- 3.22.3.115 Error Code 118 — (CE) Withholding Greater than Thirty Three and One Third Percent
- 3.22.3.116 Error Code 120
- 3.22.3.117 Error Code 121 — (CE) Excess SST/RRTA
- 3.22.3.118 Error Code 122 — (CE) CCC "G" , "B" or RPC "L" Not Present/Zero Return
- 3.22.3.119 Error Code 123 — (CE) Non-Compute Code 2 and Preparer's Data Present
- 3.22.3.120 Error Code 124
- 3.22.3.121 Error Code 125 — Federal Telephone Excise Tax
- 3.22.3.122 Error Code 126 — Federal Telephone Excise Tax
- 3.22.3.123 Error Code 127 — Federal Telephone Excise Tax
- 3.22.3.124 Error Code 128 — Federal Telephone Excise Tax
- 3.22.3.125 Error Codes 130 — 146
- 3.22.3.126 Error Code 148 — (CE) Form 2555 Incompatible Residency Dates
- 3.22.3.127 Error Code 150 — (CE) Form 2555/2555-EZ (Section 34), Residency Dates Missing
- 3.22.3.128 Error Code 152 — (CE) Form 2555/2555-EZ (Section 35), Residency Dates Missing
- 3.22.3.129 Error Code 154 — (CE) Form 2555/2555-EZ and Foreign Income Exclusion
- 3.22.3.130 Error Codes 159 and 160
- 3.22.3.131 Error Code 161 — (CE) Schedule H Present Prior to 199512 or Loose Schedule H Present
- 3.22.3.132 Error Codes 162 — 194
- 3.22.3.133 Error Code 181
- 3.22.3.134 Error Code 197 — Manually Verify Child Tax Credit
- 3.22.3.135 Error Code 198 — Country Code
- 3.22.3.136 Error Code 202/502 — Schedule C/C—EZ
- 3.22.3.137 Error Code 203 — Schedule D/RPC "T"
- 3.22.3.138 Fields Displayed — EC 203
- 3.22.3.139 Error Code 204/504 — Schedule D
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EC 118 generates when the withholding amount is inconsistent with other data on the return.
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Refer to IRM 3.12.3 and 3.22.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 118.
1040NR 1040NR-EZ Field Title 01FSC 01FSC Filing Status Code 01CCC 01CCC Computer Condition Code 01RPC 01RPC Return Processing Code 02NC> 02NC> Non Compute Code 0308 0303 Wages 0309A Taxable Interest 0310A Ordinary Dividend 0310B Qualified Dividends 0312 0305 Scholarships/Fellowships/Grants 0316B Taxable IRA Distribution 0317B Taxable Pensions and Annuities 0335 0310 Adjusted Gross Income >>>> >>>> AGI Underprint 0558 0518 Withholding 0559 0519 Estimated Tax Payments 0564 0520 Form 1040C Credit 0565 Tax Withheld at Source 0566A Tax Withheld Section 1446 Form 8805 0566B Tax Withheld Section 1446 Form 1042-S 0567A Form 8288 Withholding 0567B Form 1042-S Withheld under Section 1445 0569 0522 Total Payments 05BDR> 05BDR> Balance/Due Overpayment Taxpayer Computer >>>> >>>> Balance/Due Overpayment Computer 05BDR 05BDR Balance/Due Refund 0572 0525 ES Credit Elect 09NET> Schedule C Profit/Loss Computer—Section 09 10NET> Schedule C Profit/Loss Computer—Section 10 11NET> Schedule C Profit/Loss Computer—Section 11 1436> Schedule F Profit/Loss Computer—Section 14 1536> Schedule F Profit/Loss Computer—Section 15 Section XX Not Present
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EC 118 generates when the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , withholding is significant and RPC "G" is not present, either:
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RPC "C" is not present or FSC is 2, 5, or 6 with withholding equal to and/or greater than 33 1/3% of the sum of Wages, Taxable Interest, Taxable Dividends, Taxable IRA Distributions, Taxable Pension/Annuity and Gross Social Security.
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RPC "C" is present and FSC is 1, 3, 4, or 7 with withholding equal to or greater than 33 1/3% of the AGI computer.
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Correct coding and transcription errors and misplaced entries on displayed fields.
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Add all Wages and Withholding on Form(s) W-2, W-2G and 1099 for verification of entries on the tax return.
Note:
Enter CCC "8" and continue processing when withholding is supported by a single W-2 that is a substitute, handwritten, non standard typed or altered and the return is a refund return.
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If Wages are reported on Form W-2(s) which are not reflected in AGI adjust the Wages.
Exception: If the taxpayer indicates part of the income reported on Form W-2 was not effectively connected because the compensation was for services performed partly inside and partly outside the United States (ex. reconciliation statement) accept the taxpayer's entry.# -
If Wages were included on Schedule C or F, adjust the Schedule SE if necessary, then adjust the Schedule C or F and move the Wages to the wage line.
Exception:
Do not move Schedule C income for Insurance Salespersons, Ministers, and "Statutory Employee" to the Wages line. Enter RPC "G" .
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If SST/RRTA withholding is shown as Federal Tax Withheld, adjust Withholding as appropriate.
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Enter RPC "G"
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The taxpayer reported withholding on Line 58, Form 1040NR or Line 18 , Form 1040NR—EZ, but exempted all the income due to a tax treaty or
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Community Property is involved and/or RPC "C" and FSC 1, or 3 are both present, or
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The taxpayer reported scholarship, fellowship, grant, or stipend as wages and the amount has been adjusted, or
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The Withholding is from Gambling Income (Form W-2G).
Note:
Tax withheld from Gambling winnings on Form 1042-S are reported on Line 65, Form 1040NR.
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The taxpayer's Form W-2(s) include income that was not effectively connected to the United States. (W-2 is for services performed partly inside and partly outside the United States).
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The taxpayer is from one of the countries listed below that are exempt from tax on their social security income:
List of countries exempt from tax on social security income Canada Egypt Germany India (benefits paid to individuals who are both residents and national of India) Ireland Israel Italy Japan Romania United Kingdom (England, Northern Ireland , Scotland, and Wales)
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Other Retirement Withholding: Survivor Benefit Annuities (SBAs)/Survivor Benefit Plans (SBPs) (Pensions and Annuities)
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A member of the United States military reaching retirement age may elect to receive, during his/her lifetime, a reduced United States military pension in order that his/her surviving spouse may continue to draw a United States military pension after his/her death. After the death of the United States military retiree, the pension which is paid to the retiree's surviving spouse is called a "Survivor Benefit Annuity" (SBA) or a "Survivor Benefit Plan" (SBP).
Note:
Form 1042-S with Income Code 14 from Office of Personnel Management, United States tax law holds that these benefits represent United States — sourced, taxable income unless United States tax law is overridden by a tax treaty between the United States and the country in which the NRA recipient is a resident.
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SBAs/SBPs paid to residents and citizens of the following countries who are not also United States citizens and/or United States permanent residents are not taxable in the United States under current tax treaties:
List of Countries List of Countries China Mexico Denmark Netherlands Estonia New Zealand Finland Pakistan France Portugal Greece Russia Hungary Slovenia India South Africa Ireland Spain Italy Sweden Jamaica Switzerland Japan Thailand Korea, Republic of Tunisia Kazakhstan Turkey Latvia Ukraine Lithuania United Kingdom (England, Northern Ireland, Scotland, and Wales) -
SBAs/SBPs paid to residents and citizens of the following countries are taxable in the United States at the following tax rates under current tax treaties (or in the absence of a treaty):
Country Name Percentage (%) Canada 15% Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan) 30% Indonesia 15% Philippines (If services rendered in the United States) 30% Poland 30% All other countries (no tax treaty) 30% -
Assign TPNC 100 with the following literal: "Survivor Benefit Plans (SBPs) are taxable in the United States at the rate of 30%." .
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Form 1040NR and/or Dual Status:
Form W-2... If all income Then On line 8 is excluded due to a tax treaty, Check Forms W—2 to ensure that all withholding reported is federal tax withheld. The amount reported is federal tax withheld, Enter RPC "G" It is determined that the withholding reported on the W—2 was foreign, rather than United States (federal) withholding, Disallow the withholding claimed. Scholarship/fellowship income has been excluded, Enter RPC "G" in Field 01RPC. Form 8805.....If Then The withholding claimed is from Form 8805 or Form 1042-S and the amount is ≡ ≡ or more, the withholding must be supported by Form 8805 or Form 1042-S . If missing, SSPND 215 for the missing document. The withholding document is present and is a Form 1042-S credit, Move the credit to Field 0566b. The withholding document is present and is a Form 8805 credit, Move the credit to Field 0566a. If Then Form 8288-A credit is claimed and has not been verified on the mini computer system in the FIRPTA unit, SSPND 360. FIRPTA Unit verified the credit Verify that Form 8288-A, box 3 amount(s) is reported on one of the following: Schedule D (column (d)), Form 4797 (column (d)), Schedule E Part ll, Form 4685 Section B, Supporting Statement or check page 4, line 85, column (d), Form 1040NR. Form 8288-A, box 3 amount(s) is not reported and Code and Edit did not dummy a Schedule D, GTSEC 12 and enter the amount(s) from Form 8288-A, box 3 to Field 1215. Note:
Make sure that the year on the Form 8288-A is for the same year as the return.
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If any of the withholding is from Form 8288-A or Form 8805, move the withholding to Field 05RIC.
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If the withholding is from Form SSA/RRB 1042-S and the taxpayer attaches a green card and declaration statement with similar words ("The SSA withheld taxes erroneously because I am a U. S. permanent resident and my green card has been neither 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 my worldwide income. I have not claimed benefits for the taxable year under an income tax treaty as a nonresident alien." ), allow the refund.
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If the withholding is from SSA/RRB 1042-S and the taxpayer is missing a green card and/or declaration statement(as indicated above):
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SSPND 215 and correspond for green card and/or declaration statement
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No reply (taxpayer must provide both the green card and declaration statement), delete the withholding where reported and when EC 330 generates send TPNC 442.
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Enter RPC "G"
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The taxpayer excludes income due to a tax treaty and Form 8833 is attached to Form 1040/A/EZ or
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Community Property is involved and/or RPC "C" and FSC 1, 3, 4 or 7 are both present, or
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Refer to IRM 3.12.3 for screen displays, invalid conditions and correction procedures.
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EC 121 generates when the taxpayer's amount for excess social security does not agree with the computer.
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Refer to IRM 3.12.3 and 3.22.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 121.
1040NR Field Title CL Clear Code 01TXP Tax Period 01FSC Filing Status Code 01CCC Computer Condition Code 0308 Wages 04USS Unpaid SST Tax on Tips 0558 Withholding 0560 Excess SST Withheld
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Form 1040NR — Follow the instructions below:
If Then Taxpayer (usually F, J, M or Q visa holders) attempts to have Social Security tax refunded, Send letter 513C, delete Social Security tax from field 0560 and field 0569, adjust total payments and Balance Due/Refund and notate in upper left hand corner of return 513C and Form 843 detached. Do not send TPNC. Exception:
Nonresident aliens who file a joint return with a U. S. citizen electing to be treated as a resident alien for tax purposes are subject to U. S. tax rates and are to be processed under this Error Code.
Note:
If Form 843 is attached, detach and route to Adjustments. Notate on Routing slip "detached from Form 1040NR" .
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EC 122 generates when there is inconsistent data on the return.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 122.
1040NR 1040NR-EZ 1040-PR/SS Field Title 01CCC 01CCC 01CCC Computer Condition Code 01RPC 01RPC 01RPC Return Processing Code 02NC> Non Compute Code 0303 Wages 0335 0310 Adjusted Gross income >>>> >>>> Adjusted Gross Income Computer 0441 0415 Tentative Tax >>>> >>>> Tentative Tax Computer 0457 0417 0405 Total Tax 0558 0518 Withholding 05BDR> 05BDR> 05BDR> Balance/Due Overpayment Taxpayer Computer >>>> >>>> >>>> Balance Due Overpayment Computer Section XX Not Present
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EC 123 generates when the return is identified as a non-compute and data is present for a preparer.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 123.
1040NR 1040NR-EZ Field Title CL CL Clear Code 01CCC 01CCC Computer Condition Code 01PT 01PT Preparer's TIN 01PE 01PE Preparer's EIN 02NC> 02NC> Non Compute Code 0558 0518 Withholding 05BDR 05BDR Balance Due Refund >>>> >>>> Balance Due Overpayment Computer 0572 0525 Estimated Tax Election 05PC 05PC Preparer's Code
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Refer to IRM 3.12.3 for screen displays, invalid conditions and correction procedures.
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EC 125 generates when Federal Telephone Excise Tax Verified is not significant and it is inconsistent with other data.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 125
1040NR 1040NR-EZ 1040-PR/SS Field Title 01TXP 01TXP 01TXP Tax Period 01RPC 01RPC 01RPC Return Processing Code 05TET 05TET 05TET Federal Telephone Excise Tax >>>> >>>> >>>> Federal Telephone Excise Tax Computer 05TEV 05TEV 05TEV Federal Telephone Excise Tax Verified S59NP S59NP S59NP Section 59 Not Present
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EC 126 generates when Federal Telephone Excise Tax is claimed before or after the allowed tax period.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 126
1040NR 1040NR-EZ 1040-PR/SS Field Title 01TXP 01TXP 01TXP Tax Period 01RPC 01RPC 01RPC Return Processing Code 05TET 05TET 05TET Federal Telephone Excise Tax 5915D 5915D 5915D Tax Refund 5915E 5915E 5915E Interest on Tax Refund S59NP S59NP S59NP Section 59 Not Present
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EC 127 generates when Form 8913 is present and it is inconsistent with other data.
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Refer to IRM 3.12.3 for invalid condition and correction procedures.
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The following fields are displayed for EC 127
1040NR 1040NR-EZ 1040-PR/SS Field Title 01TXP 01TXP 01TXP Tax Period 01RPC 01RPC 01RPC Return Processing Code 05TET 05TET 05TET Federal Telephone Excise Tax 05TEV 05TEV 05TEV Federal Telephone Excise Tax Verified >>>> >>>> >>>> Federal Telephone Excise Tax Computer 5915D 5915D 5915D Telephone Tax Refund 5915E 5915E 5915E Interest on Tax Refund 5916> 5916> 5916> Form 8913 Credit for Federal Telephone Excise Tax Verified >>>> >>>> >>>> Form 8913 Credit for Federal Telephone Excise Tax Computer 05BDR 05BDR 05BDR Balance Due/Refund >>>> >>>> >>>> Balance Due/Overpayment Computer S59NP S59NP S59NP Section 59 Not Present
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EC 128 generates when Form 8913 is present and Federal Telephone Excise Tax is not significant.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 128
1040NR 1040NR-EZ 1040-PR/SS Field Title 01TXP 01TXP 01TXP Tax Period 01RPC 01RPC 01RPC Return Processing Code 05TET 05TET 05TET Federal Telephone Excise Tax 05TEV 05TEV 05TEV Federal Telephone Excise Tax Verified >>>> >>>> >>>> Federal Telephone Excise Tax Computer 05BDR 05BDR 05BDR Balance Due/Refund >>>> >>>> >>>> Balance Due/Refund Computer 5915D 5915D 5915D Tax Refund 5915E 5915E 5915E Interest on Tax Refund 5916> 5916> 5916> Form 8913 Credit for Federal Telephone Excise Tax Verified >>>> >>>> >>>> Form 8913 Credit for Federal Telephone Excise Tax Computer S59NP S59NP S59NP Section 59 Not Present
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Refer to IRM 3.12.3 for screen displays, invalid conditions and correction procedures.
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EC 148 generates when beginning and ending dates are inconsistent.
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The following fields are displayed for EC 148.
2555/2555-EZ Field Title 34BD1 Beginning Date 1 Section 34 34ED1 Ending Date 1 Section 34 34BD2 Beginning Date 2 Section 34 34ED2 Ending Date 2 Section 34 35BD1 Beginning Date 1 Section 35 35ED1 Ending Date 1 Section 35 35BD2 Beginning Date 2 Section 35 35ED2 Ending Date 2 Section 35
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EC 148 generates when Section 34/35 is present and any of the following conditions exist:
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34BD1 and 34ED1 are significant and 34ED1 is earlier than 34BD1.
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34BD1 and 34ED1 are significant and 34BD2 is significant
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34BD1 and 34ED1 are significant and 34ED2 is significant
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35BD1 and 35ED2 are significant and 35ED1 is earlier than 35BD1
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35BD1 and 35ED1 are significant and 35BD2 is significant
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35BD1 and 35ED1 are significant and 35ED2 is significant
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Correct coding and transcription errors and misplaced entries on displayed fields.
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The Bona Fide Residence Test ending date is earlier than the beginning date then use the correction procedures below:
If Then Valid Physical Presence Test dates are present (Line 16 Form 2555; Line 2b Form 2555-EZ) Delete both Fields 34BD1 and 34ED1 or Fields 35BD1 and 35ED1 and enter both Fields 34BD2 and 34ED2 or Fields 35BD2 and 35ED2. Line 31 or 38 of Form 2555 (Line 14 Form 2555-EZ) is between 330 and 364 days Delete both Fields 34BD1 and 34ED1 or Fields 35BD1 and 35ED2 and enter both Fields 34BD2 and 34ED2 or Fields 35BD2 and 35ED2 Line 31 or 38 of Form 2555 (Line 14 Form 2555-EZ) is 365 days Enter valid Physical Presence Test Dates in both Fields 34BD2 and 34ED2 or Fields 35BD2 or 35ED2. The taxpayer indicates continuing presence, such as: -
Still here
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Present in a foreign country for an entire 12 month or
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Current
Enter valid Bona Fide Residence Dates. No corrections GTSEC 03 and adjust Field 0321 (delete Foreign Earned Income Exclusion amount), adjust Field 0336 (delete Housing Deduction amount), make sure the foreign earned income is reported in Section 03 and DLSEC 34/35 Note:
If the deleted Form 2555/2555-EZ was the only foreign aspect of the return, SSPND 610/611 to renumber as a domestic return.
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The Physical Presence Test ending date is earlier than the beginning date then use the correction procedures below:
If Then Valid Bona Fide Residence Test dates are present Delete both Fields 34BD2 and 34ED2 or Fields 35BD2 and 35ED2 and enter both Fields 34BD1 and 34ED1 or Fields 35BD1 and 35ED1. Line 31 or 38 of Form 2555 (Line 14 Form 2555-EZ) is between 330 and 364 days Enter valid dates in both Fields 34BD2 and 34ED2 or Fields 35BD2 and 35ED2 Line 31 or 38 of Form 2555 (Line 14 Form 2555-EZ) is 365 days Enter valid Physical Presence Test Dates in both Fields 34BD2 and 34ED2 or Fields 35BD2 or 35ED2. The taxpayer indicates continuing presence, such as: -
Still here
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Present in a foreign country for an entire 12 month or
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Current
Enter valid Physical Presence Test Dates. No corrections GTSEC 03 and adjust Field 0321 (delete Foreign Earned Income Exclusion amount), adjust Field 0335 (delete Housing Deduction amount), make sure the foreign earned income is reported in Section 03 and DLSEC 34/35. Note:
If the deleted Form 2555/2555-EZ was the only foreign aspect of the return, SSPND 610/611 to renumber as a domestic return.
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If valid beginning dates and ending dates are present for both Bona Fide Residence Test and Physical Presence Test, keep the beginning and ending dates that reflect the longest period.
Note:
If the same dates are used, delete the Physical Presence Test Dates (34BD2 and 34ED2 and/or 35BD2 and 35ED2).
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If the taxpayer provides both dates for Bona Fide Residence Test and Physical Presence Test and they do not qualify for Bona Fide Residence Test, but qualify for Physical Presence Test, enter Physical Presence Test dates.
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If the taxpayer provides both dates for Bona Fide Residence Test and Physical Presence Test and they do not qualify for Physical Presence Test, but qualify for Bona Fide Residence Test, enter Bona Fide Residence Test dates.
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If the taxpayer provides both dates for Bona Fide Residence Test and Physical Presence Test and they do not qualify, GTSEC 03 and adjust Field 0321 (delete Foreign Earned Income Exclusion amount), adjust Field 0336 (delete Housing Deduction amount), and make sure the foreign earned income is reported in Section 03 and DLSEC 34/35.
Note:
If the deleted Form 2555/2555-EZ was the only foreign aspect of the return, SSPND 610/611 to renumber as a domestic return.
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If unable to determine dates, SSPND for correspondence with Action Code 215.
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EC 150 generates when Section 34 is present with significant entries and the bona fide residence and physical presence test dates are missing.
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The following fields are displayed for EC 150
2555 Field Title 34BD1 Beginning Date 1 Section 34 34ED1 Ending Date 1 Section 34 34DIN Declaration 3414R Number of Days in United States 1 34BD2 Beginning Date 2 Section 34 34ED2 Ending Date 2 Section 34 3418R Number of Days in United States 2 3419 Wages 3422G Total Allowances 3425 Meals and Lodging 3433 Housing Expenses 3442 Foreign Earned Income Exclusion 3444 Deduction From Excluded Income 3450 Housing Deduction
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Section 34 is present and any of the following Fields are significant:
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Declaration
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Number of Days in United States 1
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Number of Days in United States 2
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Form 2555 Wages
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Total Allowances
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Meals and Lodging
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Housing Expense
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Foreign Earned Income Exclusion
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Deduction From Excluded Income
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Housing, Deduction, and
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Section 34 is present and none of the following fields are significant:
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Beginning Date 1
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Ending Date 1
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Beginning Date 2
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Ending Date 2
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Correct coding and transcription errors and misplaced entries on displayed fields.
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If valid bona fide residence test dates (Line 10 Form 2555; Line 1b Form 2555-EZ) are available, enter fields 34BD1 and 34ED1 in YYYYMM format .
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If valid physical presence dates (Line 16 Form 2555; Line 2b Form 2555-EZ) are available, enter fields 34BD2 and 34ED2 in YYYYMM format.
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If valid bona fide residence and physical presence test dates are available enter the dates that reflect the longest period.
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Enter fields 34ED1 or 34ED2, in YYYYMM format, if the taxpayer indicates continuing presence, such as:
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still here,
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present in a foreign country for an entire 12 month or
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current
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Check the number of days on Line 31 or 38 Form 2555 (Line 14 Form 2555-EZ):
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if the number of days is 365 days, then enter bona fide residence test dates in YYYYMM format in fields 34BD1 and 34ED1 to cover at least a full calendar year.
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if the number of days is between 330 and 364 days, then enter physical presence test dates in YYYYMM format in fields 34BD2 and 34ED2.
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if the number of days is 329 days or less, then delete Section 34, adjust fields 0321 (foreign earned exclusion) and 0336 (housing deduction) to delete amount and make sure the foreign income is reported on the appropriate field (0307, 0312, 0317 or 0318).
Exception:
If the taxpayer notates "Claiming Waiver" and explains that they expected to meet the time requirement, but the conditions in the foreign country prevented them from the normal conduct of business, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and continue processing.
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If unable to determine dates, SSPND 215.
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If no reply, GTSEC 03 and adjust Field 0321 (delete Foreign Earned Income Exclusion amount), adjust Field 0336 (delete Housing Deduction amount), make sure the foreign earned income is reported in Section 03 and DLSEC 34/35.
Note:
If the deleted Form 2555/2555-EZ was the only foreign aspect of the return, SSPND 610/611 to renumber as a domestic return.
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EC 152 generates when Section 35 is present with significant entries and the bona fide residence and physical presence test dates are missing.
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The following fields are displayed for EC 152
2555 Field Title 35BD1 Beginning Date 1 Section 35 35ED1 Ending Date 1 Section 35 35DIN Declaration 3514R Number of Days in United States 1 35BD2 Beginning Date 2 Section 35 35ED2 Ending Date 2 Section 35 3518R Number of Days in United States 2 3519 Wages 3522G Total Allowances 3525 Meals and Lodging 3533 Housing Expenses 3542 Foreign Earned Income Exclusion 3544 Deduction From Excluded Income 3550 Housing Deduction
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Section 35 is present and any of the following Fields are significant:
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Declaration
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Number of Days in United States 1
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Number of Days in United States 2
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Form 2555 Wages
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Total Allowances
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Meals and Lodging
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Housing Expense
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Foreign Earned Income Exclusion
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Deduction From Excluded Income
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Housing, Deduction, and
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Section 35 is present and none of the following fields are significant:
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Beginning Date 1
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Ending Date 1
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Beginning Date 2
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Ending Date 2
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Correct coding and transcription errors and misplaced entries on displayed fields.
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If valid bona fide residence test dates (Line 10 Form 2555; Line 1b Form 2555-EZ) are available, enter fields 35BD1 and 35ED1 in YYYYMM format.
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If valid physical presence dates (Line 16 Form 2555; Line 2b Form 2555-EZ) are available, enter fields 35BD2 and 35ED2 in YYYYMM format.
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If valid bona fide residence and physical presence test dates are available enter the dates that reflect the longest period.
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Enter fields 35ED1 or 35ED2 in YYYYMM format, if the taxpayer indicates continuing presence, such as:
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still here,
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present in a foreign country for an entire 12 month or
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current
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If both bona fide residence and physical presence test dates are missing, check the number of days on Line 31 or 38 Form 2555 (Line 14 Form 2555-EZ:
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if the number of days is 365 days, then enter bona fide residence test dates in YYYYMM format in fields 35BD1 and 35ED1 to cover at least a full calendar year.
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if the number of days is between 330 and 364 days, then enter physical presence test dates in YYYYMM format in fields 35BD2 and 35ED2.
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if the number of days is 329 days or less, then delete Section 35, adjust fields 0321 (foreign earned exclusion) and 0336 (housing deduction) to delete amount and make sure the foreign income is reported on the appropriate field (0307, 0312, 0317 or 0318).
Exception:
If the taxpayer notates "Claiming Waiver" and explains that they expected to meet the time requirement, but the conditions in the foreign country prevented them from the normal conduct of business, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and continue processing.
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If unable to determine dates, SSPND 215.
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If no reply, GTSEC 03 and adjust Field 0321 (delete Foreign Earned Income Exclusion amount), adjust Field 0336 (delete Housing Deduction amount), make sure the foreign earned income is reported in Section 03 and DLSEC 35.
Note:
If the deleted Form 2555/2555-EZ was the only foreign aspect of the return, SSPND 610/611 to renumber as a domestic return.
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EC 154 generates when Section 34/35 is present and the foreign earned income exclusion is greater than the maximum amount allowed.
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The following fields are displayed for EC 154.
1040 Field Title 01TXP Tax Period 3442 Foreign Earned Income Exclusion Section 34 3542 Foreign Earned Income Exclusion Section 35
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Section 34 and/or 35 are present and Foreign Earned Income Exclusion is greater than:
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$87,600 for tax year 200812
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$85,700 for tax year 200712 to 200811
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$82,400 for tax year 200612 to 200711
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$80,000 for tax years 200212 to 200611
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$78,000 for tax year 200112 to 200211
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$76,000 for tax year 200012 to 200111
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$74,000 for tax year 199912 to 200011
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$72,000 for tax years 199712 to 199911
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$70,000 for tax years 198712 to 199711
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$80,000 for tax years 8711 and prior
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Correct coding and transcription errors and misplaced entries on fields displayed.
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Section 34/35 is dollars only.
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If the taxpayers have combined (primary and secondary taxpayer) foreign earned income exclusions on the same Form 2555/2555-EZ, SSPND for separate Forms 2555/2555-EZ using Action Code 215.
Note:
If the taxpayers are missionaries, GTSEC 35 and enter spouses' information and allowable portion of Form 2555 income.
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If data has been correctly transcribed, change line 42, Form 2555 (Field 3442), Line 18, Form 2555-EZ and change the appropriate line on Form 1040, limiting the Foreign Earned Income Exclusion to:
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$87,600 for tax year 200812
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$85,700 for tax year 200712 to 200811
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$82,400 for tax year 200612 to 200711
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$80,000 for tax years 200212 to 200611
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$78,000 for tax year 200112 to 200211
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$76,000 for tax year 200012 to 200111
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$74,000 for tax year 199912 to 200011
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$72,000 for tax years 199712 to 199911
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$70,000 for tax years 198712 to 199711
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$80,000 for tax years 8711 and prior.
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Refer to IRM 3.12.3 for screen displays, invalid conditions and correction procedures.
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EC 161 generates when RPC "Y" is present and Section 44/45 is not present.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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Refer to IRM 3.12.3 for screen displays, invalid conditions, and correction procedures.
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When a State Code is required and cannot be determined fom the return or attachments SSPND 215.
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EC 197 generates when Total Children Eligible for Child Tax Credit are significant and Child Tax Credit Verified or Additional Child Tax Credit Verified are not significant, Adoption Credit Computer is significant and Form 8396 and Form 8859 Credit Amount are significant.
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Refer to IRM 3.12.3 for invalid conditions and IRM 3.12.3 and 3.22.3 for correction procedures.
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The following Fields are displayed for EC 197.
1040NR Field Title CL Clear Code 01TXP Tax Period 01TCE> Child Tax Credit Total Eligible Computer Number 01CEV Child Tax Credit Total Eligible Verified 01EXV Exemption Verified 01CT1 Child Tax Credit Indicator 1 01CT2 Child Tax Credit Indicator 2 01CT3 Child Tax Credit Indicator 3 01CT4 Child Tax Credit Indicator 4 04MIC Mortgage Interest Credit 04DC DC Homebuyer's Credit 0446 Child Tax Credit >>>> Child Tax Credit Computer 0446V Child Tax Credit Verified 0447 Retirement Savings Contributions 04ADC Adoption Credit 04ADC> Adoption Credit Computer 0448 Credit from Forms 8396, 5695 & 8839 0561 Additional Child Tax Credit >>>> Additional Child Tax Credit Computer 0561V Additional Child Tax Credit Computer
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Correct coding and transcription errors and misplaced entries on displayed fields.
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If dependents were disallowed in 01EXV, GTSEC 01 and check 01CT1/2/3/4, if no dependents have valid TINs, enter "1" in Field 0451V and 0566V.
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The computer's figure for Child Tax Credit and Additional Child Tax Credit is not always reliable when Adoption Credit, Mortgage Interest Credit or DC Homebuyer's Credit is present.
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When Form 2555/2555-EZ is attached, verify Child Tax Credit and Additional Child Tax Credit in Field 0451V and 0566V.
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≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Enter the amounts into Child Tax Credit Verified and Additional Child Tax Credit Verified fields. Enter a "1" in the field when the amount for either of the verified fields is zero.
Note:
Child Tax Credit amount for TY03-TY08 is $1,000 (TY01-TY02 is $600; TY99 and TY00 $500; TY98 $ 400).
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EC 198 generates for Form 1040NR/NR-EZ when the country code is inconsistent with 01RPC.
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The following fields are displayed for EC 198.
1040NR 1040NR-EZ Field Title CL CL Clear Code 01TXP 01TXP Tax Period 01COU 01COU Foreign Country Code 01RPC 01RPC Return Processing Code 0308 0303 Wages 0312 0305 Scholarships and Fellowships 0316B Taxable IRA Distributions 0317B Taxable Pensions and Annuities 0321 Other Income 0452 Tax on Income Not Effectively Connected 0457 0417 Total Tax >>>> >>>> Total Tax Computer 0558 0518 Withholding 0565 Tax Withheld At Source 0566A Tax Withheld Section 1446 Form 8805 0566B Tax Withheld Section 1446 Form 1042S 0567A Form 8288-A Withheld 0567B Form 1042-S Withheld 05TET Federal Telephone Excise Tax 0569 0521 Total Payments 05BDR 05BDR Balance/Due Refund >>>> >>>> Balance/Due Overpayment Computer
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EC 198 will generate when Document Code is 72 or 73, Return Processing Code "X" is not present, Balance Due/Refund the Foreign Country Code is not AS, AU, BE, CA, CI, FI, FR, GM, GR, EI, IT, KS, LU, NL, NO, PO, SP, SW, SZ, UK and any of the following is significant
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Withholding Tax Amount, or
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Tax Withheld at Source, or
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Tax Withheld Under Section 1446, or
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Form 8288-A Withholding, or
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Form 1042-S Withheld is significant
For additional information on Country Codes see IRM 3.22.3.11.9. -
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EC 202 generates when Total Income is not equal to Total Income Computer and a math error is present for Schedule C.
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Refer to IRM 3.12.3 for invalid conditions, correction procedures and allowable TPNCs.
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The following fields are displayed for EC 202.
1040NR Field Title 01CCC Computer Condition Code 01RPC Returns Processing Code 01ACD Audit Code Field 0308 Wages 0313 Combined Schedule C Profit/Loss >>>> Combined Schedule C Profit/Loss—Computer 0318 Schedule E Profit/Loss 0321 Other Income Amount S09NP Section 09 Not Present 09STI Statutory Employee Indicator 0901 Gross Receipts 0902 Returns and Allowances 0904 Cost of Goods Sold 0906 Schedule C Other Income 09EXP Schedule C Total Expenses 0930 Expenses for Business Use of Home 09AR At Risk Code 09NET> Schedule C Profit/Loss Computer S10NP Section 10 Not Present 10STI Statutory Employee Indicator 1001 Gross Receipts 1002 Returns and Allowances 1004 Cost of Goods Sold 1006 Schedule C Other Income 10EXP Schedule C Total Expenses 1030 Expenses for Business Use of Home 10AR At Risk Code 10NET> Schedule C Profit/Loss Computer S11NP Section 11 Not Present 11STI Statutory Employee Indicator 1101 Gross Receipts 1102 Returns and Allowances 1104 Cost of Goods Sold 1106 Schedule C Other Income 11EXP Schedule C Total Expenses 1130 Expenses for Business Use of Home 11AR At Risk Code 11NET> Schedule C Profit/Loss Computer S17NP Section 17 Not Present 1702 Net Profit/Loss Non-Farm (Primary) 17TE Tentative Earnings (Primary) S21NP Section 21 Not Present 2104 Primary Earned Income Note:
The fields displayed for EC 502 will include a CL Code and 02NC> and all other fields will be the same as EC 202.
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EC 203 generates when data on the return is inconsistent with Schedule D.
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Refer to IRM 3.12.3 for invalid conditions and correction procedures.
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The following fields are displayed for EC 203.
1040NR Field Title 01TXP Tax Period 01RPC Return Processing Code 0314 Capital Gains >>>> Capital Gains Computer S12NP Section 12 Not Present 1207 Net Short Term Gain or Loss 1215 Net Long Term Gain or Loss Note:
The fields displayed for EC 503 will include a CL Code and 02NC> and all other fields will be the same as EC 203.