Page 39 - Virtual Currencies

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Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
must include in your income the earnings from Differential wage payments. Any payments years after the date you paid the tax, whichever
your private practice. made to you by an employer during the time is later. See the Instructions for Form 1040-X for
you're performing service in the uniformed serv- information on filing that form.
Foreign Employer ices are treated as compensation. These wages
are subject to income tax withholding and are
reported on Form W-2. See the discussion un- Volunteers
Special rules apply if you work for a foreign em- der Miscellaneous Compensation, earlier.
ployer. The tax treatment of amounts you receive as a
Military retirement pay. If your retirement pay volunteer is covered in the following discus-
U.S. citizen. If you're a U.S. citizen who works is based on age or length of service, it’s taxable sions.
in the United States for a foreign government, and must be included in your income as a pen-
an international organization, a foreign em- sion on lines 5a and 5b of Form 1040 or Peace Corps. Living allowances you receive
bassy, or any foreign employer, you must in- 1040-SR. Don’t include in your income the as a Peace Corps volunteer or volunteer leader
clude your salary in your income. amount of any reduction in retirement or re- for housing, utilities, household supplies, food,
and clothing are exempt from tax.
Social security and Medicare taxes. tainer pay to provide a survivor annuity for your
You're exempt from social security and Medi- spouse or children under the Retired Service- Taxable allowances. The following allow-
care employee taxes if you're employed in the man's Family Protection Plan or the Survivor ances must be included in your income and re-
United States by an international organization Benefit Plan. ported as wages.
or a foreign government. However, you must For a more detailed discussion of survivor • Allowances paid to your spouse and minor
pay self-employment tax on your earnings from annuities, see Pub. 575. children while you're a volunteer leader
services performed in the United States, even Disability. If you're retired on disability, see training in the United States.
though you aren't self-employed. This rule also Military and Government Disability Pensions • Living allowances designated by the Direc-
applies if you're an employee of a qualifying under Sickness and Injury Benefits, later. tor of the Peace Corps as basic compen-
wholly owned instrumentality of a foreign gov- sation. These are allowances for personal
ernment. Qualified reservist distribution (QRD). If you items such as domestic help, laundry and
received a QRD of all or part of the balance in clothing maintenance, entertainment and
Employees of international organizations or your health FSA because you're a reservist and recreation, transportation, and other mis-
foreign governments. Your compensation you have been ordered or called to active duty cellaneous expenses.
for official services to an international organiza- for a period of 180 days or more, the QRD is • Leave allowances.
tion is exempt from federal income tax if you treated as wages and is reportable on Form • Readjustment allowances or termination
aren't a citizen of the United States or you're a W-2. payments. These are considered received
citizen of the Philippines (whether or not you're by you when credited to your account.
a citizen of the United States). Veterans' benefits. Don’t include in your in-
Your compensation for official services to a come any veterans' benefits paid under any Example 18. You are a Peace Corps vol-
foreign government is exempt from federal in- law, regulation, or administrative practice ad- unteer and get $175 a month as a readjustment
come tax if all of the following are true. ministered by the Department of Veterans Af- allowance during your period of service, to be
• You aren't a citizen of the United States or fairs (VA). The following amounts paid to veter- paid to you in a lump sum at the end of your tour
you're a citizen of the Philippines (whether ans or their families aren't taxable. of duty. Although the allowance isn't available to
or not you're a citizen of the United States). • Education, training, and subsistence allow- you until the end of your service, you must in-
• Your work is like the work done by employ- ances. clude it in your income on a monthly basis as
ees of the United States in foreign coun- • Disability compensation and pension pay- it’s credited to your account.
tries. ments for disabilities paid either to veter-
• The foreign government gives an equal ex- ans or their families. Volunteers in Service to America (VISTA). If
emption to employees of the United States • Grants for homes designed for wheelchair you're a VISTA volunteer, you must include
meal and lodging allowances paid to you in
in its country. living. your income as wages.
Waiver of alien status. If you're an alien • Grants for motor vehicles for veterans who
who works for a foreign government or interna- lost their sight or the use of their limbs. National Senior Service Corps programs.
tional organization and you file a waiver under • Veterans' insurance proceeds and divi- Don’t include in your income amounts you re-
dends paid either to veterans or their bene-
section 247(b) of the Immigration and National- ceive for supportive services or reimburse-
ity Act to keep your immigrant status, any salary ficiaries, including the proceeds of a veter- ments for out-of-pocket expenses from the fol-
an's endowment policy paid before death.
you receive after the date you file the waiver lowing programs.
isn't exempt under this rule. However, it may be • Interest on insurance dividends left on de- • Retired Senior Volunteer Program (RSVP).
posit with the VA.
exempt under a treaty or agreement. See Pub. • Foster Grandparent Program.
519, U.S. Tax Guide for Aliens, for more infor- • Benefits under a dependent-care assis- • Senior Companion Program.
tance program.
mation about treaties. • The death gratuity paid to a survivor of a Service Corps of Retired Executives
Nonwage income. This exemption applies member of the U.S. Armed Forces who (SCORE). If you receive amounts for suppor-
only to employees' wages, salaries, and fees. died after September 10, 2001. tive services or reimbursements for
Pensions and other income, such as investment • Payments made under the compensated out-of-pocket expenses from SCORE, don't in-
income, don't qualify for this exemption. work therapy program. clude these amounts in gross income.
• Any bonus payment by a state or political
Employment abroad. For information on the subdivision because of service in a combat Volunteer tax counseling. Don’t include in
tax treatment of income earned abroad, see zone. your income any reimbursements you receive
Pub. 54. for transportation, meals, and other expenses
Note. If, in a previous year, you received a you have in training for, or actually providing,
Military bonus payment by a state or political subdivi- volunteer federal income tax counseling for the
sion because of service in a combat zone that
you included in your income, you can file a elderly (TCE).
You can deduct as a charitable contribution
Payments you receive as a member of a military claim for refund of the taxes on that income. your unreimbursed out-of-pocket expenses in
service are generally taxed as wages except for Use Form 1040-X to file the claim. File a sepa- taking part in the volunteer income tax assis-
retirement pay, which is taxed as a pension. Al- rate form for each tax year involved. In most ca- tance (VITA) program.
lowances generally aren't taxed. For more infor- ses, you must file your claim within 3 years after
mation on the tax treatment of military allowan- the date you filed your original return or within 2
ces and benefits, see Pub. 3.
Page 16 Publication 525 (2022)