#Phone #Scams Pose Serious Threat; Remain on #IRS ‘Dirty Dozen’ List of #Tax_Scams

 

IRS YouTube Videos:

WASHINGTON — The Internal Revenue Service reminded taxpayers to be careful with continuing aggressive phone scams as criminals pose as IRS agents in hopes of stealing money. These continuing phone calls remain a major threat to taxpayers and remain on the annual IRS “Dirty Dozen” list of tax scams for the 2018 filing season.

During filing season, the IRS generally sees a surge in scam phone calls threatening such things as arrest, deportation and license revocation if the victim doesn’t pay a bogus tax bill. In a new twist being seen in recent weeks, identity thieves file fraudulent tax returns with refunds going into the real taxpayer’s bank account – followed by a phone call trying to con the taxpayer to send the money to the scammer.

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year.

To help protect taxpayers, the IRS is highlighting each of these scams on 12 consecutive days to help raise awareness. The IRS also urges taxpayers to help protect themselves against identity theft by reviewing safety tips prepared the Security Summit, a collaborative effort between the IRS, states and the private-sector tax community.

How Do the Scams Work?

Con artists make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They convince the victim to send cash, usually through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS employee titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

The IRS also reminded taxpayers today that scammers change tactics. Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but variations of the IRS impersonation scam continue year-round and they tend to peak when scammers find prime opportunities to strike.

The Treasury Inspector General for Tax Administration (TIGTA) reports they have become aware of over 12,716 victims who have collectively paid over $63 million as a result of phone scams since October 2013.

Here are some things the scammers often do, but the IRS will not do. Taxpayers should remember that any one of these is a tell-tale sign of a scam.

The IRS Will Never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.
  • Call you about an unexpected refund.

For Taxpayers Who Don’t Owe Taxes or Don’t Think They Do:

For Those Who Owe Taxes or Think They Do:

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more information visit Tax Scams and Consumer Alerts on IRS.gov.

Taxpayers have a set of fundamental rights they should be aware of when dealing with the IRS. These are the Taxpayer Bill of Rights. Explore these rights and the agency’s obligations to protect them on IRS.gov.

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The Right to Challenge the IRS’s Position and Be Heard Taxpayer Bill of Rights #4

The Right to Challenge the IRS’s Position and Be Heard Taxpayer Bill of Rights #4

Taxpayers have the right to challenge the IRS’s position and be heard. This is one of the Taxpayer Bill of Rights, which clearly outline the fundamental rights of every taxpayer. The IRS wants to make sure taxpayers know about their rights when dealing with the agency.

Taxpayers have the right to:

  • Raise objections.
  • Provide additional documentation in response to formal or proposed IRS actions.
  • Expect the IRS to consider their objections timely.
  • Have the IRS consider any supporting documentation promptly.
  • Receive a response if the IRS does not agree with their position.

Here are some specific things taxpayers can expect about the right to challenge the IRS’s position and be heard.

  • In some cases, the IRS will notify a taxpayer that their tax return has a mathematical or clerical error. If this happens, the taxpayer:

Has 60 days to tell the IRS that they disagree.

Should provide copies of any records that may help correct the error.

May call the number listed on the letter or bill for assistance.

Can expect the agency to make the necessary adjustment to their account and send a correction if the IRS upholds the taxpayer’s position.

  • Here’s what will happen if the IRS does not agree with the taxpayer’s position:

The agency will issue a notice proposing a tax adjustment. This is a letter that comes in the mail.

This notice provides the taxpayer with a right to challenge the proposed adjustment.

The taxpayer makes this challenge by filing a petition in U.S. Tax Court. The taxpayer must generally file the petition within 90 days of the date of the notice, or 150 days if it is addressed outside the United States.

  • Taxpayers can submit documentation and raise objections during an audit. If the IRS does not agree with the taxpayer’s position, the agency issues a notice explaining why it is increasing the tax. Prior to paying the tax, the taxpayer has the right to petition the U.S. Tax Court, and challenge the agency’s decision.
  • In some circumstances, the IRS must provide a taxpayer with an opportunity for a hearing before an independent Office of Appeals. The agency must do this:

Before taking enforcement action to collect a tax debt. These actions include levying the taxpayer’s bank account.

Immediately after filing a notice of federal tax lien in the appropriate state filing location. If the taxpayer disagrees with the decision of the Appeals Office, they can petition the U.S. Tax Court.

More Information:

Share this tip on social media — #IRSTaxTip: The Right to Challenge the IRS’s Position and Be Heard Taxpayer Bill of Rights #4. https://go.usa.gov/xnuCz

 

 

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What is Paid Family Leave(#PFL)?

(Dept of NYS, Labor Law)

As of January 1, 2018, most employees who work in New York State for private employers are eligible to take Paid Family Leave. If you are a public employee, your employer may choose to offer Paid Family Leave.

New York’s Paid Family Leave provides job-protected, paid time off so you can:

  • bond with a newly born, adopted or fostered child;
  • care for a close relative with a serious health condition; or
  • assist loved ones when a family member is deployed abroad on active military service.

You can continue your health insurance while on leave and are guaranteed the same or a comparable job after your leave ends. If you contribute to the cost of your health insurance, you must continue to pay your portion of the premium cost while on Paid Family Leave.

Click the topics in the left navigation for details on benefitseligibilityhow to apply and more.
TOP QUESTIONS FROM EMPLOYEES

  • How long do I have to work to be eligible?
    • Full-time employees, who work a regular schedule of 20 or more hours per week, are eligible for Paid Family Leave after 26 consecutive weeks of employment.
    • Part-time employees, who work a regular schedule of less than 20 hours per week, are eligible after working 175 days, which do not need to be consecutive.
  • How do I apply?
    There are four basic steps for an employee to request Paid Family Leave:
  1. First, you must notify your employer at least30 daysbefore your leave will start, if it’s foreseeable. Otherwise, they notify your employer as soon as possible.

    2. Next, obtain the request form package for the type of leave you need to take (from your employer, your employer’s insurance carrier or directly from this website) and complete the Request For Paid Family Leave (Form PFL-1), following the instructions on the cover sheet. Make a copy for your records, and submit it to your employer.

    3. The employer must fill out their section of the form and return it to you within three business days.

    4. You then submit Form PFL-1, the other request forms specific to the leave you are taking, and supporting documentation directly to your employer’s Paid Family Leave insurance carrier. You can submit your request before or within 30 days after the start of your leave.

    The insurance carrier must pay or deny your request within 18 calendar days of receiving the completed request. Visit the How to Apply page for complete details and links to forms.

  • Can I take both temporary/short-term disability and Paid Family Leave?
    Yes, but not at the same time. You can take short-term disability and then Paid Family Leave, or Paid Family Leave and then short-term disability, if you qualify. For example, if a mother qualifies for short-term disability after giving birth, she can take short-term disability first and then Paid Family Leave. You cannot take more than 26 weeks of combined short-term disability and Paid Family Leave in a 52-week period.
  • If I am taking Paid Family Leave, when will I be paid? 
    The insurance carrier has 18 days after receipt of a completed request for Paid Family Leave to pay or deny the claim, and after the initial payment, will pay benefits bi-weekly.
  • Where do I send my completed request forms and documentation?
    Your completed request should be sent to your employer’s Paid Family Leave insurance carrier at the address provided in the PFL-1 Form Part B, Question 13 (the section your employer completed), or directly to your employer if they are self-insured. If the information is not on the form:

    • ask your employer for the carrier’s address, or
    • contact the Paid Family Leave Helpline at 844-337-6303 for assistance.

For more frequently asked questions and answers, visit the FAQ page of this website.

A private employee is someone who does not work for the State, any political subdivision of the state, a public authority or any governmental agency or instrumentality.

A public employee is someone who does work for the State, any political subdivision of the state, a public authority or any governmental agency or instrumentality.

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Benefits

Benefits

Paid Family Leave benefits phase in over four years. During 2018, you can take up to eight weeks of Paid Family Leave and receive 50% of your average weekly wage (AWW), capped at 50% of the New York State Average Weekly Wage (SAWW). Your AWW is the average of your last eight weeks of pay prior to starting Paid Family Leave. The SAWW is updated annually.

Paid Family Leave Benefits Examples for 2018

Worker’s average weekly wage Weekly PFL Benefit (2018)*
$600 $300
$1,000 $500
$2,000 $652.96

*The weekly PFL benefit is capped at 50% of the New York State average weekly wage, which is $652.96.

Benefits Increase Through 2021

Year Weeks of Leave Benefit
2018 8 weeks 50% of employee’s AWW, up to 50% of SAWW
2019 10 weeks 55% of employee’s AWW, up to 55% of SAWW
2020 10 weeks 60% of employee’s AWW, up to 60% of SAWW
2021 12 weeks 67% of employee’s AWW, up to 67% of SAWW

In 2018, the Paid Family Leave benefit is 50% of your average weekly wage, capped at 50% of the New York State Average Weekly Wage.

Example: An employee who makes $1,000 a week would receive a benefit of $500 a week (50% of $1,000). Another employee who makes $2,000 a week would receive a benefit of $652.96, because this employee is capped at one-half of New York State’s Average Weekly Wage —currently $1,305.92. Half of that amount is $652.96.

Leave can be taken either all at once or in full-day increments. You may take the maximum time-off benefit in any given 52-week period. The 52-week clock starts on the first day you take Paid Family Leave.

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Eligibility

Eligibility

All eligible employees are entitled to participate in Paid Family Leave.

  • Full-time employees: If you work a regular schedule of 20 or more hours per week, you are eligible after 26 consecutive weeks of employment.
  • Part-time employees: If you work a regular schedule of less than 20 hours per week, you are eligible after working 175 days, which do not need to be consecutive.
  • You are eligible regardless of your citizenship and/or immigration status.

Bonding Leave 
Whether you are a parent expecting, adopting or fostering a child, you deserve to take time to bond with your child without having to sacrifice your savings or your job. In 2018, you may be eligible to take up to eight weeks of Paid Family Leave.

Paid Family Leave only begins after birth and is not available for prenatal conditions. A parent may take Paid Family Leave during the first 12 months following the birth, adoption, or foster placement of a child.

Caring for a Close Relative with a Serious Health Condition

New Yorkers have the right to be with their families in times of need without having to put their economic security at risk. The time you spend caring for a loved one with a serious health condition is critical. Under Paid Family Leave, the list of family members you can take care of is expansive and includes:

  • spouse
  • domestic partner (including same and different gender couples; legal registration not required)
  • child/stepchild and anyone for whom you have legal custody
  • parent/stepparent
  • parent-in-law
  • grandparent
  • grandchild

If you are serving in the role of a parent for a child (‘in loco parentis’), even if you are not legally or biologically related to the child, you may be eligible to take Paid Family Leave for that child. Similarly, if someone stood ‘in loco parentis’ to you when you were a child, you may be able to take leave to care for them. Your insurer may ask for a simple statement of the parental relationship or for other reasonable documentation to demonstrate how you stand in loco parentis to the child or how the person in need of care stood in loco parentis to you when you were a child.

A serious health condition is an illness, injury, impairment, or physical or mental condition that involves:

  • inpatient care in a hospital, hospice, or residential health care facility; or
  • continuing treatment or continuing supervision by a health care provider.

For example, you need one or more full days to care for your mom when she undergoes chemotherapy; or your dad is having surgery followed by extensive recuperation; or your child is undergoing intense psychotherapy and is unable to attend school for a period of time; or a family member is seeking treatment for a substance use disorder. These are all situations where you can take Paid Family Leave.

Cosmetic treatments (such as plastic surgery) are not eligible conditions unless inpatient hospital care is required or complications develop. Ordinarily, unless complications arise, the common cold, the flu, ear aches, upset stomach, minor ulcers, headaches other than migraine, routine dental or orthodontia problems, periodontal disease, etc., are examples of conditions that do not meet the definition of a serious health condition and would not qualify for Paid Family Leave.

Military Active Duty Deployment
You can take Paid Family Leave to assist with family situations arising when your

  • spouse,
  • domestic partner,
  • child, or
  • parent

is deployed abroad on active military service or has been notified of an impending military deployment abroad. You cannot use Paid Family Leave for your own qualifying military event.

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Cost and Deductions

Cost and Deductions

You pay for these benefits through a small weekly payroll deduction, which is a percentage of your weekly wage up to a cap set annually.

The 2018 payroll contribution is 0.126% of your weekly wage and is capped at an annual maximum of $85.56. If you earn less than the New York State Average Weekly Wage ($1305.92 per week), you will have an annual contribution amount less than the cap of $85.56, consistent with your actual weekly wages. For example, in 2018, if you earn $27,000 a year ($519 a week), you will pay 65 cents per week.

To estimate your deduction, use the payroll deduction calculator:

Weekly Payroll Deduction Calculator

Note:  If you believe there is an error with your current payroll deduction, raise the issue with your employer. If your employer fails to address the issue, you can file a complaint online or call the Paid Family Leave Helpline at 844-337-6303.

Opting Out/Waivers

You can opt out of Paid Family Leave if you do not expect to work for your employer for the minimum amount of time required for eligibility. If you meet this criteria and wish to opt out, you can do so by completing a Paid Family Leave waiver, which is available here. A waiver of family leave benefits may be filed when:

  • Your schedule is 20 hours or more per week, but you will not work 26 consecutive weeks; or
  • Your schedule is less than 20 hours per week and you will not work 175 days in a 52 consecutive week period.

Employers should keep completed waivers on file. Your waiver will be automatically revoked if your schedule changes or you may voluntarily revoke it at any time.

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How to Apply for Benefits

How to Apply for Benefits

Your employer’s insurance carrier will receive and process requests for Paid Family Leave, and make your benefit payments. If your employer self-insures, they will receive and process requests, and make benefit payments. You are responsible for notifying your employer if you intend to request Paid Family Leave benefits.

Here’s what you need to do to request Paid Family Leave:

  1. Notify your employer. When you want to take Paid Family Leave, you must notify your employer at least 30 days before your leave will start, if it’s foreseeable. Otherwise, notify your employer as soon as possible.
  2. Obtain required forms. Contact your employer or employer’s insurance carrier to obtain the required forms, or download them here by clicking the link below for the type of leave you’re requesting:
  3. Complete and submit forms. Fill out the Request for Paid Family Leave (Form PFL-1),following the instructions on the cover sheet, make a copy for your records, and submit it to your employer. Your employer must fill out their section of the form and return it to you within three business days. If your employer fails to respond, you may proceed to the next step below and submit all materials directly to your employer’s Paid Family Leave insurance carrier.
  4. Obtain and attach supporting documentation. The specific documentation and additional forms required for each type of leave are described on the request forms and listed below.
  5. Submit your request forms and supporting documentation. Submit to your employer’s Paid Family Leave insurance carrier. You can submit your claim before or within 30 days after the start of your leave. The insurance carrier must pay or deny your request within 18 calendar days of receiving your completed request.

NOTE: If your employer is self-insured (i.e., serving as the Paid Family Leave insurer as opposed to providing coverage through a separate insurance carrier), you don’t need to submit Form PFL-1 first as described above in step 3; you can submit all forms and documentation to your employer at once.

If you do not know who your employer’s insurance carrier is, please contact your employer’s human resources department. If your employer does not have a human resources department, ask your employer or refer to the Paid Family Leave Compliance poster. If the carrier is still not identified, please contact the Paid Family Leave Helpline at 844-337-6303.

If you have a complaint or dispute regarding Paid Family Leave benefits or wage deductions, please click here for information and instructions.

You can get more information about filing a claim by calling the Paid Family Leave toll-free helpline at (844) 337-6303.

Required Supporting Documentation

When requesting Paid Family Leave, you will need to file a Request for Paid Family Leave form as well as documentation in support of your Paid Family Leave request. The specific documentation required varies based on the type of leave, as outlined below:

For the Birth of a Child:

The birth mother will need the following documentation:

  • Birth certificate, or
  • Documentation of pregnancy or birth from a health care provider (includes mother’s name and due/birth dates)

A second parent will need the following documentation:

  • Birth certificate, or if not available, a voluntary acknowledgment of paternity or court order of filiation; or
  • A copy of documentation of pregnancy or birth from a health care provider (includes mother’s name and due/birth dates) and a second document verifying the parent’s relationship with the birth mother or child

For Foster Care:

  • Letter of placement issued by county or city department of social services or local voluntary agency
  • If second parent is not named in documentation, a copy of that document plus a second document verifying relationship to the parent named in the foster care placement

For Adoption:

  • Legal evidence of adoption process
  • If second parent is not named in legal documents, the second parent must provide a copy of the legal evidence of adoption process and a second document verifying the relationship to the parent named in the document

For Leave to Care for a Serious Medical Condition:

Certification from the care recipient’s health care provider

For Military-related Leave:

  • US Department of Labor Military Family Leave Certification (Federal Military Leave Form)
  • Copy of Military Duty Papers
  • Other documentation supporting the reason for the leave (copy of meeting notice or other meeting documentation, ceremony details, rest and recuperation orders, etc.)

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FAQs & Other Resources

FAQs & Other Resources

 

Frequently Asked Questions
Weekly Payroll Deduction Calculator
Downloadable Guides (Fact Sheets & FAQs)
A Guide for Employees
Video Guide for Employees

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Complaints

Complaints

Benefit/Denial Disputes

If your Paid Family Leave request is denied, you may request to have the denial reviewed by a neutral arbitrator. Arbitration will be handled by NAM (National Arbitration and Mediation). Your insurance carrier (or employer, if self-insured) will provide you with the reason for denial and information about requesting arbitration, or you can visit the arbitrator’s website at www.nyspfla.com.

Protection from Discrimination and Retaliation

Your employer cannot discriminate or retaliate against you for requesting or taking Paid Family Leave. They must reinstate you to the same or a comparable position when you return from Paid Family Leave.

If you request or take Paid Family Leave and your employer:

  • does not return you to your same or a comparable job,
  • terminates your employment,
  • reduces your pay or benefits, or
  • disciplines you in any way.

Please follow the steps outlined in the process below.

  1. Request for Reinstatement:

First, you should request that your employer reinstate you to your same job, or a comparable one. To request reinstatement:

Your employer has 30 calendar days to respond to the request.

  1. Discrimination/Retaliation Complaint:

If your employer does not comply with your Request For Reinstatement within 30 calendar days, you have the right to a hearing with the Workers’ Compensation Board.

To request a hearing, file a discrimination/retaliation complaint:

The Board will assemble your case and reach out to you to schedule a hearing within 45 calendar days.

NOTE: To file a discrimination complaint, you must have first requested reinstatement as described in the first step above. A request for a hearing will not be processed unless a Formal Request For Reinstatement Regarding Paid Family Leave (Form PFL-DC-119) is received.

An administrative law judge may order an employer to reinstate you, pay any lost wages, pay attorney’s fees, and pay up to $500 in penalties.

Examples of Additional Anti-Discrimination Laws Beyond Paid Family Leave

There are other state and federal laws that protect employees from discrimination. If you think that you have experienced discrimination based on a ground protected under one of the following laws, then you may be able to file a discrimination claim with the State Division of Human Rights, United States Equal Employment Opportunity Commission, or your local human rights commission:

  • The New York State Human Rights Law (NYSHRL) prohibits employers from discriminating against employees and job applicants based on certain protected grounds, including age, race, creed, color, national origin, sexual orientation, military status, sex, disability, pregnancy-related conditions, gender identity, predisposing genetic characteristics, familial status, marital status, or domestic violence victim status. The New York State Human Rights Law (NYSHRL)also protects employees with disabilities or who are pregnant or who have recently given birth from discrimination by requiring employers to make “reasonable accommodations” to accommodate disabilities as well as pregnancy- and childbirth-related conditions.
  • Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees on the basis of race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, or genetic information.
  • The Americans with Disabilities Act requires employers with 15 or more employees to provide reasonable accommodations to workers with disabilities and makes it illegal for employers to discriminate against workers with disabilities.
  • You should also check your local laws for additional anti-discrimination protections.  For example, the New York City Human Rights Law protects employees in New York City from discrimination based on similar protected classes.

Wage Deduction Complaints

If you believe there is an error with your current payroll deduction, raise the issue with your employer. If your employer fails to address the issue, you can file a complaint online or call the Paid Family Leave Helpline at 844-337-6303.

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Contact Us

Contact Us

For more information, call the Paid Family Leave Helpline (844) 337-6303, Monday-Friday, 8:30am – 4:30pm ET.

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Webinars

Webinars

The New York State Workers’ Compensation Board has been hosting a series of webinars on Paid Family Leave, which have been recorded for your convenience:


Upcoming Webinars – Register Now

The next round of webinars will focus on each type of leave, covering eligibility, frequently asked questions and how to apply, including a walk-through of the required forms and supporting documentation.

Each webinar will be approximately one hour long and will include time for questions and answers. Space is limited, so please register soon. When you click ‘register here’, you will be taken to a general information page. You must click ‘Register’ on the bottom of that page to sign up.

 

Bonding with a newly born, adopted or fostered child

Tuesday, February 20, 12:00 p.m. – 1:00 p.m. Register here.

Thursday, February 22, 12:00 p.m. – 1:00 p.m. Register here.

 

Caring for a family member with a serious health condition

Tuesday, February 27, 12:00 p.m. – 1:00 p.m. Registration is now full.

Thursday, March 1, 12:00 p.m. – 1:00 p.m. Registration is now full.

Tuesday, March 6, 12:00 p.m. – 1:00 p.m.  Register here.

 

Military-related leave

Tuesday, March 13, 12:00 p.m. – 1:00 p.m. Register here.

Thursday, March 15, 12;00 p.m. – 1:00 p.m. Register here.

#Interest_on_Home_Equity_Loans_Often Still #Deductible Under New Law

Interest on Home Equity Loans Often Still Deductible Under New Law

WASHINGTON – The Internal Revenue Service today advised taxpayers that in many cases they can continue to deduct interest paid on home equity loans.

Responding to many questions received from taxpayers and tax professionals, the IRS said that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled. The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements.

New dollar limit on total qualified residence loan balance

For anyone considering taking out a mortgage, the new law imposes a lower dollar limit on mortgages qualifying for the home mortgage interest deduction. Beginning in 2018, taxpayers may only deduct interest on $750,000 of qualified residence loans. The limit is $375,000 for a married taxpayer filing a separate return. These are down from the prior limits of $1 million, or $500,000 for a married taxpayer filing a separate return.  The limits apply to the combined amount of loans used to buy, build or substantially improve the taxpayer’s main home and second home.

The following examples illustrate these points.

Example 1:  In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of $800,000.  In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both loans does not exceed $750,000, all of the interest paid on the loans is deductible. However, if the taxpayer used the home equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home equity loan would not be deductible.

Example 2:  In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home.  The loan is secured by the main home. In February 2018, the taxpayer takes out a $250,000 loan to purchase a vacation home. The loan is secured by the vacation home.  Because the total amount of both mortgages does not exceed $750,000, all of the interest paid on both mortgages is deductible. However, if the taxpayer took out a $250,000 home equity loan on the main home to purchase the vacation home, then the interest on the home equity loan would not be deductible.

Example 3:  In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home.  The loan is secured by the main home. In February 2018, the taxpayer takes out a $500,000 loan to purchase a vacation home. The loan is secured by the vacation home.  Because the total amount of both mortgages exceeds $750,000, not all of the interest paid on the mortgages is deductible. A percentage of the total interest paid is deductible (see Publication 936).

For more information about the new tax law, visit the Tax Reform page on IRS.gov.

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WHO IS DUAL STATUS FILERS

You are a dual status alien when you have been both a U.S. resident alien and a nonresident alien in the same tax year. Dual status does not refer to your citizenship, only to your resident status for tax purposes in the United States. In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. The most common dual-status tax years are the years of arrival and departure.

For The Part of the Year You are a U.S. Resident Alien

For the part of the year you are a U.S. resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien.

For The Part of The Year You are a Nonresident Alien

For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources only.

Not Effectively Connected Income

Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien.

Income From U.S. Sources

Income from U.S. sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Generally, tax treaty provisions apply only to the part of the year you were a nonresident. However, an exception to this rule exists. Refer to “Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens” found in Chapter 9 of Publication 519, U.S. Tax Guide for Aliens.

When determining what income is taxed in the United States, you must consider exemptions under U.S. tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries.

Restrictions for Filing Dual-Status Tax Returns

The following restrictions apply if you are filing a tax return for a dual-status tax year:

  • You cannot use the standard deduction allowed on Form 1040, U.S. Individual Income Tax Return. However, you can itemize certain allowable deductions.
  • Special rules apply for exemptions for the part of the tax year when a dual status taxpayer is a nonresident alien if the taxpayer is a resident of Canada, Mexico, The Republic of Korea (South Korea), a U.S. national, or a student or business apprentice from India. Refer to Aliens – How Many Exemptions Can Be Claimed.
  • Subject to the general rules for qualification, you are allowed exemptions for your spouse and dependents in figuring taxable income for the part of the year you were a resident alien.
  • Your total deduction for the exemptions for your spouse and allowable dependents cannot be more than your taxable income (determined without deducting personal exemptions) for the period you are a resident alien.
  • You cannot use the head of household Tax Table column or Tax Rate Schedule.
  • You cannot file a joint return (However, a dual status alien who is married to a U.S. citizen or a resident alien may elect to file a joint return with his or her spouse. Refer to Nonresident Spouse Treated as a Resident for more information).
  • If you are a nonresident alien and married to a U.S. citizen or resident alien for all or part of the tax year, and you do not choose to file jointly with your spouse, you must use the Tax Table column or Tax Rate Schedule for “married filing separately” to figure your tax. You cannot use the Tax Table column or Tax Rate Schedules for married filing jointly or single.
  • If you are a nonresident alien and married to a U.S. citizen or resident alien, you may not take the earned income credit, the credit for the elderly or disabled, or an education credit unless you elect to be taxed as a resident alien jointly with your spouse in lieu of these dual-status taxpayer rules.

Different Rules

When you figure your U.S. tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident.

Effectively and Not Effectively Connected Income

All worldwide income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, is combined and taxed at the rates that apply to U.S. citizens and residents. Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. You cannot take any deductions against this not effectively connected income. Refer to Taxation of Nonresident Aliens or Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities,for more information.

Resident Alien vs. Nonresident Alien Filing Procedures

The U.S. income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year.

Resident Alien at End of Year

You must file Form 1040, U.S. Individual Income Tax Return, if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents as the statement, but be sure to mark “Dual-Status Statement” across the top.

Nonresident at End of Year

You must file Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a resident. You can use Form 1040, U.S. Individual Income Tax Return as the statement, but be sure to mark “Dual-Status Statement” across the top.

Statement

Any statement must have your name, address, and taxpayer identification number on it. You do not need to sign a separate statement or schedule accompanying your return, since your signature on the return also applies to the supporting statements and schedules.

When and Where To File

If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you generally must file no later than April 15 of the year following the close of your tax year. For additional information, refer to the Instructions for Form 1040, U.S. Individual Income Tax Return.

If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you generally must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. For additional information, refer to the Instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return.

References/Related Topics

 

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