Estimated Tax Payments

You may have income from which no U.S. income tax is withheld. Or, the amount of tax withheld may not equal the income tax you estimate you will owe at the end of the year. If this is true, and if you have income effectively connected with a trade or business in the United States, you may have to pay estimated tax and file Form 1040-ES(NR). A penalty may be charged if you underpay your estimated tax by a certain amount.

Income effectively connected with a trade or business includes pay received as an employee that is subject to withholding. It does not, however, include pay subject to withholding at a flat 30% rate or lower treaty rate.

Generally, there will be no penalty for the underpayment of estimated tax if the total income tax to be withheld from your 2003 income is at least:

1. 90% of the tax to be shown on your 2003 U.S. income tax return, or
2. 100% of the tax shown on your 2002 income tax return (if your 2002 return covered all 12 months of the year).

Also, you will not have to pay a penalty if the tax due (after subtracting withheld tax) for 2003 is less than $1,000.

If your adjusted gross income for 2002 ( Form 1040NR, line 34) was more than $150,000 ($75,000 if your filing status for 2003 is married filing separately), see Publication 505, Tax Withholding and Estimated Tax.

When to pay estimated tax.   Generally, you must make your first payment of estimated tax by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ.

Additional information.   For more information refer to the instructions for Form 1040-ES(NR) and see Estimated Tax Form 1040-ES(NR) in chapter 8 of Publication 519.

Residents of Puerto Rico.   If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES.

Departing Aliens and the Sailing or Departure Permit

Before leaving the United States, you must come to an IRS office to file Form 1040-C or Form 2063. You must file these forms to get a certificate of compliance or clearance (known as a sailing permit or departure permit) from the Internal Revenue Service. However, see Aliens Not Required To Obtain Sailing or Departure Permits, later.

A certificate of compliance certifies that you have satisfied the U.S. income tax laws. This is not your final tax return.

If you are required to file a U.S. income tax return for the year, file Form 1040NR or Form 1040NR-EZ after the end of the year. You have to file this form whether or not you owe more tax or are entitled to a refund of tax paid. Treat the tax you paid with Form 1040-C as a credit against the tax on your income tax return.

Aliens Not Required To Obtain Sailing or Departure Permits

If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States.

If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption.

Category 1.   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them.

Category 2.   Employees of international organizations and foreign governments (other than diplomatic representatives covered under category (1)) and members of their households:

1. Whose compensation for official services is exempt from U.S. tax under U.S. tax laws, and
2. Who receive no other income from U.S. sources.

If you are an alien in category (1) or (2) above who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. This is true even though you filed the waiver and your income is exempt from U.S. tax because of an income tax treaty, consular agreement, or an international agreement.

Category 3.   Alien students, industrial trainees, or exchange visitors, including their spouses and children, who come to the United States on F-1, F-2, H-3, H-4, J-1, J-2, or Q visas only and who receive no income from U.S. sources while in the United States under those visas other than:

1. Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition,
2. The value of any services or food and lodging connected with this study or training,
3. Income from employment authorized by the Immigration and Naturalization Service (INS) or its successor, or
4. Interest income on deposits that is not effectively connected with a U.S. trade or business.

Category 4.   Alien students, including their spouses and children, who come to the United States on an M-1 or M-2 visa only and who receive no income from U.S. sources while in the United States on those visas, other than:

1. Income from employment authorized by the Immigration and Naturalization Service (INS) or its successor, or
2. Interest income on deposits that is not effectively connected with a U.S. trade or business.

Category 5.   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Aliens covered by this paragraph are:

1. Alien military trainees who come to the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders,
2. Alien visitors for business on a B-1 visa, or on both a B-1 visa and a B-2 visa, who do not remain in the United States or a U.S. possession for more than 90 days during the tax year,
3. Alien visitors for pleasure on a B-2 visa,
4. Aliens in transit through the United States or any of its possessions on a C-1 visa, or under a contract, such as a bond agreement between a transportation line and the Attorney General, and
5. Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required. These aliens must be visitors for pleasure, visitors for business who do not remain in the United States or a U.S. possession for more than 90 days during the tax year, or visitors in transit through the United States or any of its possessions.

Category 6.   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U.S. tax.

When To Get a Sailing or Departure Permit

You should get your sailing or departure permit at least 2 weeks before you plan to leave the United States. The clearance, however, may not be issued more than 30 days before you leave. If both you and your spouse are aliens and are leaving together, both of you must go to the IRS office.

What Is Needed To Get a Sailing or Departure Permit

Please be prepared to give your planned date of departure and bring the following records with you if they apply.

1. Your passport and alien registration card or visa.
2. Copies of your U.S. income tax returns filed for the past 2 years. If you were in the United States for less than 2 years, bring copies of the income tax returns you filed for that period.
3. Receipts for income taxes paid on these returns.
4. Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on the returns.
5. A statement from each employer you worked for this year, showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. If you are self-employed, you must bring a statement of income and expenses up to the date you plan to leave.
6. Proof of estimated tax payments for the past year and this year.
7. Documents showing any gain or loss from the sale of personal or real property, including capital assets and merchandise.
8. Documents relating to scholarships or fellowship grants, including verification of the grantor, source, and purpose of the grant, and date the grant was made.
9. Documents indicating you qualify for any special tax treaty benefits claimed.

Note.   In community property states, a married taxpayer must bring the above-listed documents for their spouse also. This applies whether or not the spouse requires a clearance.

How To Get Tax Help

You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.

Contacting your Taxpayer Advocate.   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.

The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.

To contact your Taxpayer Advocate:

• Call the Taxpayer Advocate at
  1-877-777-4778.
• Call, write, or fax the Taxpayer Advocate office in your area.
• Call 1-800-829-4059 if you are a
  TTY/TDD user.

For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS.

Free tax services.   To find out what services are available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications and an index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics.

Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While visiting our web site, you can:

• See answers to frequently asked tax questions or request help by e-mail.
• Download forms and publications or search for forms and publications by topic or keyword.
• Order IRS products on-line.
• View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping.
• View Internal Revenue Bulletins published in the last few years.
• Search regulations and the Internal Revenue Code.
• Receive our electronic newsletters on hot tax issues and news.
• Learn about the benefits of filing electronically (IRS e-file).
• Get information on starting and operating a small business.

You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.

TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling 703-368-9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The items you request will be faxed to you.

For help with transmission problems, call the FedWorld Help Desk at 703-487-4608.

Phone. Many services are available by phone.

• Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current and prior year forms, instructions, and publications.
• Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
• Solving problems. Take advantage of Everyday Tax Solutions service by calling your local IRS office to set up an in-person appointment at your convenience. Check your local directory assistance or www.irs.gov for the numbers.
• TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829- 4059 to ask tax questions or to order forms and publications.
• TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.

Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to sometimes listen in on or record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.

Walk-in. Many products and services are available on a walk-in basis.

• Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
• Services. You can walk in to your local IRS office to ask tax questions or get help with a tax problem. Now you can set up an appointment by calling your local IRS office number and, at the prompt, leaving a message requesting Everyday Tax Solutions help. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience.

Mail. You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 workdays after your request is received. Find the address that applies to your part of the country.

• Western part of U.S.:
  Western Area Distribution Center
  Rancho Cordova, CA 95743-0001
• Central part of U.S.:
  Central Area Distribution Center
  P.O. Box 8903
  Bloomington, IL 61702-8903
• Eastern part of U.S. and foreign addresses:
  Eastern Area Distribution Center
  P.O. Box 85074
  Richmond, VA 23261-5074

CD-ROM for tax products. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:

• Current tax forms, instructions, and publications.
• Prior-year tax forms and instructions.
• Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
• Internal Revenue Bulletins.

The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1-877-233-6767 or on the Internet at http://www.irs.gov/cdorders. The first release is available in early January and the final release is available in late February.

CD-ROM for small businesses. IRS Publication 3207, Small Business Resource Guide, is a must for every small business owner or any taxpayer about to start a business. This handy, interactive CD contains all the business tax forms, instructions and publications needed to successfully manage a business. In addition, the CD provides an abundance of other helpful information, such as how to prepare a business plan, finding financing for your business, and much more. The design of the CD makes finding information easy and quick and incorporates file formats and browsers that can be run on virtually any desktop or laptop computer.

It is available in March. You can get a free copy by calling 1-800-829-3676 or by visiting the website at www.irs.gov/smallbiz.

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