Washington DC Form D-40 - Income Tax Return Instructions

New for 2013 Income Tax Returns:

The District of Columbia Tax Refund Visa Prepaid Card

The DC Office of Tax and Revenue (OTR) is implementing a significant addition to the way individual income tax refunds are issued, and we want to make sure you have the information you need to choose the best way to receive your 2013 refund.

There will be three options on 2013 returns for receiving individual income tax refunds - direct deposit, a new tax refund card, or paper check. All individual income tax returns will require that an option be selected. If you do not select an option, you will receive a tax refund card. However, refunds under $25 or greater than $2,500 do not qualify for the tax refund card and will be issued by check. The following information will help you understand the new refund card.

The DC OTR issues over 50% of income tax refunds via paper checks each year. The switch to the tax refund cards will save the District money by reducing check printing and mailing costs. The Office of Finance and Treasury has partnered with Citi Prepaid Services to administer the tax refund card program at no cost to the taxpayer.

What are the benefits of each option for District of Columbia taxpayers? Direct deposit is still the fastest and recommended method for receiving a refund, provided accurate bank account information is entered on the return. So be sure to check your bank information carefully before filing your return. In addition to entering your bank information, you must also select the direct deposit option. For individuals who prefer not to use direct deposit, the tax refund card offers a more secure and convenient alternative to paper checks that also eliminates check-cashing fees.

How can I be sure the DC Tax Refund Visa Prepaid is secure? The DC Tax Refund Visa Prepaid Card is covered by Visa's Zero Liability protection; cardholders are not responsible for fraudulent or unauthorized transactions (terms and conditions apply). The card itself can be activated only by using the recipient's identifying information, including social security number. For additional security, many transactions require a personal identification number (PIN) chosen by the recipient.

How and where can the tax refund card be used? The card can be used to withdraw cash at any Visa member bank, or it can be used at retail stores and ATMs or to make transactions online wherever Visa debit cards are accepted. The DC Tax Refund Visa Prepaid Card is valid only until the refund amount has been exhausted. The card cannot be reloaded.

Are there fees associated with using the tax refund card? Many transactions are free, including retail purchases, in-network ATM withdrawals, "cash back" at participating merchants and one-time withdrawal of funds at a Visa member bank, but there may be fees for some transactions. A complete fee schedule is available on our website, www.taxpayerservicecenter.com.

How will tax refund cards work for a joint refund? In the case of a joint return, a single tax refund card will be issued in the name of both spouses/domestic partners. The refund itself cannot be divided into separate cards between the spouses/domestic partners.

Where can I get more information about the DC Tax Refund Visa Prepaid Card? On the OTR website, www.taxpayerservicecenter.com.

Cards are issued by Citibank, N.A. pursuant to a license from Visa U.S.A. Inc. and managed by Citi Prepaid Services. This card can be used everywhere Visa debit cards are accepted.

The DCfreefile fillable forms e-File program provides an online version of the D-40/D-40EZ and related schedules. The DCfreefile fillable forms program allows you to complete your return online by entering your DC state tax information as if you were filling out a paper return. Once the form is completed, you can e-File your return at no charge or print it for mailing. The DCfreefile fillable forms option is available only to DC residents, but there are no income or age restrictions. The DCfreefile fillable forms program also performs basic calculations. If you usually file on paper forms, the DCfreefile fillable forms e-File Program may be a good choice for you.

DCfreefile is a free federal and state income tax preparation and electronic filing program for eligible taxpayers, developed through a partnership between groups of private sector tax software companies. Eligible taxpayers may prepare and e-File both your 2013 federal and DC income tax returns using one of our DCfreefile vendors. Each participating vendor sets its own eligibility requirements and not all taxpayers will qualify for all companies.

For more information on either option, please visit our website, www.taxpayerservicecenter.com.

General Instructions for D-40

Who must file a DC Income tax return?

You must file a 2013 DC Individual Income tax return if -

  • You were a District of Columbia (DC) resident in 2013 and were required to file a federal income tax return. (A resident is an individual whose permanent legal residence is within the District during the taxable year); or
  • You maintained a place of residence in DC for a total of 183 days or more during 2013 even if your permanent residence was outside DC; or
  • You were a member of the United States (US) armed forces and DC was your legal residence for tax purposes for all or part of 2013.

Note that even if you are the spouse/registered partner of someone not required to file, such as a non-resident Congressional appointee, and you meet any of the above requirements, you yourself must file.

You do not need to file a 2013 DC Individual Income tax return if:

  • You were not required to file a 2013 federal income tax return.
  • You were not considered a resident of DC during 2013.
  • You were an elected member of the US government who was not domiciled in DC.
  • You were an employee on the personal staff of an elected member of the US Congress and you and the elected member were bona fide residents of the same state.
  • You were a member of the US Executive Branch appointed by the President, subject to US Senate confirmation, whose tenure of office is at the pleasure of the President and you were not domiciled in DC during any part of 2013.
  • You were a justice of the US Supreme Court and were not domiciled in DC during any part of 2013.

Refund of DC taxes

If you believe you are entitled to a refund and you are not required to file a DC income tax return and:

  • You are a DC resident, file a Form D-40, Individual Income Tax Return or D-40EZ, Income Tax Return for Single and Joint Filers with No Dependents; or
  • You are not a DC resident, file a Form D-40B, Non-Resident Request for Refund.

Which form should you file?

D-40EZ Income Tax Return for Single and Joint Filers with No Dependents. You may use this simpler form if you meet all of the following:

  • Your filing status is single or filing jointly with a spouse or a registered domestic partner. (Domestic partners are registered with the Vital Records Division of the DC Department of Health);
  • You were a DC resident from January 1 through December 31, 2013;
  • Your taxable income is $100,000 or less and consists only of wages, salaries and tips; taxable scholarships or fellowship grants; unemployment compensation; and/or interest and dividends ($1500 maximum);
  • You did not make estimated income tax payments;
  • You do not claim dependents;
  • You do not claim an exemption for being age 65 or older or legally blind;
  • You have no federal adjustments to income;
  • You do not itemize deductions;
  • You do not file DC Schedules S, H, U, I or N;
  • You do not claim a deduction for a payment to the DC college savings plan; and
  • You do not claim a long-term care insurance premium deduction.

D-40 Individual Tax Return. Use this form if you cannot use the D-40EZ.

D-41 Fiduciary Income Tax Return. Use the D-41 if you are the fiduciary of a DC estate or trust and:

  • The gross income for the estate is $1,675 or more for the year; or
  • The gross income for the trust is $100 or more for the year.

When are your taxes due?

April 15, 2014, is the due date for filing your return and paying any taxes due. If the due date falls on a Saturday, Sunday, or legal holiday, the return is timely if filed on the next business day.

FR-127 Extension of Time to File Income Tax Return

An extension of time to file of six months may be granted if a valid extension of time to file is requested. In order to be valid, a FR-127 Extension of Time to File form is due by April 15, 2014. If the due date falls on a Saturday, Sunday, or legal holiday, the return is timely if filed on the next business day. The submission of the extension of time to file is subject to the following considerations:

  1. If you expect to have a balance due when you file your D-40, you must pay with your timely filed extension.
  2. If you do not expect to have a balance due when you file your D-40, you would not be required to file a Form FR-127, if you have:
    1. Reasonably estimated your D-40 tax liability and paid the estimated amount of DC income taxes through withholding or estimated tax payment; and
    2. Filed a request to extend the time to file your federal indi- vidual income tax return with the IRS. The timely filed federal extension to file form will satisfy the requirement for filing a Form FR-127 with DC.
     
  3. If you do not expect to have a balance due and you have not filed an extension of time to file for your federal individual income tax return and wish to request an extension for your DC income tax return, you should submit a Form FR-127.

Penalty and interest charges are imposed on any tax found owing and not paid on time with the extension request.

How to file your return

This booklet has all the forms and instructions you will need. You are responsible for filing and paying taxes on time whether or not you receive the printed forms.

Substitute forms

You may file your DC tax return using a computer-prepared or computer- generated substitute form, provided the form is approved in advance by the Office of Tax and Revenue (OTR). The fact that a software package is available for retail purchase does not mean that the substitute form has been approved for use. Call or check with the software developer to determine if their form is a DC OTR approved form.

By mail

  • If mailing a return with a payment, send it to:

Office of Tax and Revenue
PO Box 96169
Washington, DC 20090-6169

  • If mailing a refund request return or a 'no money due' return, send it to:

Office of Tax and Revenue
PO Box 96145
Washington, DC 20090-6145

There are two adhesive mailing labels on the back flap of your return envelope. If you are sending a payment with your return, use the PO Box 96169 mailing label on your return envelope.

If you are filing a no money due or a refund requested return, use the PO Box 96145 mail label on your return envelope.

Do not include more than one return per envelope.

By DC electronic filing (e-file)

e-File offers most DC individual income taxpayers a full federal/state Electronic Filing program. There are three ways in which taxpayers can file their federal and District returns together electronically:

  1. Through an authorized software provider listed on the Internal Revenue Service (IRS) website;
  2. Through a tax practitioner who is an authorized e-File provider; or
  3. Through a commercial online filing service. This allows taxpayers to transmit their DC and federal returns from their PC for a fee.

The DCfreefile fillable forms e-File program provides an online version of the D-40/D-40EZ and related schedules. The DCfreefile fillable forms program allows the taxpayer to complete the return online by entering the DC state tax information as if the taxpayer were filling out a paper return. The DCfreefile fillable forms option is available only to DC residents, but there are no income or age restrictions. Once the return is completed, it can be e-Filed at no charge or printed for mailing. The DCfreefile fillable forms program also performs basic calculations. If you usually file on paper forms, the DCfreefile fillable forms e-File program may be a good choice for you.

DCfreefile is a free federal and state income tax preparation and electronic filing program for eligible taxpayers, based on the IRS Free File Alliance program. Eligible taxpayers may prepare and e-File their federal and state income tax returns for free using commercial online software provided by specific Free File vendors. Each participating vendor set its own eligibility requirements and not all taxpayers will qualify for all companies. Please select a product from our Free File page to assure yourself the opportunity to e-File both your federal and District returns.

DCfreefile fillable forms and DCfreefile will be available at the same time as the IRS.

If you use one of the e-File options to file your DC return, you also have three options to receive your refund:

  1. Direct Deposit;
  2. The new DC Tax Refund Visa® Prepaid Card; or
  3. Paper Check.

Be sure to make a selection on the return for the refund option that you want. If no choice is made, and your refund is within the threshold of a refund card, you will receive a refund card. However, refund cards will not be mailed to a foreign address. Please review the information at the front of the book. Instructions for direct deposit can be found on pages 10 and 11.

Electronic Filing Instructions

The instructions in this booklet are specifically for filers of paper returns. When you file electronically, note that the instructions may differ. Follow the "on screen" instructions. If you need further explanations, review the instructions in this booklet.

Payment Options

Check or money order - Include a check or money order, payable to the DC Treasurer, with your completed return. Write your social security number, daytime telephone number, "2013" and the type of form filed ("D-40" or "D40EZ") on your payment. Attach your payment to the Form D-40P voucher provided in this booklet. Do not attach either to your return.

Form D-40P, Payment Voucher - Use this form when sending a check or money order. Do not staple the voucher to the D-40 or D-40EZ. Include the D-40P with your D-40 or D-40EZ in the return envelope provided. Use the PO Box 96169 mail label from the back flap of the return envelope.

By Phone -

  1. Dial 1-800-272-9829 (available 7 days a week, 24 hours a day)
  2. Enter code 6000 (District of Columbia's Jurisdiction Code)
  3. Complete the telephone transaction directly with the credit card processing vendor or electronic check processing vendor, Official Payments Corporation. You will be given a confirmation number, please keep it with your records.

Electronic Check (e-check) - E-check is similar to ACH debit, but it is a one-time transaction where the taxpayer provides the banking information at the time of payment instead of storing the information. There is no fee for e-check payments.

Credit/Debit Card - The taxpayer may pay the amount owed using Visa®, MasterCard®, Discover® or American Express®. You will be charged a fee that is paid directly to the District's credit card service provider. Payment is effective on the day it is charged.

Direct Debit - Electronic filers have the ability to pay their tax due by direct debit. Enter your banking information, including the routing and account numbers, checking or savings account and the date of withdrawal. If you file and pay before the April 15th due date, you may enter any date. After the due date, you can only choose the current date, except for estimated payments.

Visit the website http://www.taxpayerservicecenter.com for Credit/Debit Card Payment or Electronic Check (e-check) Payment Information.

Note: Dishonored payments. Make sure your check or electronic payment will clear. You will be charged a $65 fee if your check or electronic payment is not honored by your financial institution and returned to OTR.

Note: International ACH Transaction (IAT). Electronic banking rules have changed. If you request a refund to be direct deposited into an account outside of the United States, you will receive a paper check.

Your payment cannot be drawn on a foreign account. You must pay by money order (US dollars) or credit card instead.

Penalties and Interest

OTR will charge -

  • A penalty of 5% per month if you fail to file a return or pay any tax due on time. It is computed on the unpaid tax for each month, or fraction of a month, that the return is not filed or the tax is not paid. It may not exceed an additional amount equal to 25% of the tax due;
  • A 20% penalty on the portion of an underpayment of taxes if attributable to negligence. Negligence is a failure to make a reasonable attempt to comply with the law or to exercise ordinary and reasonable care in preparing tax returns without the intent to defraud. One indication of negligence is failure to keep adequate books and records;
  • Interest of 10% per year, compounded daily, on a late payment;
  • A one-time fee to cover internal collection efforts on any unpaid balance. The collection fee assessed is 10% of the tax balance due after 90 days. Payments received by OTR on accounts subject to the fee are first applied to the fee, then to the penalty, interest and tax owed;
  • A civil fraud penalty of 75% of the underpayment which is attributable to fraud (see DC Code §47-4212).

Penalties and interest accrued may be reported on Line 17 of the D-40EZ or Lines 37, 43a and/or 43b of the D-40. This will include Estimated Tax Underpayment Penalty, Form D-2210, which can be located at http://www.taxpayerservicecenter.com. File the Form D-2210 with your return.

Criminal Penalties

You will be penalized under the criminal provisions of the DC Code, Title 47, if you are required to file a return or report, or to perform any act, and you:

  • Fail to file the return or report timely. If convicted, you will be fined not more than $1,000 or imprisoned for not more than 180 days, or both, for each failure or neglect;
  • Willfully fail to file the return or report timely. If convicted, you will be fined not more than $5,000 or imprisoned for not more than 180 days, or both;
  • Willfully attempt to evade or defeat a tax; willfully fail to collect, account for, or pay a tax; or willfully make fraudulent and false statements or fail to provide information. See DC Official Code §47-4101 through 4107.

These penalties are in addition to penalties under DC Code §22-2405 for false statements (and any other applicable penalties). Corporate officers may be held personally liable for the payment of taxes owed to DC.

Enforcement Actions

OTR may use lien, levy, seizure, collection agencies, and liability offset if the taxpayer fails to pay the District within 20 days after receiving a Notice of Tax Due and a demand for payment. Visit www.taxpayerservicecenter.com.

Special filing circumstances

Amended return

File an amended DC return if your DC tax liability for a prior open tax year (usually 3 years from date of filing) has changed on the D-40 or D-40EZ for the year you are amending. To file an amended return for the current year, complete another 2013 DC individual income return and fill in the "amended return" oval on the form. Attach a list with explanations of the changes covered by your amended return.

If you are filing an amended return for a prior year, attach a copy of the return filed for that year. You can download forms from www.taxpayerservicecenter.com or call 202-442-6546 to request forms by mail.

If the IRS adjusts your individual federal tax return, you must file an amended DC return within 90 days of receiving notice of the federal adjustment. Attach a copy of the adjusted federal return.

Getting Started

To complete the Forms D-40 or D-40EZ, in general you will need:

  • A copy of your completed 2013 federal return, as applicable (Form 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ) and any additional forms or worksheets related to the return. You can copy many entries directly from federal forms 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ. Please be careful since the line numbers may differ from the District Forms D-40 or D-40EZ line numbers;
  • A copy of your completed state returns if you filed an income tax return with another state;
  • Your W-2 and applicable 1099 forms with DC withholding tax or taxable income;
  • A pen with black ink;
  • A calculator.

Not all items will apply. Fill in only those that do. If an amount is zero, make no entry, leave the line blank.

Do not enter cents. Round to the nearest dollar. Examples: $10,500.50 rounds to $10,501 , $10,500.49 rounds to $10,500

Taxpayer Identification Number(s) (TIN)

You must have a TIN, whether it is a SSN or FEIN.

  • A SSN is a valid number issued by the Social Security Administration (SSA) of the United States Government. To apply for a SSN, get Form SS-5, Application for a Social Security Card, from your local SSA office or get this form online at www.ssa.gov. You may also get this form by calling 1-800-772-1213;
  • A FEIN is a valid number issued by the Internal Revenue Service (IRS). To apply for an FEIN, get Form SS-4, Application for Employer Identification Number, or get this form online at www.irs.gov/businesses and clicking on Employer Identification Number (EIN) under Starting a Business. You may also get this form by calling 1-800-TAX-FORM (1-800-829-3676).

You must wait until you receive either number before you file a DC return. Your return may be rejected if your TIN is missing, incorrect or invalid. You could be subject to a balance due or disallowance of credits or exemptions, if your dependents or other qualifying person TIN's are missing, incorrect or invalid.

If you are filing a joint return, or filing separately on the same return, enter the name and SSN shown first on your return, then enter the name and SSN shown second on your return. Incomplete information or failure to follow these instructions will delay processing of your return.

Filling out the form

To aid us in processing your return please follow these rules.

  • Do not print outside the boxes.
  • Leave a space between words and between words and numbers.
  • Fill in ovals completely.
  • Print in CAPITAL letters.
  • Do not enter cents. Round cents to the nearest dollar.

Note: Your social security number is used for tax purposes only. Personal information

Complete the personal information as instructed using CAPITAL letters and black ink. Use one block per letter, including using a space between address fields. Please write clearly, as this can delay processing your return.

Wages, tips and salaries

Enter the amount from your federal 1040, 1040A, or 1040EZ, or 1040NR, or 1040NR-EZ, plus any unemployment compensation received on Line 1 of the D-40EZ or Line a, Income Information on the D-40.

DC income tax withheld

Add the DC income tax withheld as shown on your 2013 federal Forms W-2 and applicable Forms 1099. Attach all copies of your Forms W-2 and 1099 that show DC tax withheld to the Forms D-40 or D-40EZ.

Filing Status

More than one filing status may apply to you. Use the one that will give you the lowest tax. Please ensure the oval to the left of the filing status is filled in.

Generally, you will use the same filing status on your DC return as that used on your federal return. However, if you used married filing jointly on your federal return, it may be better for you to file your DC return using either married filing separately or filing separately on the same return. If both have income, figure the tax both ways.

Single (D-40 and D-40EZ)

You were unmarried, divorced or legally separated as of December 31, 2013, or were widowed prior to January 1, 2013, and did not remarry before January 1, 2014.

Filing Jointly (D-40 and D-40EZ)

You were married or have a registered domestic partner and both spouses/domestic partners were DC residents as of December 31, 2013, or your spouse/domestic partner died in 2013 and you did not remarry/register in 2013. If legally separated, do not file jointly. If your spouse died during the year, you are considered married for the whole year for filing status purposes. If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse.

If you are filing a joint return or filing separately on the same return, enter the name and SSN shown first on your return, then enter the name and SSN shown second on your return.

Registered domestic partners (D-40 and D-40EZ)

To be considered as a domestic partner for DC tax purposes, the parties must be registered with the Vital Record Division of the DC Department of Health. If you have registered your relationship you may either file a joint return (D-40 or D-40EZ) or file separately on the same return (D-40). You may also file as single.

Domestic partners or other similar relationship registered in other jurisdictions. If you have registered your relationship in another jurisdiction, you may file a joint return, or file separately on the same return, or file a separate return using the single status.

If you are visiting the DC OTR for assistance in preparing your DC Income Tax Return, registered domestic partners must first prepare a "not to be filed" (mock) joint federal return.

  • If filing jointly is chosen, enter the spouse/domestic partner's total federal AGI on Line 1 of the Form D-40EZ or Line 3, of the Form D-40.
  • If you are same-sex spouses, you may file either a joint return or file separately on the same return. If filing jointly is chosen, enter the total federal adjusted gross income of both spouses/partners on Line 3, Form D-40.
  • If filing separately on the same return is chosen, follow the instructions under Married or Registered Domestic Partners filing separately on the same return.

Married filing separately or domestic partner filing separately (D-40)

You are married or have a registered domestic partner and both spouses/partners had income. Include your spouse/domestic partner's name and social security number in the Personal Information section.

You will each report only your own income, exemptions, deductions, and credits. You will each report one-half of the income from any securities, bank accounts, real estate, etc., that are registered or titled in both names.

You must use this filing status if:

  • You and/or your spouse/registered domestic partner were part- year residents of DC during different periods of 2013;
  • You were a DC resident and your spouse/domestic partner was one of the following:
    • A member of the US armed forces and not considered a DC resident, but you are required to report income in DC;
    • A member of the US Congress or an employee on the personal staff of a member of Congress who is considered a resident of the member's state of residency;
    • An officer of the US Executive Branch whose primary residence was not in DC, who is appointed by the President, confirmed by the US Senate and serves at the plea- sure of the President; or
    • A justice of the US Supreme Court whose primary residence was not in DC.
     

Dependent claimed by someone else

If you are claimed as a dependent on someone else's return, fill in the 'dependent claimed' oval on the D-40 or D-40EZ return.

Married or registered domestic partners filing separately on the same return (D-40)

If you claim either status, you and your spouse/domestic partner must combine your separate amounts using Calculation J on Schedule S so that you will either receive one refund or make one tax payment. You may also claim a credit for child and dependent care expenses, which you are not allowed to claim if you file separate returns. Using this filing status may reduce the amount of tax you owe by allowing each spouse/domestic partner to take advantage of lower tax brackets. Before completing Calculation J, and the Form D-40, you will need to figure the following for you and your spouse/domestic partner:

  • Each person's federal adjusted gross income;
  • Each person's additions to federal income;
  • Each person's subtractions from federal income;
  • Each person's deductions; and
  • Each person's exemptions.

NOTE: If you and your spouse/domestic partner were part-year residents of DC during different periods of 2013, you cannot file separately on the same return. You must file separate returns.

Head of Household (D-40)

You may claim this status if you were unmarried or legally separated as of December 31, 2013, and paid over half of the costs of maintaining a home for a qualifying person, such as a child or parent. Certain individuals who lived apart from the spouse/domestic partner for the last six (6) months of 2013 may also be able to use this filing status. Use the appropriate section of Schedule S to enter the full name, SSN and Date of Birth (DOB) of the qualifying person whether that person is a dependent or the non-qualifying dependent. Failure to provide a Schedule S can delay processing and exclude any exemptions claimed for dependents or other non-qualifying dependent. All the information must be complete, i.e., name, SSN and DOB.

Standard Deduction and Exemption Amounts (D-40 and D-40EZ)

You are not entitled to the standard deduction if you itemize on your federal return. You are entitled to the itemized deductions excluding the state and local taxes and subject to the DC 5 percent limitation.

District Code §47-1803.03 (c) states "Every individual who claims the standard deduction on his or her federal income tax return shall claim the applicable standard deduction specified in District Code §47-1801.04 (44). Every individual who itemizes the deductions on his or her federal income tax return shall itemize the deductions permissible under this chapter. If a husband and wife or domestic partners file separate returns, the applicable standard deduction shall not be allowed to either spouse or domestic partner if the net income of one of the spouses/domestic partners is determined by itemizing deductions." Each spouse/domestic partner can claim only his/her own itemized deduction.

Standard Deduction

Married filing separately or registered domestic partners filing separately are allowed a standard deduction of $2,050. All other filing statuses are allowed a standard deduction of $4,100.

Number of Exemptions

If you are a 'dependent claimed by someone else', do not claim any exemptions. Leave Lines 18 and 19 blank on the D-40.

If you are filing:

  • single and claiming more than one exemption; or
  • married or registered domestic partners filing jointly, and claiming more than two exemptions

Complete Calculation G on page 2 of the Schedule S and attach the schedule to the return, Form D-40.

Exemption Amount

Enter $5,775 if filing status is single on the D-40EZ or multiply $1,675 by Line 18 of the D-40 number of exemptions. If you do not have exemptions, leave Line 19 blank on the D-40.

Enter $7,450 if filing jointly on the D-40EZ, for standard deduction and exemption.

Enter $4,100 on Line 4 of the D-40EZ if you are a dependent claimed by someone else. You are not eligible to claim an exemption. If you are completing the D-40 as a dependent claimed by someone else, leave Lines 18 and 19 blank on the D-40.

Credits

There are two credits offered to DC taxpayers: (1) DC Low Income Credit (LIC) and (2) DC Earned Income Tax Credit (EITC). The LIC is a non-refundable credit, which means it can reduce the DC tax you owe, but it will not directly result in a tax refund. The EITC is a refundable credit. If the IRS is calculating your federal EITC, wait until they notify you of that amount before you determine your DC EITC.

If you take the federal earned income credit, it may be better for you to take the DC Earned Income Tax Credit instead of the DC Low Income Credit. You cannot take both DC credits.

DC Low Income Credit (LIC)

To qualify for this credit:

  • You cannot have computed your federal income tax using the Alternative Minimum Tax (AMT) calculation;
  • The amount of DC taxable income on Line 21 of your D-40 or Line 5 of the D-40EZ is more than zero; and
  • Your DC Adjusted Gross Income (AGI) D-40, Line 15 or D-40EZ, Line 3; is greater than the sum of DC personal exemptions and DC standard deduction and is less than or equal to the sum of your federal personal exemptions and your federal standard deduction.

Calculation of Eligibility

If your DC taxable income is greater than zero, complete this chart to determine if you are eligible for the low income credit.

Line 1 DC AGI $

Line 2 Federal personal exemptions Amount

("Dependents claimed by someone else", enter 0)

$
Line 3 Federal standard deduction Amount $
Line 4 Sum of Line 2 and Line 3 $

Line 5 If Line 1 is greater than Line 4 You do not qualify

STOP
Line 6 DC personal exemption Amount $

Line 7 DC Standard deduction Amount

$
Line 8 Sum of Line 6 and Line 7 $
Line 9 If Line 1 is greater than Line 8 continue. $

To determine the low income credit, see the Low Income Credit Table on page 13.

Dependents claimed by someone else should use the calculation at the bottom of page 13 to determine the low income credit available.

Complete Calculation LIC/EITC for D-40EZ or Calculation L on page 23 for D-40 taxpayers to determine which DC credit is better for you.

You must enter the number of federal exemptions to claim the LIC, Forms D-40EZ, Line 7a, or D-40, Line 25a.

DC Earned Income Tax Credit (EITC)

If your filing status is "Married or registered domestic partner filing separately" or "Dependent claimed by someone else", you cannot claim the DC EITC.

Taxpayers who claim the federal EITC may also claim a DC EITC of 40% of the federal credit. Taxpayers who claim the DC LIC credit may not claim the EITC. You may take only one of these DC credits. Complete the calculation on the back of the D-40EZ or Calculation L on page 23 of the D-40.

If you are not entitled to claim a federal EITC, you cannot claim a DC EITC other than the exception below.

DC Law also allows the same 40% of federal EITC to those who are not allowed to claim the EITC at the federal level but who meet other DC requirements, such as a non-custodial parent who is a District resident between the ages of 18 and 30, and paying child support under a court order for a minor child. The taxpayer must have paid the child support of at least the amount due for the year through a government sponsored support collection unit and the order must have been in effect for a least one-half of the year. You must file a D-40 form to use this exception. Complete Schedule N, DC Non-Custodial Parent EITC Claim, and attach to the D-40. Also enter the amount to be claimed on the Schedule U, Part 1B, Line 1.

Please enter the number of qualified EITC dependents on Line 13a of the D-40EZ, or Line 28a of the D-40.

Qualifying Child for EITC Purposes

A qualifying child as defined by the IRS for the EITC is a child who is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece or nephew) and was:

  • Under age 19 at the end of 2013; or
  • Under age 24 at the end of 2013 and a full-time student; or
  • Any age and permanently and totally disabled.

In addition, they must have lived with you in the US for more than half of 2013, unless you are claiming the EITC as a non-custodial parent (see D-40 instructions for Schedule N).

If your child was married at the end of the year, the child is not a qualifying child unless you can claim the child's exemption or you have been given the right to claim the exemption in an agreement signed by the child's custodial parent releasing the dependency exemption.

Contributions

There are three (3) DC contributions. Contributions will be deducted from the refund due or added to the tax due. You can contribute as much as you would like, however the smallest contribution you can make to any one fund is $1.00.

Public Fund for Drug Prevention and Children at Risk - Enter in Line 9a of the D40-EZ, or Part II Contribution, Line 2 of the Schedule U, and attach to the D-40.

DC Statehood Delegation Fund - Enter in Line 9B of the D-40EZ, or Part II Contribution, Line 1 of the Schedule U, and attach to the D-40.

Anacostia River Cleanup and Protection Fund - Enter in Line 9c of the D-40EZ, or Part II Contribution, Line 3 of the Schedule U, and attach to the D-40.

Tax tables

If your taxable income is $100,000 or less, use the tax tables on pages 53 - 62 to find the tax on the Line 6 amount of the Form D-40EZ or Line 22 of the D-40.

If your taxable income is greater than $100,000, for D-40EZ filers, use the Form D-40. D-40 filers use Calculation I on page 23 to determine your tax.

Tax paid with extensions

Report tax paid with extension of time to file or with original return if this is an amended return on Line 12 of the D-40EZ or Line 33 of the D-40.

Refund Options

Beginning with the 2013 individual income tax returns filed in 2014, there will be three refund options offered. All individual income tax returns will require that an option be selected.

1. Direct deposit of refund

Direct Deposit Facts:

  1. It's simple. You don't have to go to the bank to cash your check.
  2. It's safe. No more lost, stolen or misplaced checks.
  3. It's fast. Your money will be available the morning of the payment.

If you want your refund deposited directly in your bank account, complete the Direct Deposit Information above the signature line on the D40 or D-40EZ. If the routing or account number begins with zeros, include the zeros.

Fill in the bank routing and account number information. You can obtain this information from the lower left portion of your check (see example below).

NOTE: Refer to your own check or financial institution for your numbers. The routing and account numbers may be in different places on your check.

Your routing number is the left-most number located on your check, identified as the American Banking Association (ABA) routing number. The ABA number identifies your bank uniquely within the direct deposit system. It must be:

  • Nine (9) digits in length, including zeros;
  • A current valid bank routing number.

Your account number:

  • Is usually just to the right of your ABA routing number including zeros;
  • Can be up to 17 digits long; and
  • Can be both letters and numbers.

You may want to verify your account and routing numbers with your financial institution before filling in the information.

Fill in the oval to show the type of bank account. If you want the refund to go to a savings account instead of your checking account, you may need to contact your financial institution for the account and routing number information.

Check the ABA routing number and account number carefully. If your bank account information is incorrect or missing digits, the money can be deposited in someone else's account. Please double check your routing and account number. OTR is not liable for any ABA routing and account numbers reported on the return in error.

If you do not select the checking or savings oval, we will assume the refund will be deposited in your checking account. If the funds are returned to OTR, a paper check will be issued.

Refund direct deposit to a foreign account - International ACH Transaction (IAT). If you request your refund to be direct deposited to an account outside of the United States, you will receive a paper check.

2. DC Tax Refund Visa® Prepaid Card

Beginning with 2013 tax returns, if you do not select direct deposit, your income tax refund will be issued on a tax refund card unless you choose another option. However, refunds under $25 or greater than $2,500 do not qualify for the refund card. Non-qualified refunds will receive a paper check if direct deposit is not selected.

3. Paper Check

A paper check will be issued if the taxpayer selects this option, or direct deposit is not selected, or tax refund card is beyond the threshold, or if the taxpayer uses a foreign address.

Refund status inquiry

To check the status of your refund visit www.taxpayerservicecenter.com. You will need to enter your SSN and the refund amount you requested on your return.

Third Party Designee

If you want to authorize another person to discuss your 2013 tax return with the OTR, check the oval in the Third Party Designee block on page 2 of the D-40, or page 1 of the D-40EZ, and enter the designee's name and phone number. If you want to authorize your paid preparer, enter 'preparer' in the 'third party designee' block. If you are filing a joint return, checking the third party designee block oval constitutes authorization by both filers.

Checking the oval also gives the designee authorization to:

  • Give OTR any information missing from your return;
  • Contact OTR for information about processing your return and the status of any refund or payment; and
  • Request, receive and/or respond to OTR notices related to your return.

The authorization does not:

  • Give the designee the right to receive your refund;
  • Bind you to any additional tax liability related to your return; or
  • Otherwise represent you before OTR.

This authorization automatically ends on April 15, 2014 (without regard to extensions).

Signature

Sign and date your return. If your filing status is married filing jointly or married filing separately on the same return, both spouses/registered domestic partners must sign. If the return is not signed, it will be sent back to you. If the return was prepared by a paid tax preparer, the tax preparer must also sign the return and provide his or her identification (PTIN) and telephone number. You, the taxpayer(s) is/are responsible for the information prepared and submitted by a paid preparer.

Send in your original return and attachments, if applicable; please keep a copy for your records.

Do not understate your taxes. There may be a penalty if an understatement of the tax required to be shown on your return exceeds the greater of:

  • 10% of the tax required to be shown on the return; or
  • $2,000

The penalty is 20% of the excess of the amount required to be shown on the return over the tax shown on the return.

Preparer Tax Identification Number (PTIN)

IRS rules have changed. If you are a paid tax preparer, you are required to have an IRS PTIN issued by the IRS. If you use a paid preparer, they are required to have an IRS PTIN issued by the IRS. Although you may use a paid preparer, you the taxpayer(s) are responsible for the filing and payment of your tax return. A PTIN is a number issued and authorized by the IRS to file a return on your behalf. Please review the tax return before you allow a paid preparer to issue a return on your behalf.

Paid preparers must pay a penalty for understating taxes where:

  • The refund or amount due is based on unrealistic information; or
  • The preparer should have been aware of a relevant law or regulation; or
  • Relevant facts about the return are not adequately disclosed.

Penalties range from $250 to $10,000.

Assembling your D-40EZ or D-40 return

  • Do not staple or otherwise damage the Bar Code located in the upper right hand corner of the form or schedule being attached;
  • Do not cross out the tax year on the 2013 return. If you are not filing a 2013 individual income tax return, do not use this booklet. Request a booklet for the specific year you are filing by calling our Forms Center at (202) 442-6546, or visit our Customer Service Center (CSA) at 1101 4th Street, SW, Washington, DC 20024. You may also visit our website at http://www.taxpayerservicecenter.com for prior year(s) individual income tax booklets/returns;
  • Staple check or money order to the D-40P, Payment Voucher;
  • Staple Forms W-2 and applicable 1099 to the front of your return;
  • Staple any of the other required documents listed on this page in the upper left corner behind the return;
  • Send in an original, signed DC return with attachments, if applicable, not a copy. Please fold your return once and use the return envelope provided;
  • There are two adhesive mail labels on the back flap of the return envelope. If you are sending a payment with your return, use the PO Box 96169 label on the return envelope. If you are filing a return with no payment due or refund return, use the PO Box 96145 label.

List of other required documents for D-40 filers.

Staple these behind the D-40 return in file order. (File order numbers can be found at the bottom of the forms)

  • DC Schedule S (if claiming exemptions other than yourself);
  • DC Schedule H (include the completed medical certification, and verification that the total household gross income is less than or equal to $20,000);
  • DC Schedule U;
  • DC Schedule I;
  • DC Schedule N;
  • DC Form D-2210, Underpayment of Estimated Income Tax by Individuals

If any of the following forms are needed, visit www.taxpayerservicecenter.com. Click "Tax Forms and Publications", "Individual Income Forms", and select form needed.

You may also contact our Forms Center at (202) 442-6546

  • DC Form FR-147, Refund Claim for Deceased Taxpayer, with letters of administration and a copy of the death certifi cate;
  • DC Form D-2440, Disability Income Exclusion (and any certifi cation);
  • DC Form D-2441, Child and Dependent Care Credit for Part-Year Residents.

Instructions for the D-40

To complete your D-40 return, you will need to do a series of calculations contained in these instructions and copy many of the line items and totals on your D-40. You may also need to attach DC schedules, forms and worksheets to your D-40 if you complete any of the DC forms. Unless instructed otherwise, if you complete any part of any Schedules H, I, N, S, or U, attach it to your return, in the order defined in General Instructions, page 12.

Schedule H, Homeowners and Renter Property Tax Credit

This schedule allows eligible residents to claim a property tax credit against their DC income tax liability. Total household gross income cannot exceed $20,000. Do not claim this credit for an exempt property owned by a government, a house of worship or a non-profit organization. See Schedule H in this booklet.

Note: If you are filing a D-40, you must file DC Schedule H with it. If you are not required to file a D-40 (or D-40EZ), the DC Schedule H can be filed by itself.

Schedule I, Additions to and Subtractions from FAGI

This schedule contains two calculations, one for additions and another for subtractions from federal AGI. See Schedule I in this booklet.

If you took the 30% or 50% federal bonus depreciation and/or the additional Internal Revenue Code (IRC) Section 179 expenses on your federal return, enter the total on Schedule I, Calculation A, Line 3.

Schedule N. DC Non-Custodial Parent EITC Claim

Use this schedule to determine whether a non-custodial parent making court-ordered child support payments may claim the DC EITC. See Schedule N in this booklet.

Schedule S, Supplemental Information and Dependents

If claiming exemptions, use Schedule S to list each dependents name, social security number and date of birth. Use Schedule S if reporting dependent or other qualifying dependent, and head of household information. It contains Calculation G for use in determining the number of exemptions you may claim and Calculation J to determine the DC tax amount for married or registered domestic partners filing separately on the same return. You may also use Schedule S for claiming dependents and deductions for being blind and/or over 65. You may claim an exemption for each of your dependents. You may also claim a deduction for being over 65 or blind.

Claiming dependents and deductions for being blind and/or over 65 - You may claim an exemption for each of your dependents or other qualifying non-dependent person. If claiming exemptions, use Schedule S to list each dependent's name, SSN, and DOB. You may also claim a deduction for yourself or your spouse/registered domestic partner for being over 65 or blind.

Schedule U, Additional Miscellaneous Credits and Contributions

This schedule lists certain additional non-refundable and refundable credits you may be able to claim. It also lists several contributions funds to which you may wish to contribute. See Schedule U in this booklet.

Credit for certain DC Government employees who are DC residents and first-time DC homebuyers. This credit, originally limited to DC police officers who are first-time homebuyers in DC, has been expanded. This $2,000 credit is now available to all DC government employees, employees of a DC public charter school, and any person who has accepted an offer to be a DC police officer, firefighter, emergency medical technician, public school teacher or a teacher at a DC public charter school. Except for DC police officers, the tax credit is limited to those employees who purchased their first principal residence in DC on or after October 1, 2007, and who are enrolled in the Employer Assisted Housing Program (EAHP) offered by the DC Department of Housing and Community Development. The credit is available for a 5-year period. Enter $2,000 on Schedule U, Part 1a, Line 1.

It includes the amount DC taxpayers may claim as a credit for individual income tax paid to other state(s) if the income taxed by that state is derived from that state and is of a kind taxed by DC. If tax paid to a state is the total state tax liability shown on the state tax return. (It is not the state withholding shown on your Form W-2.)

Complete Calculation K on page 19, to determine your out of state credit. Enter the credit amount on Schedule U, Part 1a, Line 3. If you paid tax to more than one state, enter the respective amounts and other state codes in the spaces provided.

No DC credit is allowed for any other tax imposed by a state, including the following:

  • Corporate franchise tax;
  • License tax;
  • Excise tax;
  • Unincorporated business franchise tax; and
  • Occupation tax.

Personal Information. Refer to General Instructions, page 8 for directions on completing an amended return.

Filing for a deceased taxpayer. Fill in the oval for a deceased taxpayer at the top of the page of the D-40.

If a taxpayer died in 2013 or 2014 before filing a return, a return must be filed for that person. Complete a D-40 on the correct year's tax return and provide the deceased person's information, not your own. Do not adjust the deceased's income, exemptions or deductions to refl ect the date of death, unless a D-41 is being filed for the remainder of the year after the date of death. Tax preparers, other than the surviving spouse/registered domestic partner, such as executors, attorneys, or other personal representatives, must attach letters of administration.

If a refund is due, all tax preparers must attach a completed FR-147, Statement of Persons Claiming Refund Due a Deceased Taxpayer, found on www.taxpayerservicecenter.com and a copy of the death certificate. Do not use the federal form to request a DC refund.

Calculation K Out-of-state income tax credit

a. Amount of income tax paid to other state(s), enter from the other state(s) return(s).  
b. Income subject to income tax in other states and received while a resident of DC.  
c. DC adjusted gross income from D-40, Line 15.  
d. Divide Line b by Line c. (Enter the percent.)  
e. DC Tax from D-40, Line 22.  
f. Maximum out-of-state credit. Multiply Line e by Line d.  
g. Enter the lesser of Line a or Line f. Also enter on Schedule U, Part 1a Line 3.  

Filing Status

Refer to General Instructions, page 8.

Part-Year Residents

NOTE: A temporary absence (even a lengthy one) from your permanent home does not make you a part-year resident. If filing as a part-year resident, you will be given guidance for completing your D-40 throughout these instructions.

You are a part-year DC resident if, during the year, you moved out of DC with the intent to permanently leave or moved into DC with the intent to permanently stay.

A DC taxpayer domiciled in DC during the tax year, is a full-time DC resident unless he or she changes domicile during the tax year. In such case, he or she will be a part-year resident for the period not domiciled in DC.

A DC taxpayer present in DC for 183 days or more and not domiciled in DC during the tax year is a part-time resident for the period present in DC. Number of months of DC residency. Divide the number of days lived in DC by 30 to determine the number of months of residency. Any remainder over 15 days counts as a full month.

Example: 196 days of residency in DC divided by 30 = 7 months (6 months plus one month due to the 16 day remainder).

"Domicile" is where a person has his or her permanent home. To change domicile, you have to abandon the previous domicile and establish a new one in another state with the intent to remain. If you resided in DC for only part of 2013, allocate your DC income and deductions attributable to the time of your DC residency. Also prorate your exemptions and credits.

If DC was your home or permanent residence for less than a year, fill in the oval on Line 2 of the D-40, complete the applicable months in the "from" and "to" boxes, and enter the number of months in DC. Complete Calculation C for standard deduction and Calculation D for DC itemized deductions showing the type and amount of income received:

  • During the time you resided in DC;
  • During the time you were a non-resident; and
  • The total income reported on your federal return.

Before completing the D-40, calculate the following:

  • Income received when you were a resident of DC, and when you resided outside of DC; and
  • Deductible expenses paid when you resided in DC and when you resided outside of DC. The same allocation is required for exemptions, credits, and other deductions.

If you received a state income tax refund while not a resident of DC; do not include it in DC income.

If you claimed itemized deductions on your federal income tax return, include, for DC purposes, only those relating to the time you were a DC resident. Your federal worksheet will assist you in completing Schedule I (Calculations A and B) and Calculation D (if applicable). Keep a copy of your worksheet, a copy of your tax return and all calculations.

If you resided in DC for only part of 2013, allocate your DC income and deductions attributable to the time of your DC residency. Also prorate your exemptions and credits.

(Note: Calculations A and B are on Schedule I)

Calculation C - Standard deduction for part-year DC residents

a. Your standard deduction.
Married or registered domestic partner filing separately enter $2,050. All others enter $4,100
 
b. Number of months you lived in DC from D-40, Line 2.  
c. Divide Line a by the number 12.  
d. Part-year DC standard deduction. Multiply Line c by Line b, enter here and on D-40, Line 17.  

Calculation D - DC Itemized deductions for part-year DC residents

a. Total Itemized Deductions from Form 1040 Schedule A, Form 1040NR.  
b.Portion of Line a that applies to the time you were a DC resident.  
c. Portion of your state and local tax or state and local sales tax deduction from Schedule A, Line 5; or 1040NR, Schedule A, Line 1, that was paid to DC.  
d. DC itemized deductions Subtract Line c from Line b. If your District AGI is equal to or less than $200,000 ($100,000 if Married filing separately) stop here and enter this amount on Line 17 of the D-40.  
Note: If your District AGI is greater than $200,000 ($100,000 if Married filing separately) continue below to determine the allowable itemized deductions
e. Enter the sum of Form 1040 Schedule A Lines 4, 14&20 allocable to the time you were a DC resident  
f. Subtract amount on Line e from the amount on Line d  
g. Enter the amount of DC AGI  
h. Enter $200,000 (or $100,000 if MFS)  
i. Subtract Line h entry from Line g entry  
j. Multiply Line i entry by 5%  
k. Subtract amount on Line j from amount on Line f (If < 0, enter 0)  
l. Add the amounts on Lines e and k (enter this on Line 17 of the D-40)  

Standard deduction for part-year DC residents. Adjust your standard deduction to reflect the number of months you were a DC resident. Complete Calculation C on page 20.

Itemized deductions for part-year DC residents. If your DC AGI is $200,000 or less and you were a part-year resident, complete Calculation D on page 20.

Effective January 1, 2011, DC Official Code §47-1803.03 (b-4) provides that certain DC itemized deductions of DC taxpayers with over $200,000 of DC AGI ($100,000 for a separate return filed by a married individual) will be limited. Reduce the DC itemized deduction amount by 5% of DC AGI in excess of $200,000 ($100,000 for a separate return filed by a married individual). The itemized deductions that are not subject to the 5% limitation are medical and dental expenses, expenses incurred in the production of investment interest and casualty or theft loss deduction.

If your DC deductions are limited and you were a part-year DC resident, complete Calculation D on page 20.

Number of exemptions for part-year DC residents. Reduce the full exemption amount to reflect the number of months you were a DC resident. Complete Calculation E on page 21.

NOTE: Calculation G - Number of exemptions is on Schedule S Supplemental Information and Dependents.

Credit for child and dependent care expenses for part-year DC residents. Complete the DC Form D-2441 and enter the amount from Line 5 on Line 23 of the D-40. Attach a copy of your DC Form D-2441.

Do not include income tax withheld for other states in the DC tax withheld, Line 31, D-40.

Income Information Section

  • Copy Line a through d from the appropriate federal return. Do not recalculate any amounts or totals.
  • Not all items will apply to you. Fill in only those that do. If the amount is zero, leave the line blank.
  • If you had a loss for Lines b, c, d, 3, 6, 15 or 21, fill in the "Fill in if loss" oval to indicate that the figure entered is a negative one.

Do not enter a minus sign or brackets in the boxes.

Line a Wages, salaries, unemployment compensation, and/or tips

Enter the amount from your federal 1040,1040a, 1040EZ, 1040NR, or 1040NREZ, plus any unemployment compensation received.

All unemployment compensation received in 2013 is taxable.

Calculation E - DC exemption amount for part-year DC residents

a. Number of exemptions from D-40 Line 18.  
b. Exemption amount per month x $139.58 ($1,675 divided by 12).  
c. Multiply Line b by Line a.  
d. Number of months you lived in DC from D-40, Line 2.  

e. Exemption amount

Multiply Line c by Line d. Enter here and on D-40, Line 19.

 

Line b Business income or loss

Enter the amount from your 1040 or 1040NR.

Line c Capital gains or losses

Enter the amount from your 1040 or 1040NR. The maximum allowable annual capital loss claim is $3000 ($1500 if married or registered domestic partner filing separately).

If you had farm income or loss, enter on Line c the amount on Line 18 of your 1040 or Line 19 of your 1040NR in the amount entered on Line c. If a loss, fill in the oval.

For DC tax purposes, upon disposing of an asset not fully depreciated, compute the capital gain/loss reported on your federal return for the year of disposition excluding any bonus depreciation.

Line d Rental real estate, royalties, S corporations, trusts, etc

Enter the amount from your 1040 or 1040NR.

If you had gross income, from DC sources, of more than $12,000 from a non-incorporated business or business activity, including rents and royalties, do not include on D-40. You are required to file a D-30 return. File a DC Form D-30, Unincorporated Franchise Tax Return if capital is a material income producing factor. An S Corporation must file a D-20, Corporate Franchise Tax Return.

Computation of DC Gross and Adjusted Gross Income

Line 3 Federal adjusted gross income

Enter the amount from 1040, 1040A, 1040EZ, 1040NR, or 1040NR. Include your taxable portion of pension/annuity in your federal adjusted gross income.

NOTE: Any grants and stipends received by certain DC public or charter school teachers under the Housing Support for Teachers Act of 2007 are subject to both federal and DC income tax.

Additions to DC Income

Line 4 Franchise Tax

Enter any franchise tax deducted on a federal business tax return, from federal Forms 1065 or 1120S.

Line 5 Other additions from DC Schedule I

Enter the amount from Line 8 of Calculation A, Schedule I.

Line 6 Add Lines 3, 4 and 5

Add federal adjusted gross income, franchise tax deducted and additions to DC income. Fill in oval if loss.

Calculation F DC Itemized deductions for full-year DC residents

a. Total itemized deductions from Form 1040, 1040NR, 1040NR-EZ.  
b. State and local income tax or state and local general sales tax deduction from 1040, or 1040NR.  

c. DC itemized deductions. Subtract Line b from Line a, If your District AGI is equal to or less than $200,000

($100,000 if Married filing separately), stop here and enter this amount on Line 17 of the D-40.

 
Note: If your District AGI is greater than $200,000 ($100,000 if Married filing separately) continue below to determine the allowable itemized deductions
d. Enter the sum of Form 1040 Schedule A Lines 4, 14&20  
e. Subtract amount on Line d from the amount on Line c  
f. Enter the amount of DC AGI  
g. Enter $200,000 (or $100,000 if MFS)  
h. Subtract Line g entry from Line f entry  
i. Multiply Line h entry by 5%  
j. Subtract amount on Line i from amount on Line e (if < 0, enter 0)  
k. Add the amounts on Lines d and j (enter this on Line 17 of the D-40)  

Note: Calculation G - Number of exemptions is on Schedule S - Supplemental Information and Dependents.

Subtractions from DC Income

Line 7 Income received during period of non-residence

For each type of income reported on your federal 1040, determine the amount you received when you resided in DC. Subtract that amount from your total income and enter the results on Line 7.

Line 8 Taxable refunds, credits or offset of state and local income tax

Enter the amount from your 1040, or 1040NR.

Line 9 Taxable amount of social security and tier 1 railroad retirement

Enter the amount from 1040 or 1040A.

Line 10 Income reported and taxed this year on a DC franchise or fiduciary return (D-20, D-30 or D-41)

If the income reported on your 1040 included income reported and taxed on a DC franchise or DC fiduciary return, enter that amount here. Provide the, FEIN or SSN, and your share of the income reported. Refer to General Instructions, page 7 regarding TINs. Include the FEIN/SSN on page 2 of the Schedule S.

Line 11 DC and federal government pension and annuity limited exclusion

You must be 62 years of age or older as of December 31, 2013, to claim this exclusion. Enter the lesser of $3,000 or the taxable income you received from military retired pay, pension income or annuity income from the DC or federal government during the year. The maximum annual exclusion is $3,000 per person. The remaining amount of the pension/annuity is taxable and must be reported on your return. Attach a copy of your federal Form 1099R.

Line 12 DC and federal government survivor benefits

If you are an annuitant's survivor and 62 years of age or older as of December 31, 2013, enter the total survivor benefits (do not include Social Security survivor benefits).

Line 13 Other subtractions from DC Schedule I

Line 14 Total subtractions from DC Income

Add Lines 7-13

DC Adjusted Gross Income

Line 15 DC adjusted gross income

Line 6 minus Line 14.

DC Taxable Income

Line 16 Deduction type

Indicate which type of deduction (itemized or standard) you are taking by filling in the appropriate oval. You must take the same type of deduction on your DC return as you took on your federal return.

Line 17 DC deduction amount

Do not copy the amount from your federal return. DC amounts are different from those allowed on your federal return.

Standard deduction. Reference page 9 of the General Instructions. Part-year DC residents, reference page 20.

Calculation I/Tax Rate Schedule

If your taxable income from D-40, Line 21 is:

0 but not over $10,000, your tax rate is 4%

At least $10,000, but not over $40,000, your tax is $400 + 6% of excess over $10,000

At least $40,000, but not over $350,000, your tax is $2,200 + 8.5% of excess over $40,000

Over $350,000, your tax is $28,550 + 8.95% of excess over $350,000.

Itemized deductions. Do not copy the amount from your federal return. DC amounts are different from those allowed on your federal return.

If your DC AGI is $200,000 or less, complete Calculation F on page 22. DC income taxes paid are not deductible on your DC return. Therefore, reduce your federal itemized deductions amount by those taxes before entering the total on your DC return.

Effective January 1, 2011, DC Official Code §47-1803.03 (b-4) provides that certain DC itemized deductions of DC taxpayers with over $200,000 of DC AGI ($100,000 for a separate return filed by a married individual) will be limited. Reduce the DC itemized deduction amount by 5% of DC AGI in excess of $200,000 ($100,000 for a separate return filed by a married individual). The itemized deductions that are not subject to the 5% limitation are medical and dental expenses, expenses incurred in the production of investment interest and casualty or theft loss deduction.

If your DC deductions are limited, complete Calculation F on page 22.

Line 18 Number of exemptions

Reference page 9 of the General Instructions.

Line 19 Exemption amount

Reference page 9 of the General Instructions.

Line 20

Add Line 17 and 19.

Line 21 DC taxable income

Subtract Line 20 from Line 15. Enter the result, if it is a minus, fill in the oval.

Line 22 Tax

If Line 21 is $100,000 or less, use the tax tables on pages 53-62 to determine your tax. If Line 21 is more than $100,000, use Calculation I on page 23 to determine your tax.

Married or registered domestic partners filing separately on the same return - Before completing Calculation J, the tax computation, on Schedule S, you must determine each person's separate federal AGI, additions to income, subtractions from income, deductions and exemptions. You must combine the separate amounts for each person before making entries on Lines 23-33 of the D-40.

DC tax, credits, and payments

The credits claimed on Lines 23, 24 and 25 are non-refundable, which means they can reduce the taxes you owe, but they will not result in a tax refund. The credits you claim on Lines 28, 29 and 30 are refundable credits, which means if these credits plus any tax payments are greater than your total tax due, you may receive a refund.

Line 23 Credit for child and dependent care expenses

Do not claim this credit if your filing status is married filing separately. If your status is married or registered domestic partner filing separately on the same return, you may claim the credit and divide it between spouses/ domestic partners any way you wish.

If you were a full-year DC resident, to figure your DC credit, multiply by .32, the amount from federal Form 2441, Line 9. Enter the result on Line 23 of the D-40. (Do not use the DC Form D-2441.)

If you were eligible for the Child and Dependent Care Credit but did not claim it for federal purposes, complete the DC Form D-2441, multiply the result by .32 and claim the DC credit for child and dependent care expenses.

Line 24 Non-refundable credits from DC Schedule U

This entry is the total of non-refundable amounts from DC Schedule U, Part 1a, Line 6.

Calculation L - comparison of DC Low Income Credit and the DC Earned Income Tax Credit. DO NOT TAKE BOTH

a Child and dependent care credit from D-40, Line 23.  
b DC Schedule U, Line 6 (nonrefundable credits).  
c Add Line a and Line b.  
d Tax from D-40, Line 22.  
e Subtract Line c amount from Line d amount.  
f DC Low Income Credit from table on page 13.  
g Enter the lesser of Line e or Line f amounts.  
h Federal Earned Income Credit from Federal Form 1040, 1040A, or 1040EZ.  
i DC Earned Income Tax Credit Rate - 40% of Federal credit x .40
j DC Earned Income Tax Credit. Multiply Line h by Line i.  

If Line g amount exceeds Line j amount, enter it on D-40, Line 25.

If Line j amount exceeds Line g amount, enter it on D-40, Line 28.

Note: Part-year residents may not take the full amount of either credit. See page 20 of the instructions to determine the reduced amount. Line 25 DC Low Income Credit

Refer to General Instructions, page 9.

Line 26 Total non-refundable credits

Add Lines 23, 24 and 25.

Line 27 Total tax

Subtract Line 26 from Line 22. If Line 22 is less than Line 26, leave Line 27 blank.

Line 28 DC EITC

Refer to General Instructions, page 10.

Line 28a Qualified EITC children

Refer to General Instructions, page 10.

Line 29 Property tax credit

If you filed a DC Schedule H, Homeowner and Renter PropertyTax Credit, enter the amount from the appropriate Line (5 or 9). See the instructions in this booklet for assistance in completing Schedule H. If you are filing a D-40 and Schedule H, attach Schedule H to your D-40.

Line 30 Refundable credits from DC Schedule U

Complete Schedule U, Part 1b. Attach Schedule U to your D-40. See Schedule N, DC Non-Custodial Parent EITC Claim, to determine if you are eligible to claim this credit. If you complete a Schedule N, attach it to your D-40.

Line 31 DC income tax withheld

Add the amount of DC income tax withheld as shown on your 2013 federal forms W-2 and applicable1099 that show DC tax withheld.

Line 32 2013 Estimated income tax payments

Enter the total of your 2013 DC estimated income tax payments. If you are filing separate returns, you and your spouse/registered domestic partner must divide the payments according to which spouse/registered domestic partner paid them. You cannot arbitrarily allocate them between you.

Line 33 Payment made with an extension of time to file or with original return

If you filed Form FR-127, Extension of Time to file a DC Income Tax Return, enter the amount you paid with the FR-127 or with the original return, if filing an amended return.

Line 34 Total payments and refundable credits

Add Lines 28, 29-33. If Line 34 is more than Line 27, go to Line 35 in the -Refund section. If Line 34 is equal to or less than Line 27, go to Line 41 in the Amount owed section.

Refund

Line 35 Amount you overpaid

Subtract Line 27 from Line 34.

Line 36 Amount to be applied to your 2014 estimated tax

Enter the amount of overpayment, if any, you want credited to your 2014 estimated tax. This amount will not be refunded.

Line 37 Penalty

Enter any penalty for non-payment and for underpayment of one's estimated tax.

D-2210: Underpayment of Estimated Income Tax By Individuals - You may use this form to calculate your penalty, when submitting your D-40 form. If you do, fill in the oval, attach it to your tax return and add the penalty and any interest to the amount you calculate for Line 37 or 43a of the D-40. If you do not wish to calculate the penalty and interest, the Office of Tax and Revenue (OTR) will do it when your return is processed and will notify you of the amount due. You may also complete this form if you believe the penalty assessed by OTR for an underpayment of estimated income tax is incorrect.

Line 39 Contribution amount from Schedule U, Part II

Reference General Instructions, page 10.

Line 40 Net Refund

Subtract Line 39 from Line 38.

Be sure to use the PO Box 96145 mail label from the back fl ap of the return envelope when mailing your return.

If you answer yes to the question, "will the refund you requested go to an account outside of the US", you will be issued a paper check in lieu of direct deposit. See page 11 of the General Instructions.

Amount Owed

Line 41 Tax due

Subtract Line 35 from Line 27.

Line 42 Contribution amount from Schedule U, Part II

Reference General Instructions, page 10.

D-2210: Underpayment of Estimated Income Tax By Individuals - You may use this form to calculate your penalty, when submitting your D-40 form. If you do, fill in the oval, attach it to your tax return and add the penalty and any interest to the amount you calculate for Line 37 or 43a of the D-40. If you do not wish to calculate the penalty and interest, the Office of Tax and Revenue (OTR) will do it when your return is processed and will notify you of the amount due. You may also complete this form if you believe the penalty assessed by OTR for an underpayment of estimated income tax is incorrect.

Line 43a Penalty

Enter any penalty for non-payment and for underpayment of one's estimated tax.

Line 43b Interest

Enter any interest amount due.

Line 43 Enter total penalty and interest

Line 44 Total amount owed

Add Lines 41 - 43.

You must pay this amount in full with your return. See page 6 for payment options under General Instructions.

If you wish to contribute and you are not due a refund or do not owe additional tax, please enter the total contribution amount on Line 42. Make your payment payable to the DC Treasurer and include it with your return. Designate the specific contributions on Schedule U. Attach Schedule U to your return.

SCHEDULE I Additions to and Subtractions from Federal Adjusted Gross Income

Calculation A Instructions

Additions to federal adjusted gross income

Line 6. Other is for those items not subject to federal tax but subject to DC tax. Please list.

Calculation B Instructions

Subtractions from federal adjusted gross income

Line 1 Taxable interest from US Treasury bonds and other obligations. This interest is included on your federal Forms 1040 or 1040A, Line 8a or 1040EZ, Line 2. It may be all or part of that amount, or it may be 0. Also see your federal Form 1099-INT, Line 3.

Line 2 Disability income exclusion from DC Form D-2440. Enter the amount from Form D-2440, Line 10. Attach a completed D-2440. If disability payments were included in your federal gross income, you may be able to claim an exclusion for them on your DC return.

Line 5 Excess of DC allowable depreciation over federal allowable depreciation. If you claimed the federal bonus depreciation (30% or 50%) on your federal return, the DC basis for the depreciated property will be more than the federal basis. Use this line to subtract the excess depreciation from the federal AGI to show the proper DC depreciation allowable.

Line 6 Long-term care insurance premiums. Long-term care insurance premiums paid in 2013 are entered on Line 6, Calculation B, Schedule I. The deduction may not exceed $500 per year, per person.

Line 7 DC College Savings Plan payments. Enter the amount contributed to a qualified DC "529" College Savings Plan. You may deduct up to $4,000 annually for contributions you made to all qualified college savings accounts of which you are the owner. If you are married and file a joint or combined separate return, each spouse/domestic partner may deduct up to $4,000 for contributions made to all accounts for which that spouse/domestic partner is the sole owner. A rollover distribution is not a contribution for purposes of this deduction. Contributions made to one or more accounts in excess of the allowable $4,000 ($8,000 for eligible joint filers) annual deduction may be carried forward as a deduction (subject to the annual limitation) for up to five years. If you were a part-year DC resident during the tax year, you may deduct only the amount contributed when you resided in DC.

Line 8 Exclusions for DC residents. Income not to exceed $10,000 is excludable in computing DC gross income for persons determined by the Social Security Administration to be totally and permanently disabled and who are receiving: Supplemental Security Income or Social Security Disability; or railroad retirement disability benefits; or federal or DC government disability benefits; and whose annual household adjusted gross income is less than $100,000.

Household income includes income received by all household members in the year, even income excluded from federal adjusted gross income.

Adjusted gross income is that of all persons residing in a household, excluding the adjusted gross income of any person who is a tenant under a written lease for fair market value.

Lines 9 and 10 Expenditures by DC teachers. An individual who:

  1. has been approved by the DC public schools; and
  2. has been a classroom teacher in a DC public school or public charter school for this entire tax year or the entire prior tax year may deduct:
    • the amount the teacher paid during the year for basic and necessary classroom teaching materials and supplies - up to $500 per person whether filing individually or jointly.
    • the tuition and fees paid during the year for postgraduate education, professional development, or state licensing examination and testing for improving teaching credentials or maintaining professional certification - up to $1,500 per person whether filing individually or jointly.
     

Interaction between DC deductions and similar federal deductions. To prevent a "double deduction" situation - if a DC classroom teacher claims a deduction on his/her federal return for personal expenses, the federal tax deduction claimed reduces the amount that may be claimed for those same expenses on the DC return. For example: a DC classroom teacher who claims $1,500 or more for tuition and fees on the federal return (Form 1040, Line 34) may not take any deduction for these same expenses on the DC return.

Line 11 Loan repayment awards. "Loan repayment awards" of up to $120,000 paid over four years by DC to healthcare professionals to reduce their medical education debt are not taxed by DC. (This program is administered by the DC Department of Health.)

Line 12 Healthcare insurance premiums. Any healthcare insurance premium paid by an employer for an employee's domestic partner registered with the Vital Records Division of the DC Department of Health (see DC Code §32-701 (3) and 702) or same sex spouse is deductible, unless on your federal return the employee's registered domestic partner or same sex spouse is considered a dependent pursuant to IRC §152 and a deduction from income was taken for the premium on the employee's federal tax return.

Line 13 DC Poverty Lawyer Loan Assistance. Attach a copy of your document cancelling the debt. Lawyers eligible for this award are those whose legal practice has been certified by the DC OAG as serving the public interest.

Line 14 Other is for those items not subject to DC tax but subject to federal tax. Please list.

Line 15 Military Spouse Residency Relief Act. If you have determined that you are required to file a District of Columbia tax return and you are in one of the U.S. military services, one of the following may apply:

  1. If a servicemember's legal residence for taxes is not in DC but the servicemember and spouse reside in DC due to military orders, the military compensation and the non-military spouse's compensation should be deducted on Schedule I, Line 15. If this applies to you, a copy of the Department of Defense form providing the servicemember's legal residence for taxes and a copy of the non-military spouse's legal residence for taxes driver's license should be kept with your tax records in case it is subsequently needed.
  2. If a servicemember's legal residence for taxes is not in DC but the service member resides in DC due to military orders and subsequently marries a DC resident, the servicemember's military compensation should be deducted on Schedule I, Line 15. The non-military spouse's income is not exempt in this case since the non-military spouse is a DC resident and has not moved to DC to be with a transferred service- member. If this applies to you, a copy of the Department of Defense form providing the servicemember's legal residence for taxes should be kept with your tax records in case it is subsequently needed.
  3. If a servicemember's legal residence for taxes is in DC and the servicemember and spouse reside in DC in compliance with the servicemember's military orders, they will file Form D-40 and will report all their income in DC, as either married filing jointly or married filing separately.