conduct of a trade or business in the USVI.

    Note:

    The taxpayer will complete and attach Form 8689 to both returns to determine how much tax to pay to the U.S. and to the U.S. Virgin Islands.

  5. If the taxpayer is a nonresident alien of the United States and not a bona fide resident of the USVI during the entire tax year, they must file:

    1. A return with the USVI, reporting income from sources in the USVI and

    2. A Form 1040-NR reporting U.S. source income.

  6. For a VI Cover Over return found in a batch of regular returns:

    1. If a return has a "U.S. Claim" stamp in the top margin of the return, take it to the work leader.

    2. Work leader will contact P&A for instructions.

Processing Form 1040 with Address or Income from United States Virgin Islands
  1. If there is an indication that the taxpayer is a bona fide resident of USVI ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the only source of income is from a Form W-2VI:

    1. Correspond using Form 3696-A to initiate Letter 86C, which informs the taxpayer that their return has been transshipped to the Virgin Islands Bureau of Internal Revenue for processing.

      Exception:

      Do not prepare Form 3696-A for photocopied returns with a U.S. Territory received date.

    2. Attach Form 3696-A to the tax return and route it to the ERS clerical unit. The ERS clerical unit will issue Letter 86C and transship the tax return to:
      Virgin Islands Bureau of Internal Revenue
      6115 Estate Smith Bay
      Suite 225
      St. Thomas, VI 00802

    Note:

    For a numbered return, edit Action Code "640" , attach Form 4227, and notate "transship to the Virgin Islands for processing" .

  2. If there is no indication that a taxpayer is a bona fide resident of the USVI, continue processing the return.

  3. Taxpayers who reside outside the 50 U.S. states and the District of Columbia are not entitled to claim EIC.

    1. If the taxpayer is not claiming EIC, edit RPC "B" .

    2. If the taxpayer is claiming EIC, see IRM 3.21.3.15.1.30.

      Caution:

      If the taxpayer is not a bona fide resident in any of the U.S. territory and the taxpayer is U.S. Military personnel, the taxpayer is considered a resident of the U.S. for the entire year and may be able to claim the EIC.

  4. "X" any amount claimed for Additional Child Tax Credit (ACTC) on line 28, unless you can determine the taxpayer is a U.S. military personnel. See IRM 3.21.3.15.1.31.

  5. If the taxpayer is claiming withholding from Virgin Islands, see IRM 3.21.3.15.1.28.

  6. The taxpayer may claim excess Social Security and RRTA taxes withheld. Verify the withholding.

    Note:

    Consider all Forms W-2 submitted when verifying the withholding.

Form 8689 - Allocation of Individual Income Tax to the Virgin Islands
  1. Form 8689 is used to figure the amount of U.S. tax allocable to the USVI.

    Caution:

    If Form 8689 is attached or there is an indication on the dotted portion of line 33, Form 1040 that the taxpayer is either reporting taxes paid to the USVI or filing in compliance with Notice 2007-19 (zero return, taxpayer's name, address, TIN, and signature), do not send these returns to the USVI. See IRM 3.21.3.78.2.

  2. Taxes paid to the USVI may be claimed as a credit on the dotted portion of Form 1040, line 33 by completing and attaching Form 8689.

    1. If the amount edited to the dotted portion of Form 1040, line 33 or included in the total on Schedule 3, line 14 is greater than the tax on Form 1040, line 24, adjust the credit to equal the tax amount on Form 1040, line 24.

    2. Ensure the credit amount claimed or edited on the dotted portion of Form 1040, line 33 or included in the total of Schedule 3, line 14 has been included in the total of Form 1040, line 33 or Schedule 3, line 14, respectively.

  3. If Form 8689 is not attached and the taxpayer notated Form 8689 on the dotted portion of Form 1040, line 33 and/or is claiming a credit on the dotted portion of Form 1040, line 33 or Schedule 3, line 13z or 14, then correspond for Form 8689 when the amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

Processing Form 1040 in Compliance with Notice 2007-19
  1. Review the return for indications the taxpayer is filing in compliance with Notice 2007-19, including:

    1. Notation on the return Notice 2007-19

    2. Zero tax return (no dollar entries)

    3. Affirmation statement indicating filed a USVI Form 1040

    4. Statement of gross income of $75,000 or more

    5. Statement affirming the taxpayer's bona fide residency in the USVI along with a summary of facts on which the residency is based

  2. If an indication is found, the return must be hand carried from function to function.

  3. "X" all entries except:

    • Caption Information,

    • Computer Condition Code (CCC), Return Processing Code (RPC), and

    • Received Date

    Exception:

    If the return includes both Notice 2007-19 and Form 8689, process as Form 1040 with Form 8689. See IRM 3.21.3.78.1.

Processing Form 1040 in Compliance with Notice 2007-31
  1. The USVI Bureau Internal Revenue (BIR) will send to the IRS copies of the taxpayers' returns for 2006 and later when the taxpayer files a return with the USVI BIR and they meet each of the following conditions:

    1. Bona fide resident of USVI

    2. Gross income of $75,000 or more

  2. The return will be only page 1 of Form 1040 and include a watermark "Filed due to VI Notice 2007-31" in the upper left corner of page 1 Form 1040.

  3. These returns must be hand carried from function to function.

  4. "X" all entries except:

    • Caption Information

    • RPC "L"

    • CCC "B"

    • RPC "V"

    • Received Date

    Note:

    These are the only valid codes for returns filed under Notice 2007-31.

    Reminder:

    For Virgin Islands filed for Cover Over for Notice 2007-31 as Form 1040A (2017 and prior) or Form 1040EZ (2017 and prior), circle the "A" or "EZ" as applicable in red. The return will then be processed as a prior year Form 1040.

Processing U.S. Virgin Islands (VI) Cover-Over Program Form 1040

  1. The Virgin Islands Bureau of Internal Revenue (BIR) sends Form 1040 and Form 1040A (TY17 and prior) tax returns to the IRS that require special handling and editing, also known as the Cover-Over Program. The returns will be hand carried by the Planning and Analysis staff to each function. After the returns are edited, the Planning and Analysis staff must be notified so the returns can be hand carried to the next function. Use the procedures below to edit these returns.

  2. Delete all dependent entries. For TY17 and prior, also delete all exemption entries.

  3. Edit the following information and lines following line by line instructions:

    1. Caption Information

    2. CCCs, RPCs, and SPC

    3. Received Date

  4. Edit only the Caption Information of the return. If a U.S. address is in the caption area, it must be circled out. Perfect the ZIP code to 00801.

  5. Always edit CCCs:

    • "3" (MUST BE EDITED FIRST)

    • "B"

    • "O"

    Note:

    These are the only valid codes for returns filed with a transmittal from the USVI BIR.

  6. Ensure the received date stamped by the USVI BIR is legible.

    Note:

    Always use the USVI Received Date. If the received date stamped by the USVI is illegible, use the signature date.

  7. Edit RPCs:

    • "B"

    • "K" (Statute Years Only)

      Reminder:

      Do not send these returns to Statute.

    • "L"

    Note:

    These are the only valid codes for returns filed with a transmittal from the USVI BIR.

  8. Edit SPC "B" .

    Note:

    This is the only valid code for returns filed with a transmittal from the USVI BIR.

  9. "X" all entries except:

    • Caption information

    • CCCs, RPCs, and SPC

    • Received Date

Puerto Rico - Overview

  1. The Commonwealth of Puerto Rico has an independent income tax system.

  2. Generally the taxpayer will file returns with both Puerto Rico and the IRS. The income reported on each return depends on the taxpayer’s residency status in Puerto Rico.

Puerto Rico (PR) - Filing Requirements Overview

  1. Generally, returns will be filed with both Puerto Rico and the United States. The income reported on each return depends on the taxpayer's residency status in Puerto Rico.

  2. If the taxpayer is a bona fide resident of Puerto Rico during the entire tax year and is a United States citizen or resident alien, they generally must:

    1. File a Puerto Rico return.

    2. If the taxpayer has income from sources other than Puerto Rico, they also file a United States tax return to report income from worldwide sources, but exclude Puerto Rico source income (IRC 933). The taxpayer will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income.

      Exception:

      Income received for services performed as an employee of the United States government or any of its agencies cannot be excluded from the IRS tax return. If United States government wages are reported on both the IRS and Puerto Rico tax returns, Form 1116 can be attached to the IRS tax return to claim a credit for income taxes paid to Puerto Rico.

      Note:

      U.S. government cost of living allowances are excludable from U.S. income tax.

    3. If the taxpayer does NOT have any income other than PR source income, they are ONLY required to file a Puerto Rico return unless using Form 1040-SS to report effectively connected net business income of more than $400 from a trade or business in Puerto Rico.

  3. If the taxpayer is a nonresident alien of the United States and a bona fide resident of Puerto Rico during the entire tax year, they must generally file:

    1. A Puerto Rico tax return.

    2. A United States tax return to report income from worldwide sources, but exclude Puerto Rico source income (IRC 933). The taxpayer will not be allowed the standard deduction, cannot file a joint return, and is not allowed deductions for dependents unless the person is a citizen or national of the United States, a resident of the United States, or a resident of a country contiguous to the United States.

      Exception:

      Income received for services performed as an employee of the United States government or any of its agencies cannot be excluded from the IRS tax return. If United States government wages are reported on both the IRS and Puerto Rico tax returns, Form 1116 can be attached to the IRS tax return to claim a credit for income taxes paid to Puerto Rico.

  4. If the taxpayer is a United States citizen or resident AND not a bona fide resident of Puerto Rico during the entire tax year, they must file the following returns:

    1. A Puerto Rico tax return.

    2. A United States tax return to report income from worldwide sources. Form 1116 can be attached to claim credit for income taxes paid to Puerto Rico or Puerto Rico source income subject to double taxation.

  5. If the taxpayer is a nonresident alien of the United States AND does not qualify as a bona fide resident of Puerto Rico, they must file the following returns:

    1. A Puerto Rico tax return.

    2. A United States tax return, Form 1040-NR, according to the rules for a nonresident alien, reporting only U.S. source and U.S. effectively connected income.

Processing Form 1040 with Address or Income from Puerto Rico
  1. If it appears the taxpayer is a bona fide resident of Puerto Rico (PR) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and no Self-Employment tax is being paid, prepare Form 9143 and mail the return back to the taxpayer with the following fill-in: "Since you appear to be a bona fide resident of PR with only PR income, you do not have a U.S. tax filing obligation. If you have not already done so, you should file a return with the Departamento de Hacienda, PO Box 9022501, San Juan, PR 00902-2501. If you wish to file a US return to claim the Additional Child Tax Credit, you must do so on a Form 1040-PR or Form 1040-SS."

    Note:

    For a numbered return, edit Action Code "640" , and attach Form 4227 and notate "send to taxpayer"

    .

    Exception:

    If the taxpayer is claiming excess Social Security and/or RRTA taxes, process the return.

  2. If the only source of income is from a Form 499R-2/W-2PR and there is an indication that the taxpayer is a bona fide resident of PR and it appears the taxpayer is filing only to claim the Additional Child Tax Credit or Refundable Child Tax Credit:

    1. Prepare Form 9143 to send the return to the taxpayer

    2. Use the following fill-in:
      "Si usted radica una planilla de contribucion de los Estados Unidos, para reclamar el credito tributario adicional por hijos, a usted se le requiere completar el Formulario 1040-PR o 1040-SS. Consulte la Publicacion 570."

  3. If there is no indication that the taxpayer is a bona fide resident of Puerto Rico, continue processing the return.

  4. If the taxpayer is claiming withholding from Puerto Rico, see IRM 3.21.3.15.1.28.

  5. Taxpayers who reside outside the 50 U.S. states and the District of Columbia generally are not entitled to claim EIC.

    1. If the taxpayer is not claiming EIC, edit RPC "B" .

    2. If the taxpayer is claiming EIC, see IRM 3.21.3.15.1.30.

  6. The taxpayer may claim excess Social Security and/or RRTA taxes withheld. Verify the withholding.

    Note:

    Consider all Forms W-2 submitted when verifying the withholding.

  7. For additional information on bona fide residency rules, military personnel, and military spouses, see IRM 3.21.3.3.6.

Processing Procedures for Excluding income - IRC 933

  1. Individuals that are considered bona fide residents of Puerto Rico during the entire tax year generally may exclude income derived from sources within Puerto Rico under IRC 933. However, if a bona fide resident of Puerto Rico received income from sources outside Puerto Rico during the tax year, then they generally must also file a return with the IRS reporting their worldwide gross income. They may claim a Foreign Tax Credit on their U.S. income tax return using Form 1116 for taxes paid to Puerto Rico.

    Exception:

    Such individuals have a U.S. Federal income tax return filing obligation only if their income from sources outside Puerto Rico exceeds their deductions under IRC 151 relating to the personal exemption.

  2. Wages and salaries paid by the U.S. government are subject to U.S. federal income tax. This income does not qualify for the exclusion under IRC 933; therefore, these taxpayers may also be required to file an income tax return with the IRS. These returns may claim the foreign tax credit to avoid double taxation.

    1. If claimed, "X" the exclusion where found.

    2. Edit the income to Form 1040, line 1, if not already included.

  3. If the taxpayer is prorating their itemized deductions (Schedule A) under IRC 933, accept the taxpayer's prorated amount for itemized deductions. When two amounts are present on Schedule A, line 17, "X" out the larger amount.

  4. If the taxpayer qualifies under IRC 933 and does not itemize deductions, only the prorated amount of the standard deduction that is allocated to taxable income on Form 1040 is allowable. If the taxpayer has prorated their standard deduction, accept the taxpayer's figure.

  5. TY17 and prior: If the taxpayer is a resident of Puerto Rico, claiming IRC 933 (exempting all income) and is claiming Additional Child Tax Credit on Form 1040A, convert to Form 1040, and then "X" the income and exclusion where found. See IRM 3.21.3.15.1.31.

  6. If the taxpayer is a bona fide resident of PR and indicates Schedule C or Schedule F income is excluded under IRC 933, take the following actions:

    1. "X" the schedule.

    2. Prepare a dummy schedule.

    3. For Schedule C, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if furnished by the taxpayer. Do not compute line 3. See Figure 3.21.3-23.

    4. For Schedule F, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if furnished by the taxpayer.

  7. If Schedule SE is present, accept the taxpayer's figures.

  8. If there is an indication that the excluded amount under IRC 933 is reported anywhere on the return, delete the income and exclusion where shown and adjust.

  9. When the taxpayer claims income exempt under IRC 933 and is claiming EIC, disallow EIC. "X" both Form 1040, line 27 and Schedule EIC, if attached.

  10. If Form 1116 is attached and Schedule 3, line 1 is blank, edit the amount from Form 1116, line 35 to Schedule 3, line 1.

  11. If a Cost of Living Allowance (COLA) is reported as an adjustment on Form 1040, page 2 or Schedule 1 by a U.S. government employee, delete the amount.

    Figure 3.21.3-23

    This is an Image: 34010023.gif

    Please click here for the text description of the image.

Taxpayers Who File Two Returns (Form 1040 with Form 1040-PR or Form 1040-SS)

  1. Determine if the taxpayer is a bona fide resident of Puerto Rico by using the taxpayer's address and checking Form W-2 to determine if state wages were paid to Puerto Rico.

  2. If a taxpayer, who lives or lived in Puerto Rico (PR), files Form 1040-PR or Form 1040-SS to report self-employment and also files Form 1040 to report worldwide income, use the table below to determine which form should be processed:

    If Then
    The taxpayer is a United States government employee
    1. Process Form 1040 and all applicable Forms and Schedules reporting their U.S. source income and Self-Employment tax on Schedule SE

    2. "X" Form 1040-PR or Form 1040-SS.

    and
    The taxpayer is a bona fide resident of Puerto Rico with only PR source income
    1. Process Form 1040-PR or Form 1040-SS reporting PR self-employment tax.

    2. "X" Form 1040.

    The taxpayer is a bona fide resident with U.S. Source income or other income with a source outside of Puerto Rico
    1. Process the Form 1040.

    2. "X" Form 1040-PR or Form 1040-SS.

    The taxpayer is not a bona fide resident of Puerto Rico with U.S. source income
    1. Process the Form 1040.

    2. "X" Form 1040-PR or Form 1040-SS.

    The taxpayer is not a bona fide resident of Puerto Rico without U.S. source income
    1. Process the Form 1040.

    2. "X" Form 1040-PR or Form 1040-SS.

    The taxpayer cites IRC 933 anywhere on the return or filed Form 8898 and if taxpayer does not have any income source outside of Puerto Rico Treat as a bona fide resident of a U.S. Territory and process the Form 1040-PR or Form 1040-SS.

    Reminder:

    Transfer all T-line amounts as appropriate per the form that is to be processed. Also dummy any Schedules as needed.