Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040nr 2012

Free Tax Return CalculatorI Need To Amend My 2012 Tax Return1040 Ez 20121040ez Tax Form 2012Irs 1040 FormFile Taxes Online FreeFiling State Taxes Online For FreeWww Irs Gov FormspubsFree E File 2010Free Tax FileHrblock TaxcutHow Do You File An Amended Tax ReturnFile Taxes For FreeSoftware To File 1040nrFree State And Federal Tax ReturnsFile My 2009 Taxes Online FreeWww Free State Tax ReturnE File State Taxes OnlyFile Late Taxes Online FreeTurbotax 1040ezFile 2010 Taxes Online Turbotax1040x HelpTax For Military Active DutyFile A 1040ez OnlineIt1040ezHow To Fill Out 1040x FormFile My 2011 Taxes FreeH And R Block FreeTurbo Tax 1040xFree 2012 State Tax FilingFile Your 2011 Taxes For Free1040x 2012 Tax FormAmend 2012 Tax ReturnFile Tax Amendment Online2011 Income TaxesFederal Tax Income ReturnMy Freetaxes Com2011 Tax Forms 1040 InstructionsIrs Forms Amended Tax ReturnWhere Can I File My 2010 Taxes Online For Free

1040nr 2012

1040nr 2012 Publication 80 - Introductory Material Table of Contents Future Developments What's New Reminders Calendar Future Developments For the latest information about developments related to Publication 80 (Circular SS), such as legislation enacted after it was published, go to www. 1040nr 2012 irs. 1040nr 2012 gov/pub80. 1040nr 2012 What's New Social security and Medicare tax for 2014. 1040nr 2012  The social security tax rate is 6. 1040nr 2012 2% each for the employee and employer, unchanged from 2013. 1040nr 2012 The social security wage base limit is $117,000. 1040nr 2012 The Medicare tax rate is 1. 1040nr 2012 45% each for the employee and employer, unchanged from 2013. 1040nr 2012 There is no wage base limit for Medicare tax. 1040nr 2012 Social security and Medicare taxes apply to the wages of household workers you pay $1,900 or more in cash or an equivalent form of compensation. 1040nr 2012 Social security and Medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation. 1040nr 2012 Change of responsible party. 1040nr 2012 . 1040nr 2012  Beginning January 1, 2014, any entity with an employer identification number (EIN) must file Form 8822-B, Change of Address or Responsible Party—Business, to report the latest change to its responsible party. 1040nr 2012 Form 8822-B must be filed within 60 days of the change. 1040nr 2012 If the change in the identity of your responsible party occurred before 2014, and you have not previously notified the IRS of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change. 1040nr 2012 For a definition of “responsible party”, see the Form 8822-B instructions. 1040nr 2012 Same-sex marriage. 1040nr 2012  For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. 1040nr 2012 For more information, see Revenue Ruling 2013-17, 2013-38 I. 1040nr 2012 R. 1040nr 2012 B. 1040nr 2012 201, available at www. 1040nr 2012 irs. 1040nr 2012 gov/irb/2013-38_IRB/ar07. 1040nr 2012 html. 1040nr 2012 Notice 2013-61 provides special administrative procedures for employers to make claims for refund or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. 1040nr 2012 Notice 2013-61, 2013-44 I. 1040nr 2012 R. 1040nr 2012 B. 1040nr 2012 432, is available at www. 1040nr 2012 irs. 1040nr 2012 gov/irb/2013-44_IRB/ar10. 1040nr 2012 html. 1040nr 2012 Reminders Additional Medicare Tax withholding. 1040nr 2012  In addition to withholding Medicare tax at 1. 1040nr 2012 45%, you must withhold a 0. 1040nr 2012 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1040nr 2012 You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 1040nr 2012 Additional Medicare Tax is only imposed on the employee. 1040nr 2012 There is no employer share of Additional Medicare Tax. 1040nr 2012 All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040nr 2012 For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Employment and Payments , in section 12. 1040nr 2012 For more information on Additional Medicare Tax, visit IRS. 1040nr 2012 gov and enter “Additional Medicare Tax” in the search box. 1040nr 2012 Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans. 1040nr 2012  The work opportunity tax credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2014. 1040nr 2012 Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. 1040nr 2012 For more information, visit IRS. 1040nr 2012 gov and enter “work opportunity tax credit” in the search box. 1040nr 2012 Outsourcing payroll duties. 1040nr 2012  Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party to perform these acts. 1040nr 2012 The employer remains responsible if the third party fails to perform any required action. 1040nr 2012 If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer such as a payroll service provider or reporting agent, visit IRS. 1040nr 2012 gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic. 1040nr 2012 Residents of the Philippines working in the Commonwealth of the Northern Mariana Islands (CNMI). 1040nr 2012  The IRS will not assert that an employer has understated liability for social security and Medicare taxes because they failed to treat services performed before January 1, 2015, in the CNMI by a resident of the Philippines as employment as defined under Internal Revenue Code section 3121(b). 1040nr 2012 For more information, see Announcement 2012-43, 2012-51 I. 1040nr 2012 R. 1040nr 2012 B. 1040nr 2012 723, available at www. 1040nr 2012 irs. 1040nr 2012 gov/irb/2012-51_IRB/ar15. 1040nr 2012 html. 1040nr 2012 CNMI government employees now subject to social security and Medicare taxes. 1040nr 2012  Beginning in the fourth calendar quarter of 2012, CNMI government employees are subject to social security and Medicare taxes. 1040nr 2012 COBRA premium assistance credit. 1040nr 2012  The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008 and May 31, 2010, and to premiums paid for up to 15 months. 1040nr 2012 See COBRA premium assistance credit in Publication 15 (Circular E), Employer's Tax Guide. 1040nr 2012 You can get Publication 15 (Circular E) at IRS. 1040nr 2012 gov. 1040nr 2012 You must receive written notice from the IRS to file Form 944. 1040nr 2012  If you have been filing Forms 941-SS and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944, Employer's ANNUAL Federal Tax Return, instead of Forms 941-SS, you must contact the IRS to request to file Form 944. 1040nr 2012 You must receive written notice from the IRS to file Form 944 instead of Forms 941-SS before you may file this form. 1040nr 2012 For more information on requesting to file Form 944 visit IRS. 1040nr 2012 gov and enter “file employment taxes annually” in the search box. 1040nr 2012 Federal employers in the CNMI. 1040nr 2012  The U. 1040nr 2012 S. 1040nr 2012 Treasury Department and the CNMI Division of Revenue and Taxation entered into an agreement under 5 USC 5517 in December 2006. 1040nr 2012 Under this agreement, all federal employers (including the Department of Defense) are required to withhold CNMI income taxes (rather than federal income taxes) and deposit the CNMI taxes with the CNMI Treasury for employees who are subject to CNMI taxes and whose regular place of federal employment is in the CNMI. 1040nr 2012 Federal employers are also required to file quarterly and annual reports with the CNMI Division of Revenue and Taxation. 1040nr 2012 For questions, contact the CNMI Division of Revenue and Taxation. 1040nr 2012 Change of address. 1040nr 2012  Use Form 8822-B to notify the IRS of an address change. 1040nr 2012 Do not mail Form 8822-B with your employment tax return. 1040nr 2012 Federal tax deposits must be made by electronic funds transfer. 1040nr 2012  You must use electronic funds transfer to make all federal tax deposits. 1040nr 2012 Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). 1040nr 2012 If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. 1040nr 2012 Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. 1040nr 2012 EFTPS is a free service provided by the Department of Treasury. 1040nr 2012 Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. 1040nr 2012 For more information on making federal tax deposits, see How To Deposit in section 8. 1040nr 2012 For more information about EFTPS or to enroll in EFTPS, visit the EFTPS website at www. 1040nr 2012 eftps. 1040nr 2012 gov or call 1-800-555-4477 (U. 1040nr 2012 S. 1040nr 2012 Virgin Islands only) or 303-967-5916 (toll call) or 1-800-733-4829 (TDD). 1040nr 2012 Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. 1040nr 2012 Electronic filing and payment. 1040nr 2012  Using electronic options can make filing a return and paying your federal tax easier. 1040nr 2012 Use the Electronic Federal Tax Payment System (EFTPS) to make deposits or pay in full, whether you rely on a tax professional or prepare your own taxes. 1040nr 2012 You can use IRS e-file to file certain returns. 1040nr 2012 If there is a balance due on the return, you can e-file and e-pay in a single step by authorizing an electronic funds withdrawal (EFW) from your bank account while e-filing. 1040nr 2012 Do not use EFW to pay taxes that are required to be deposited. 1040nr 2012 Visit the IRS website at www. 1040nr 2012 irs. 1040nr 2012 gov/efile for more information on filing electronically. 1040nr 2012 For more information on paying your taxes using EFW, visit the IRS website at www. 1040nr 2012 irs. 1040nr 2012 gov/e-pay. 1040nr 2012 A fee may be charged to file electronically. 1040nr 2012 For EFTPS, visit www. 1040nr 2012 eftps. 1040nr 2012 gov or call EFTPS Customer Service at 1-800-555-4477 (U. 1040nr 2012 S. 1040nr 2012 Virgin Islands only) or 303-967-5916 (toll call). 1040nr 2012 For electronic filing of Forms W-2AS, W-2CM, W-2GU, W-2VI, Wage and Tax Statements; W-3SS, Transmittal of Wage and Tax Statements; and W-2c, Corrected Wage and Tax Statement, visit www. 1040nr 2012 socialsecurity. 1040nr 2012 gov/employer. 1040nr 2012 If you are filing your tax return or paying your federal taxes electronically, a valid EIN is required. 1040nr 2012 If a valid EIN is not provided, the return or payment will not be processed. 1040nr 2012 This may result in penalties and delays in processing your return or payment. 1040nr 2012 Electronic option for filing Forms W-2AS, W-2CM, W-2GU, or W-2VI. 1040nr 2012  Employers in American Samoa, the CNMI, Guam, and the U. 1040nr 2012 S. 1040nr 2012 Virgin Islands can now use the Social Security Administration's W-2 Online service to create, save, print, and submit up to 50 Forms W-2AS, W-2CM, W-2GU, or W-2VI at a time over the Internet. 1040nr 2012 Form W-3SS will be generated automatically based on your Forms W-2AS, W-2CM, W-2GU, or W-2VI. 1040nr 2012 For more information, visit Social Security Administration's SSA website at www. 1040nr 2012 ssa. 1040nr 2012 gov/bso/bsowelcome. 1040nr 2012 htm. 1040nr 2012 Credit or debit card payments. 1040nr 2012  For information on paying your taxes with a credit or debit card, visit the IRS website at www. 1040nr 2012 irs. 1040nr 2012 gov/e-pay. 1040nr 2012 However, do not use credit or debit cards to make federal tax deposits. 1040nr 2012 Hiring new employees. 1040nr 2012  Record the number and name from each new employee's social security card. 1040nr 2012 An employee who does not have a social security card should apply for one on Form SS-5, Application for a Social Security Card. 1040nr 2012 See section 3. 1040nr 2012 Reporting discrepancies between Forms 941-SS (or Form 944) and Forms W-2. 1040nr 2012  File Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, to explain certain wage, tax, and payment discrepancies between Forms 941-SS (or Form 944), and Forms W-2 that were caused by acquisitions, statutory mergers, or consolidations. 1040nr 2012 For more information, see the Instructions for Schedule D (Form 941). 1040nr 2012 Apply for an employer identification number (EIN) online. 1040nr 2012  You can apply for an EIN online by visiting IRS. 1040nr 2012 gov and clicking on the Apply for an EIN Online link under Tools. 1040nr 2012 Dishonored payments. 1040nr 2012  Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. 1040nr 2012 The penalty is $25 or 2% of the payment, whichever is more. 1040nr 2012 However, the penalty on dishonored payments of $24. 1040nr 2012 99 or less is an amount equal to the payment. 1040nr 2012 For example, a dishonored payment of $18 is charged a penalty of $18. 1040nr 2012 Private delivery services. 1040nr 2012  You can use certain private delivery services designated by the IRS to send tax returns or payments. 1040nr 2012 The list includes only the following: DHL Express (DHL): DHL Same Day Service. 1040nr 2012 Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 1040nr 2012 United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 1040nr 2012 M. 1040nr 2012 , UPS Worldwide Express Plus, and UPS Worldwide Express. 1040nr 2012 For the IRS mailing address to use if you are using a private delivery service, go to IRS. 1040nr 2012 gov and enter “private delivery service” in the search box. 1040nr 2012 Your private delivery service can tell you how to get written proof of the mailing date. 1040nr 2012 Private delivery services cannot deliver items to P. 1040nr 2012 O. 1040nr 2012 boxes. 1040nr 2012 You must use the U. 1040nr 2012 S. 1040nr 2012 Postal Service to mail any item to an IRS P. 1040nr 2012 O. 1040nr 2012 box address. 1040nr 2012 Recordkeeping. 1040nr 2012  Keep all records of employment taxes for 4 years. 1040nr 2012 These should be available for IRS review. 1040nr 2012 There is no required format for such records, but they should include your EIN; the amounts and dates of all wage payments (including fringe benefits) and tips reported; the names, addresses, and occupations of employees receiving such payments and their social security numbers; copies of returns filed; dates of employment; and the dates and amounts of deposits made. 1040nr 2012 Farm employers must keep a record of the name, permanent address, and EIN of each crew leader. 1040nr 2012 See Farm Crew Leaders in section 2. 1040nr 2012 Disregarded entities and qualified subchapter S subsidiaries (QSubs). 1040nr 2012  Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. 1040nr 2012 Eligible single-member entities that have not elected to be taxed as corporations must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. 1040nr 2012 See Regulations sections 1. 1040nr 2012 1361-4(a)(7) and 301. 1040nr 2012 7701-2(c)(2)(iv). 1040nr 2012 Photographs of missing children. 1040nr 2012  The IRS is a proud partner with the National Center for Missing and Exploited Children. 1040nr 2012 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1040nr 2012 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 1040nr 2012 Calendar   If any date for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. 1040nr 2012 A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. 1040nr 2012 However, a statewide legal holiday does not delay the due date of federal tax deposits. 1040nr 2012 See Deposits on Business Days Only in section 8. 1040nr 2012 For any filing due date, you will meet the “file” or “furnish” requirement if the envelope containing the return or form is properly addressed, contains sufficient postage, and is postmarked by the U. 1040nr 2012 S. 1040nr 2012 Postal Service on or before the due date, or sent by an IRS-designated delivery service on or before the due date. 1040nr 2012 See Private delivery services under Reminders. 1040nr 2012 The following are important dates and responsibilities. 1040nr 2012 Also see Publication 509, Tax Calendars. 1040nr 2012 By January 31. 1040nr 2012   Furnish wage and tax statements to employees. 1040nr 2012 Give each employee a completed Form W-2AS, W-2CM, W-2GU, or W-2VI. 1040nr 2012 See section 10 for more information. 1040nr 2012 File Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, with the IRS. 1040nr 2012 If you deposited all Form 943 taxes when due, you have 10 additional calendar days to file. 1040nr 2012 U. 1040nr 2012 S. 1040nr 2012 Virgin Islands employers only must file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. 1040nr 2012 Pay or deposit (if more than $500) any balance of the tax due. 1040nr 2012 If you deposited the full amount of taxes when due, you have 10 additional calendar days to file. 1040nr 2012 File Form 944 with the IRS if you were notified by the IRS to file Form 944 instead of quarterly Forms 941-SS. 1040nr 2012 If you deposited the full amount of taxes when due, you have 10 additional calendar days to file. 1040nr 2012 By February 28. 1040nr 2012  File paper wage and tax statements with the Social Security Administration (SSA). 1040nr 2012 File Copy A of Forms W-2AS, W-2CM, W-2GU, or W-2VI, and Form W-3SS with the Social Security Administration (SSA). 1040nr 2012 For electronically filed returns, see By March 31 next. 1040nr 2012 By March 31. 1040nr 2012  File electronic Forms W-2AS, W-2CM, W-2GU, or W-2VI with the SSA. 1040nr 2012 Visit the SSA's Reporting Instructions & Information webpage at www. 1040nr 2012 socialsecurity. 1040nr 2012 gov/employer for more information. 1040nr 2012 By April 30, July 31, October 31, and January 31. 1040nr 2012  File Form 941-SS with the IRS. 1040nr 2012 If you deposited the full amount of taxes when due, you have 10 additional calendar days to file. 1040nr 2012 Do not file Forms 941-SS for these quarters if you have been notified to file Form 944 and you did not request to file quarterly Forms 941-SS. 1040nr 2012 Deposit FUTA tax for the quarter (including any amount carried over from other quarters) if over $500. 1040nr 2012 If $500 or less, carry it over to the next quarter. 1040nr 2012 See section 11 for more information. 1040nr 2012 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

CP 297 - Notice of Intent to Levy and Notice of Your Right to a Hearing

Details About This Notice:
Sample Content: Page 1, Page 2
Purpose:   We send CP 297 to notify the recipient of our intent to levy and of the their right to a hearing.
Reason for Issuance:   There is a balance due on the recipient's account we've previously asked them to pay. We're sending the notice to inform them the account is still unpaid and to notify them of our intent to levy and of their right to receive appeals consideration.
Account Balance:   Balance due
Possible Enclosures:  

Frequently Asked Questions About This Notice

Page Last Reviewed or Updated: 20-May-2013

The 1040nr 2012

1040nr 2012 Publication 575 - Main Content Table of Contents General InformationPension. 1040nr 2012 Annuity. 1040nr 2012 Qualified employee plan. 1040nr 2012 Qualified employee annuity. 1040nr 2012 Designated Roth account. 1040nr 2012 Tax-sheltered annuity plan. 1040nr 2012 Fixed-period annuities. 1040nr 2012 Annuities for a single life. 1040nr 2012 Joint and survivor annuities. 1040nr 2012 Variable annuities. 1040nr 2012 Disability pensions. 1040nr 2012 Variable Annuities Section 457 Deferred Compensation Plans Disability Pensions Insurance Premiums for Retired Public Safety Officers Railroad Retirement Benefits Withholding Tax and Estimated Tax Cost (Investment in the Contract)Foreign employment contributions while a nonresident alien. 1040nr 2012 Taxation of Periodic PaymentsPeriod of participation. 1040nr 2012 Fully Taxable Payments Partly Taxable Payments Taxation of Nonperiodic PaymentsFiguring the Taxable Amount Loans Treated as Distributions Transfers of Annuity Contracts Lump-Sum Distributions RolloversExceptions. 1040nr 2012 No tax withheld. 1040nr 2012 Partial rollovers. 1040nr 2012 Frozen deposits. 1040nr 2012 Reasonable period of time. 1040nr 2012 20% Mandatory withholding. 1040nr 2012 How to report. 1040nr 2012 How to report. 1040nr 2012 Special rule for Roth IRAs and designated Roth accounts. 1040nr 2012 Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. 1040nr 2012 How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. 1040nr 2012   Some of the terms used in this publication are defined in the following paragraphs. 1040nr 2012 Pension. 1040nr 2012   A pension is generally a series of definitely determinable payments made to you after you retire from work. 1040nr 2012 Pension payments are made regularly and are based on such factors as years of service and prior compensation. 1040nr 2012 Annuity. 1040nr 2012   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. 1040nr 2012 They can be either fixed (under which you receive a definite amount) or variable (not fixed). 1040nr 2012 You can buy the contract alone or with the help of your employer. 1040nr 2012 Qualified employee plan. 1040nr 2012   A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries and that meets Internal Revenue Code requirements. 1040nr 2012 It qualifies for special tax benefits, such as tax deferral for employer contributions and capital gain treatment or the 10-year tax option for lump-sum distributions (if participants qualify). 1040nr 2012 To determine whether your plan is a qualified plan, check with your employer or the plan administrator. 1040nr 2012 Qualified employee annuity. 1040nr 2012   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 1040nr 2012 Designated Roth account. 1040nr 2012   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. 1040nr 2012 Elective deferrals that are designated as Roth contributions are included in your income. 1040nr 2012 However, qualified distributions (explained later) are not included in your income. 1040nr 2012 You should check with your plan administrator to determine if your plan will accept designated Roth contributions. 1040nr 2012 Tax-sheltered annuity plan. 1040nr 2012   A tax-sheltered annuity plan (often referred to as a 403(b) plan or a tax-deferred annuity plan) is a retirement plan for employees of public schools and certain tax-exempt organizations. 1040nr 2012 Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. 1040nr 2012 Types of pensions and annuities. 1040nr 2012   Pensions and annuities include the following types. 1040nr 2012 Fixed-period annuities. 1040nr 2012   You receive definite amounts at regular intervals for a specified length of time. 1040nr 2012 Annuities for a single life. 1040nr 2012   You receive definite amounts at regular intervals for life. 1040nr 2012 The payments end at death. 1040nr 2012 Joint and survivor annuities. 1040nr 2012   The first annuitant receives a definite amount at regular intervals for life. 1040nr 2012 After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 1040nr 2012 The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 1040nr 2012 Variable annuities. 1040nr 2012   You receive payments that may vary in amount for a specified length of time or for life. 1040nr 2012 The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds, cost-of-living indexes, or earnings from a mutual fund. 1040nr 2012 Disability pensions. 1040nr 2012   You receive disability payments because you retired on disability and have not reached minimum retirement age. 1040nr 2012 More than one program. 1040nr 2012   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. 1040nr 2012 If you participate in more than one program, you may have to treat each as a separate pension or annuity contract, depending upon the facts in each case. 1040nr 2012 Also, you may be considered to have received more than one pension or annuity. 1040nr 2012 Your former employer or the plan administrator should be able to tell you if you have more than one contract. 1040nr 2012 Example. 1040nr 2012 Your employer set up a noncontributory profit-sharing plan for its employees. 1040nr 2012 The plan provides that the amount held in the account of each participant will be paid when that participant retires. 1040nr 2012 Your employer also set up a contributory defined benefit pension plan for its employees providing for the payment of a lifetime pension to each participant after retirement. 1040nr 2012 The amount of any distribution from the profit-sharing plan depends on the contributions (including allocated forfeitures) made for the participant and the earnings from those contributions. 1040nr 2012 Under the pension plan, however, a formula determines the amount of the pension benefits. 1040nr 2012 The amount of contributions is the amount necessary to provide that pension. 1040nr 2012 Each plan is a separate program and a separate contract. 1040nr 2012 If you get benefits from these plans, you must account for each separately, even though the benefits from both may be included in the same check. 1040nr 2012 Distributions from a designated Roth account are treated separately from other distributions from the plan. 1040nr 2012 Qualified domestic relations order (QDRO). 1040nr 2012   A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan. 1040nr 2012 The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant's benefits to be paid to each alternate payee. 1040nr 2012 A QDRO may not award an amount or form of benefit that is not available under the plan. 1040nr 2012   A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if he or she were a plan participant. 1040nr 2012 The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. 1040nr 2012 The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. 1040nr 2012 The denominator is the present value of all benefits payable to the participant. 1040nr 2012   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. 1040nr 2012 Variable Annuities The tax rules in this publication apply both to annuities that provide fixed payments and to annuities that provide payments that vary in amount based on investment results or other factors. 1040nr 2012 For example, they apply to commercial variable annuity contracts, whether bought by an employee retirement plan for its participants or bought directly from the issuer by an individual investor. 1040nr 2012 Under these contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. 1040nr 2012 The earnings are not taxed until distributed either in a withdrawal or in annuity payments. 1040nr 2012 The taxable part of a distribution is treated as ordinary income. 1040nr 2012 Net investment income tax. 1040nr 2012   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). 1040nr 2012 For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. 1040nr 2012 For information on the tax treatment of a transfer or exchange of a variable annuity contract, see Transfers of Annuity Contracts under Taxation of Nonperiodic Payments, later. 1040nr 2012 Withdrawals. 1040nr 2012   If you withdraw funds before your annuity starting date and your annuity is under a qualified retirement plan, a ratable part of the amount withdrawn is tax free. 1040nr 2012 The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. 1040nr 2012   If your annuity is under a nonqualified plan (including a contract you bought directly from the issuer), the amount withdrawn is allocated first to earnings (the taxable part) and then to your cost (the tax-free part). 1040nr 2012 However, if you bought your annuity contract before August 14, 1982, a different allocation applies to the investment before that date and the earnings on that investment. 1040nr 2012 To the extent the amount withdrawn does not exceed that investment and earnings, it is allocated first to your cost (the tax-free part) and then to earnings (the taxable part). 1040nr 2012   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. 1040nr 2012   The amount you receive in a full surrender of your annuity contract at any time is tax free to the extent of any cost that you have not previously recovered tax free. 1040nr 2012 The rest is taxable. 1040nr 2012   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. 1040nr 2012 If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. 1040nr 2012 Annuity payments. 1040nr 2012   If you receive annuity payments under a variable annuity plan or contract, you recover your cost tax free under either the Simplified Method or the General Rule, as explained under Taxation of Periodic Payments , later. 1040nr 2012 For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. 1040nr 2012 For a variable annuity paid under a nonqualified plan (including a contract you bought directly from the issuer), you must use a special computation under the General Rule. 1040nr 2012 For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. 1040nr 2012 Death benefits. 1040nr 2012    If you receive a single-sum distribution from a variable annuity contract because of the death of the owner or annuitant, the distribution is generally taxable only to the extent it is more than the unrecovered cost of the contract. 1040nr 2012 If you choose to receive an annuity, the payments are subject to tax as described above. 1040nr 2012 If the contract provides a joint and survivor annuity and the primary annuitant had received annuity payments before death, you figure the tax-free part of annuity payments you receive as the survivor in the same way the primary annuitant did. 1040nr 2012 See Survivors and Beneficiaries , later. 1040nr 2012 Section 457 Deferred Compensation Plans If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. 1040nr 2012 If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. 1040nr 2012 You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. 1040nr 2012 You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. 1040nr 2012 Your 457(b) plan may have a designated Roth account option. 1040nr 2012 If so, you may be able to roll over amounts to the designated Roth account or make contributions. 1040nr 2012 Elective deferrals to a designated Roth account are included in your income. 1040nr 2012 Qualified distributions (explained later) are not included in your income. 1040nr 2012 See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. 1040nr 2012 This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. 1040nr 2012 For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. 1040nr 2012 Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. 1040nr 2012 Plans that are not eligible section 457 plans include the following: Bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plans. 1040nr 2012 Nonelective deferred compensation plans for nonemployees (independent contractors). 1040nr 2012 Deferred compensation plans maintained by churches. 1040nr 2012 Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. 1040nr 2012 An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. 1040nr 2012 Disability Pensions If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. 1040nr 2012 You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. 1040nr 2012 Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. 1040nr 2012 You may be entitled to a tax credit if you were permanently and totally disabled when you retired. 1040nr 2012 For information on this credit, see Publication 524. 1040nr 2012 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. 1040nr 2012 Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. 1040nr 2012 Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. 1040nr 2012 For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. 1040nr 2012 Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. 1040nr 2012 The premiums can be for coverage for you, your spouse, or dependents. 1040nr 2012 The distribution must be made directly from the plan to the insurance provider. 1040nr 2012 You can exclude from income the smaller of the amount of the insurance premiums or $3,000. 1040nr 2012 You can only make this election for amounts that would otherwise be included in your income. 1040nr 2012 The amount excluded from your income cannot be used to claim a medical expense deduction. 1040nr 2012 An eligible retirement plan is a governmental plan that is: a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan. 1040nr 2012 If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. 1040nr 2012 The amount shown in box 2a of Form 1099-R does not reflect this exclusion. 1040nr 2012 Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040nr 2012 Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040nr 2012 Enter “PSO” next to the appropriate line on which you report the taxable amount. 1040nr 2012 If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line. 1040nr 2012 Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. 1040nr 2012 These categories are treated differently for income tax purposes. 1040nr 2012 The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. 1040nr 2012 This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes like social security benefits. 1040nr 2012 If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2013, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien) from the U. 1040nr 2012 S. 1040nr 2012 Railroad Retirement Board (RRB). 1040nr 2012 For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Publication 915. 1040nr 2012 The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). 1040nr 2012 It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. 1040nr 2012 Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. 1040nr 2012 This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. 1040nr 2012 (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. 1040nr 2012 ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. 1040nr 2012 See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. 1040nr 2012 Form RRB-1099-R is used for U. 1040nr 2012 S. 1040nr 2012 citizens, resident aliens, and nonresident aliens. 1040nr 2012 Nonresident aliens. 1040nr 2012   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. 1040nr 2012 Nonresident aliens are subject to mandatory U. 1040nr 2012 S. 1040nr 2012 tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. 1040nr 2012 A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. 1040nr 2012 See Tax withholding next for more information. 1040nr 2012   If you are a nonresident alien and your tax withholding rate changed or your country of legal residence changed during the year, you may receive more than one Form RRB-1042S or Form RRB-1099-R. 1040nr 2012 To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year. 1040nr 2012 For information on filing requirements for aliens, see Publication 519, U. 1040nr 2012 S. 1040nr 2012 Tax Guide for Aliens. 1040nr 2012 For information on tax treaties between the United States and other countries that may reduce or eliminate U. 1040nr 2012 S. 1040nr 2012 tax on your benefits, see Publication 901, U. 1040nr 2012 S. 1040nr 2012 Tax Treaties. 1040nr 2012 Tax withholding. 1040nr 2012   To request or change your income tax withholding from SSEB payments, U. 1040nr 2012 S. 1040nr 2012 citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. 1040nr 2012 To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments. 1040nr 2012 If you are a nonresident alien or a U. 1040nr 2012 S. 1040nr 2012 citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U. 1040nr 2012 S. 1040nr 2012 tax withholding. 1040nr 2012 Nonresident U. 1040nr 2012 S. 1040nr 2012 citizens cannot elect to be exempt from withholding on payments delivered outside of the U. 1040nr 2012 S. 1040nr 2012 Help from the RRB. 1040nr 2012   To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 1-877-772-5772 for the nearest field office) or U. 1040nr 2012 S. 1040nr 2012 consulate/Embassy if you reside outside the United States. 1040nr 2012 You can visit the RRB on the Internet at www. 1040nr 2012 rrb. 1040nr 2012 gov. 1040nr 2012 Form RRB-1099-R. 1040nr 2012   The following discussion explains the items shown on Form RRB-1099-R. 1040nr 2012 The amounts shown on this form are before any deduction for: Federal income tax withholding, Medicare premiums, Legal process garnishment payments, Recovery of a prior year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit, or Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity. 1040nr 2012   The amounts shown on this form are after any offset for: Social Security benefits, Age reduction, Public Service pensions or public disability benefits, Dual railroad retirement entitlement under another RRB claim number, Work deductions, Legal process partition deductions, Actuarial adjustment, Annuity waiver, or Recovery of a current-year overpayment of NSSEB, tier 2, VDB, or supplemental annuity benefits. 1040nr 2012   The amounts shown on Form RRB-1099-R do not reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. 1040nr 2012 To determine if any of these rules apply to your benefits, see the discussions about them later. 1040nr 2012   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. 1040nr 2012 Use distribution code “7” if you are asked for a distribution code. 1040nr 2012 Distribution codes are not shown on Form RRB-1099-R. 1040nr 2012   There are three copies of this form. 1040nr 2012 Copy B is to be included with your income tax return if federal income tax is withheld. 1040nr 2012 Copy C is for your own records. 1040nr 2012 Copy 2 is filed with your state, city, or local income tax return, when required. 1040nr 2012 See the illustrated Copy B (Form RRB-1099-R) above. 1040nr 2012       Each beneficiary will receive his or her own Form RRB-1099-R. 1040nr 2012 If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. 1040nr 2012 So that you get your form timely, make sure the RRB always has your current mailing address. 1040nr 2012 Please click here for the text description of the image. 1040nr 2012 Form RRB-1099-R Box 1—Claim Number and Payee Code. 1040nr 2012   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. 1040nr 2012 This is the number under which the RRB paid your benefits. 1040nr 2012 Your payee code follows your claim number and is the last number in this box. 1040nr 2012 It is used by the RRB to identify you under your claim number. 1040nr 2012 In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. 1040nr 2012 Box 2—Recipient's Identification Number. 1040nr 2012   This is the recipient's U. 1040nr 2012 S. 1040nr 2012 taxpayer identification number. 1040nr 2012 It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient. 1040nr 2012 If you are a resident or nonresident alien who must furnish a taxpayer identification number to the IRS and are not eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. 1040nr 2012 The Instructions for Form W-7 explain how and when to apply. 1040nr 2012 Box 3—Employee Contributions. 1040nr 2012   This is the amount of taxes withheld from the railroad employee's earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. 1040nr 2012 This amount is the employee's cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). 1040nr 2012 (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. 1040nr 2012 ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. 1040nr 2012 It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. 1040nr 2012 If this amount has changed, the change is retroactive. 1040nr 2012 You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. 1040nr 2012 If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. 1040nr 2012    If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount. 1040nr 2012 Box 4—Contributory Amount Paid. 1040nr 2012   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. 1040nr 2012 (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040nr 2012 ) This amount is the total contributory pension paid in 2013. 1040nr 2012 It may be partly taxable and partly tax free or fully taxable. 1040nr 2012 If you determine you are eligible to compute a tax-free part as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost. 1040nr 2012 Box 5—Vested Dual Benefit. 1040nr 2012   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. 1040nr 2012 It is fully taxable. 1040nr 2012 VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040nr 2012 Note. 1040nr 2012 The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. 1040nr 2012 Box 6—Supplemental Annuity. 1040nr 2012   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. 1040nr 2012 It is fully taxable. 1040nr 2012 Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. 1040nr 2012 Box 7—Total Gross Paid. 1040nr 2012   This is the sum of boxes 4, 5, and 6. 1040nr 2012 The amount represents the total pension paid in 2013. 1040nr 2012 Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040nr 2012 Box 8—Repayments. 1040nr 2012   This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2013 for years before 2013 or for unknown years. 1040nr 2012 The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. 1040nr 2012 It only includes repayments of benefits that were taxable to you. 1040nr 2012 This means it only includes repayments in 2013 of NSSEB benefits paid after 1985, tier 2 and VDB benefits paid after 1983, and supplemental annuity benefits paid in any year. 1040nr 2012 If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. 1040nr 2012 For more information about repayments, see Repayment of benefits received in an earlier year , later. 1040nr 2012    You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment. 1040nr 2012 Box 9—Federal Income Tax Withheld. 1040nr 2012   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. 1040nr 2012 Include this on your income tax return as tax withheld. 1040nr 2012 If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2013, you will receive more than one Form RRB-1099-R for 2013. 1040nr 2012 Determine the total amount of U. 1040nr 2012 S. 1040nr 2012 federal income tax withheld from your 2013 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2013 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive. 1040nr 2012 Box 10—Rate of Tax. 1040nr 2012   If you are taxed as a U. 1040nr 2012 S. 1040nr 2012 citizen or resident alien, this box does not apply to you. 1040nr 2012 If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2013. 1040nr 2012 If you are a nonresident alien whose tax was withheld at more than one rate during 2013, you will receive a separate Form RRB-1099-R for each rate change during 2013. 1040nr 2012 Box 11—Country. 1040nr 2012   If you are taxed as a U. 1040nr 2012 S. 1040nr 2012 citizen or resident alien, this box does not apply to you. 1040nr 2012 If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2013. 1040nr 2012 If you are a nonresident alien who was a resident of more than one country during 2013, you will receive a separate Form RRB-1099-R for each country of residence during 2013. 1040nr 2012 Box 12—Medicare Premium Total. 1040nr 2012   This is for information purposes only. 1040nr 2012 The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. 1040nr 2012 Medicare premium refunds are not included in the Medicare total. 1040nr 2012 The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). 1040nr 2012 However, if Form RRB-1099 or Form RRB-1042S is not required for 2013, then this total will be shown on Form RRB-1099-R. 1040nr 2012 If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total will not be shown in this box. 1040nr 2012 Repayment of benefits received in an earlier year. 1040nr 2012   If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it. 1040nr 2012   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. 1040nr 2012 The 2%-of-adjusted-gross-income limit applies to this deduction. 1040nr 2012 You cannot take this deduction if you file Form 1040A. 1040nr 2012    If you repaid more than $3,000 in 2013, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 28 or you can take a credit against your tax. 1040nr 2012 For more information, see Repayments in Publication 525. 1040nr 2012 Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. 1040nr 2012 However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. 1040nr 2012 (These are distributions, described later under Rollovers, that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. 1040nr 2012 ) If you choose not to have tax withheld or if you do not have enough tax withheld, you may have to make estimated tax payments. 1040nr 2012 See Estimated tax , later. 1040nr 2012 The withholding rules apply to the taxable part of payments you receive from: An employer pension, annuity, profit-sharing, or stock bonus plan, Any other deferred compensation plan, A traditional individual retirement arrangement (IRA), or A commercial annuity. 1040nr 2012 For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. 1040nr 2012 There will be no withholding on any part of a distribution where it is reasonable to believe that it will not be includible in gross income. 1040nr 2012 Choosing no withholding. 1040nr 2012   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. 1040nr 2012 You can make this choice on Form W-4P for periodic and nonperiodic payments. 1040nr 2012 This choice generally remains in effect until you revoke it. 1040nr 2012   The payer will ignore your choice not to have tax withheld if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer, before the payment is made, that you gave an incorrect social security number. 1040nr 2012   To choose not to have tax withheld, a U. 1040nr 2012 S. 1040nr 2012 citizen or resident alien must give the payer a home address in the United States or its possessions. 1040nr 2012 Without that address, the payer must withhold tax. 1040nr 2012 For example, the payer has to withhold tax if the recipient has provided a U. 1040nr 2012 S. 1040nr 2012 address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. 1040nr 2012 S. 1040nr 2012 home address. 1040nr 2012   If you do not give the payer a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to the payer that you are not a U. 1040nr 2012 S. 1040nr 2012 citizen, a U. 1040nr 2012 S. 1040nr 2012 resident alien, or someone who left the country to avoid tax. 1040nr 2012 But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. 1040nr 2012 This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. 1040nr 2012 For details, get Publication 519. 1040nr 2012 Periodic payments. 1040nr 2012   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. 1040nr 2012 Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 1040nr 2012 You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). 1040nr 2012 If you do not, tax will be withheld as if you were married and claiming three withholding allowances. 1040nr 2012   Tax will be withheld as if you were single and were claiming no withholding allowances if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer (before any payment is made) that you gave an incorrect social security number. 1040nr 2012   You must file a new withholding certificate to change the amount of withholding. 1040nr 2012 Nonperiodic distributions. 1040nr 2012    Unless you choose no withholding, the withholding rate for a nonperiodic distribution (a payment other than a periodic payment) that is not an eligible rollover distribution is 10% of the distribution. 1040nr 2012 You can also ask the payer to withhold an additional amount using Form W-4P. 1040nr 2012 The part of any loan treated as a distribution (except an offset amount to repay the loan), explained later, is subject to withholding under this rule. 1040nr 2012 Eligible rollover distribution. 1040nr 2012    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. 1040nr 2012 You cannot choose not to have tax withheld from an eligible rollover distribution. 1040nr 2012 However, tax will not be withheld if you have the plan administrator pay the eligible rollover distribution directly to another qualified plan or an IRA in a direct rollover. 1040nr 2012 For more information about eligible rollover distributions, see Rollovers , later. 1040nr 2012 Estimated tax. 1040nr 2012   Your estimated tax is the total of your expected income tax, self-employment tax, and certain other taxes for the year, minus your expected credits and withheld tax. 1040nr 2012 Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 return, or 100% of the tax shown on your 2013 return. 1040nr 2012 If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. 1040nr 2012 For more information, get Publication 505, Tax Withholding and Estimated Tax. 1040nr 2012 In figuring your withholding or estimated tax, remember that a part of your monthly social security or equivalent tier 1 railroad retirement benefits may be taxable. 1040nr 2012 See Publication 915. 1040nr 2012 You can choose to have income tax withheld from those benefits. 1040nr 2012 Use Form W-4V to make this choice. 1040nr 2012 Cost (Investment in the Contract) Distributions from your pension or annuity plan may include amounts treated as a recovery of your cost (investment in the contract). 1040nr 2012 If any part of a distribution is treated as a recovery of your cost under the rules explained in this publication, that part is tax free. 1040nr 2012 Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. 1040nr 2012 In general, your cost is your net investment in the contract as of the annuity starting date (or the date of the distribution, if earlier). 1040nr 2012 To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. 1040nr 2012 This includes the amounts your employer contributed that were taxable to you when paid. 1040nr 2012 (However, see Foreign employment contributions , later. 1040nr 2012 ) It does not include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). 1040nr 2012 It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). 1040nr 2012 From this total cost you must subtract the following amounts. 1040nr 2012 Any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income and that you received by the later of the annuity starting date or the date on which you received your first payment. 1040nr 2012 Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). 1040nr 2012 If you must use the Simplified Method for your annuity payments, the tax-free part of any single-sum payment received in connection with the start of the annuity payments, regardless of when you received it. 1040nr 2012 (See Simplified Method , later, for information on its required use. 1040nr 2012 ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. 1040nr 2012 (See General Rule , later, for information on its use. 1040nr 2012 ) Your annuity contract has a refund feature if the annuity payments are for your life (or the lives of you and your survivor) and payments in the nature of a refund of the annuity's cost will be made to your beneficiary or estate if all annuitants die before a stated amount or a stated number of payments are made. 1040nr 2012 For more information, see Publication 939. 1040nr 2012 The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . 1040nr 2012 Form 1099-R. 1040nr 2012 If you began receiving periodic payments of a life annuity in 2013, the payer should show your total contributions to the plan in box 9b of your 2013 Form 1099-R. 1040nr 2012 Annuity starting date defined. 1040nr 2012   Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. 1040nr 2012 Example. 1040nr 2012 On January 1, you completed all your payments required under an annuity contract providing for monthly payments starting on August 1 for the period beginning July 1. 1040nr 2012 The annuity starting date is July 1. 1040nr 2012 This is the date you use in figuring the cost of the contract and selecting the appropriate number from Table 1 for line 3 of the Simplified Method Worksheet. 1040nr 2012 Designated Roth accounts. 1040nr 2012   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. 1040nr 2012 Your cost will also include any in-plan Roth rollovers you included in income. 1040nr 2012 Foreign employment contributions. 1040nr 2012   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. 1040nr 2012 The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (not including the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) but only if the contributions would be excludible from your gross income had they been paid directly to you. 1040nr 2012 Foreign employment contributions while a nonresident alien. 1040nr 2012   In determining your cost, special rules apply if you are a U. 1040nr 2012 S. 1040nr 2012 citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. 1040nr 2012 Your contributions and your employer's contributions are not included in your cost if the contribution: Was made based on compensation which was for services performed outside the United States while you were a nonresident alien, and Was not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if paid as cash compensation when the services were performed. 1040nr 2012 Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. 1040nr 2012 Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 1040nr 2012 These payments are also known as amounts received as an annuity. 1040nr 2012 If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. 1040nr 2012 In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. 1040nr 2012 The amount of each payment that is more than the part that represents your cost is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040nr 2012 Designated Roth accounts. 1040nr 2012   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. 1040nr 2012 This applies to both your cost in the account and income earned on that account. 1040nr 2012 A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. 1040nr 2012   If the distribution is not a qualified distribution, the rules discussed in this section apply. 1040nr 2012 The designated Roth account is treated as a separate contract. 1040nr 2012 Period of participation. 1040nr 2012   The 5-tax-year period of participation is the 5-tax-year period beginning with the first tax year for which the participant made a designated Roth contribution to the plan. 1040nr 2012 Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. 1040nr 2012   However, if a direct rollover is made to the plan from a designated Roth account under another plan, the 5-tax-year period for the recipient plan begins with the first tax year for which the participant first had designated Roth contributions made to the other plan. 1040nr 2012   Your 401(k), 403(b), or 457(b) plan may permit you to roll over amounts from those plans to a designated Roth account within the same plan. 1040nr 2012 This is known as an in-plan Roth rollover. 1040nr 2012 For more details, see In-plan Roth rollovers , later. 1040nr 2012 Fully Taxable Payments The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations applies to you (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040nr 2012 You did not pay anything or are not considered to have paid anything for your pension or annuity. 1040nr 2012 Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. 1040nr 2012 Your employer did not withhold contributions from your salary. 1040nr 2012 You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). 1040nr 2012 Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. 1040nr 2012 You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040nr 2012 Deductible voluntary employee contributions. 1040nr 2012   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. 1040nr 2012 Accumulated deductible voluntary employee contributions include net earnings on the contributions. 1040nr 2012 If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. 1040nr 2012 Partly Taxable Payments If you have a cost to recover from your pension or annuity plan (see Cost (Investment in the Contract) , earlier), you can exclude part of each annuity payment from income as a recovery of your cost. 1040nr 2012 This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. 1040nr 2012 The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). 1040nr 2012 You figure the tax-free part of the payment using one of the following methods. 1040nr 2012 Simplified Method. 1040nr 2012 You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). 1040nr 2012 You cannot use this method if your annuity is paid under a nonqualified plan. 1040nr 2012 General Rule. 1040nr 2012 You must use this method if your annuity is paid under a nonqualified plan. 1040nr 2012 You generally cannot use this method if your annuity is paid under a qualified plan. 1040nr 2012 You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. 1040nr 2012 If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. 1040nr 2012 Qualified plan annuity starting before November 19, 1996. 1040nr 2012   If your annuity is paid under a qualified plan and your annuity starting date (defined earlier under Cost (Investment in the Contract) ) is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the Simplified Method or the General Rule. 1040nr 2012 If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. 1040nr 2012 If you used the Three-Year Rule (which was repealed for annuities starting after July 1, 1986), your annuity payments are generally now fully taxable. 1040nr 2012 Exclusion limit. 1040nr 2012   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. 1040nr 2012 Once your annuity starting date is determined, it does not change. 1040nr 2012 If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. 1040nr 2012 That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. 1040nr 2012 Exclusion limited to cost. 1040nr 2012   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. 1040nr 2012 Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 1040nr 2012 This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040nr 2012 Example 1. 1040nr 2012 Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. 1040nr 2012 The total cost of your annuity is $12,000. 1040nr 2012 Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). 1040nr 2012 After that, your annuity payments are generally fully taxable. 1040nr 2012 Example 2. 1040nr 2012 The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. 1040nr 2012 You have recovered tax free only $9,600 (8 × $1,200) of your cost. 1040nr 2012 An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. 1040nr 2012 Exclusion not limited to cost. 1040nr 2012   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. 1040nr 2012 If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. 1040nr 2012 The total exclusion may be more than your cost. 1040nr 2012 Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. 1040nr 2012 For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. 1040nr 2012 For any other annuity, this number is the number of monthly annuity payments under the contract. 1040nr 2012 Who must use the Simplified Method. 1040nr 2012   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. 1040nr 2012 You receive your pension or annuity payments from any of the following plans. 1040nr 2012 A qualified employee plan. 1040nr 2012 A qualified employee annuity. 1040nr 2012 A tax-sheltered annuity plan (403(b) plan). 1040nr 2012 On your annuity starting date, at least one of the following conditions applies to you. 1040nr 2012 You are under age 75. 1040nr 2012 You are entitled to less than 5 years of guaranteed payments. 1040nr 2012 Guaranteed payments. 1040nr 2012   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. 1040nr 2012 If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. 1040nr 2012 Annuity starting before November 19, 1996. 1040nr 2012   If your annuity starting date is after July 1, 1986, and before November 19, 1996, and you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. 1040nr 2012 You could have chosen to use the Simplified Method if your annuity is payable for your life (or the lives of you and your survivor annuitant) and you met both of the conditions listed earlier under Who must use the Simplified Method . 1040nr 2012 Who cannot use the Simplified Method. 1040nr 2012   You cannot use the Simplified Method if you receive your pension or annuity from a nonqualified plan or otherwise do not meet the conditions described in the preceding discussion. 1040nr 2012 See General Rule , later. 1040nr 2012 How to use the Simplified Method. 1040nr 2012    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. 1040nr 2012 Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. 1040nr 2012   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. 1040nr 2012 How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. 1040nr 2012 For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. 1040nr 2012    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. 1040nr 2012 Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. 1040nr 2012 Single-life annuity. 1040nr 2012   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040nr 2012 Enter on line 3 the number shown for your age on your annuity starting date. 1040nr 2012 This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040nr 2012 Multiple-lives annuity. 1040nr 2012   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040nr 2012 Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. 1040nr 2012 For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. 1040nr 2012 For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. 1040nr 2012 Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. 1040nr 2012   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. 1040nr 2012 Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. 1040nr 2012 This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040nr 2012 Fixed-period annuity. 1040nr 2012   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. 1040nr 2012 Line 6. 1040nr 2012   The amount on line 6 should include all amounts that could have been recovered in prior years. 1040nr 2012 If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. 1040nr 2012 Example. 1040nr 2012 Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. 1040nr 2012 Bill's annuity starting date is January 1, 2013. 1040nr 2012 The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. 1040nr 2012 Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. 1040nr 2012 Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. 1040nr 2012 Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. 1040nr 2012 Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of Worksheet A in completing line 3 of the worksheet. 1040nr 2012 His completed worksheet is shown later. 1040nr 2012 Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. 1040nr 2012 Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. 1040nr 2012 The full amount of any annuity payments received after 310 payments are paid must be included in gross income. 1040nr 2012 If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. 1040nr 2012 This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040nr 2012 Worksheet A. 1040nr 2012 Simplified Method Worksheet for Bill Smith 1. 1040nr 2012 Enter the total pension or annuity payments received this year. 1040nr 2012 Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 1040nr 2012 $14,400 2. 1040nr 2012 Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. 1040nr 2012 * See Cost (Investment in the Contract) , earlier 2. 1040nr 2012 31,000   Note. 1040nr 2012 If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 1040nr 2012 Otherwise, go to line 3. 1040nr 2012     3. 1040nr 2012 Enter the appropriate number from Table 1 below. 1040nr 2012 But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. 1040nr 2012 310 4. 1040nr 2012 Divide line 2 by the number on line 3 4. 1040nr 2012 100 5. 1040nr 2012 Multiply line 4 by the number of months for which this year's payments were made. 1040nr 2012 If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 1040nr 2012 Otherwise, go to line 6 5. 1040nr 2012 1,200 6. 1040nr 2012 Enter any amount previously recovered tax free in years after 1986. 1040nr 2012 This is the amount shown on line 10 of your worksheet for last year 6. 1040nr 2012 -0- 7. 1040nr 2012 Subtract line 6 from line 2 7. 1040nr 2012 31,000 8. 1040nr 2012 Enter the smaller of line 5 or line 7 8. 1040nr 2012 1,200 9. 1040nr 2012 Taxable amount for year. 1040nr 2012 Subtract line 8 from line 1. 1040nr 2012 Enter the result, but not less than zero. 1040nr 2012 Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040nr 2012 Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. 1040nr 2012 If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers , earlier, before entering an amount on your tax return 9. 1040nr 2012 $13,200 10. 1040nr 2012 Was your annuity starting date before 1987? □ Yes. 1040nr 2012 STOP. 1040nr 2012 Do not complete the rest of this worksheet. 1040nr 2012  ☑ No. 1040nr 2012 Add lines 6 and 8. 1040nr 2012 This is the amount you have recovered tax free through 2013. 1040nr 2012 You will need this number if you need to fill out this worksheet next year 10. 1040nr 2012 1,200 11. 1040nr 2012 Balance of cost to be recovered. 1040nr 2012 Subtract line 10 from line 2. 1040nr 2012 If zero, you will not have to complete this worksheet next year. 1040nr 2012 The payments you receive next year will generally be fully taxable 11. 1040nr 2012 $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. 1040nr 2012           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. 1040nr 2012 . 1040nr 2012 . 1040nr 2012 BEFORE November 19, 1996, enter on line 3. 1040nr 2012 . 1040nr 2012 . 1040nr 2012 AFTER November 18, 1996, enter on line 3. 1040nr 2012 . 1040nr 2012 . 1040nr 2012     55 or under 300 360     56-60 260 310     61-65 240 260     66-70 170 210     71 or older 120 160     Table 2 for Line 3 Above     IF the combined ages at  annuity starting date were. 1040nr 2012 . 1040nr 2012 . 1040nr 2012 THEN enter on line 3. 1040nr 2012 . 1040nr 2012 . 1040nr 2012     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. 1040nr 2012   If you and one or more other annuitants receive payments at the same time, you exclude from each annuity payment a pro rata share of the monthly tax-free amount. 1040nr 2012 Figure your share by taking the following steps. 1040nr 2012 Complete your worksheet through line 4 to figure the monthly tax-free amount. 1040nr 2012 Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. 1040nr 2012 Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. 1040nr 2012 The result is your share of the monthly tax-free amount. 1040nr 2012   Replace the amount on line 4 of the worksheet with the result in (3) above. 1040nr 2012 Enter that amount on line 4 of your worksheet each year. 1040nr 2012 General Rule Under the General Rule, you determine the tax-free part of each annuity payment based on the ratio of the cost of the contract to the total expected return. 1040nr 2012 Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 1040nr 2012 To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. 1040nr 2012 Who must use the General Rule. 1040nr 2012   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. 1040nr 2012 Annuity starting before November 19, 1996. 1040nr 2012   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. 1040nr 2012 You also had to use it for any fixed-period annuity. 1040nr 2012 If you did not have to use the General Rule, you could have chosen to use it. 1040nr 2012 If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. 1040nr 2012   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. 1040nr 2012 Who cannot use the General Rule. 1040nr 2012   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. 1040nr 2012 See Simplified Method , earlier. 1040nr 2012 More information. 1040nr 2012   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. 1040nr 2012 Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. 1040nr 2012 Nonperiodic distributions are also known as amounts not received as an annuity. 1040nr 2012 They include all payments other than periodic payments and corrective distributions. 1040nr 2012 For example, the following items are treated as nonperiodic distributions. 1040nr 2012 Cash withdrawals. 1040nr 2012 Distributions of current earnings (dividends) on your investment. 1040nr 2012 However, do not include these distributions in your income to the extent the insurer keeps them to pay premiums or other consideration for the contract. 1040nr 2012 Certain loans. 1040nr 2012 See Loans Treated as Distributions , later. 1040nr 2012 The value of annuity contracts transferred without full and adequate consideration. 1040nr 2012 See Transfers of Annuity Contracts , later. 1040nr 2012 Corrective distributions of excess plan contributions. 1040nr 2012   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. 1040nr 2012 To correct an excess, your plan may distribute it to you (along with any income earned on the excess). 1040nr 2012 Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. 1040nr 2012 It is not subject to the allocation rules explained in the following discussion, it cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. 1040nr 2012    If your retirement plan made a corrective distribution of excess amounts (excess deferrals, excess contributions, or excess annual additions), your Form 1099-R should have the code “8,” “B,” “P,” or “E” in box 7. 1040nr 2012   For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. 1040nr 2012 Figuring the Taxable Amount How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. 1040nr 2012 If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. 1040nr 2012 If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. 1040nr 2012 You may be able to roll over the taxable amount of a nonperiodic distribution from a qualified retirement plan into another qualified retirement plan or a traditional IRA tax free. 1040nr 2012 See Rollovers, later. 1040nr 2012 If you do not make a tax-free rollover and the distribution qualifies as a lump-sum distribution, you may be able to elect an optional method of figuring the tax on the taxable amount. 1040nr 2012 See Lump-Sum Distributions, later. 1040nr 2012 Annuity starting date. 1040nr 2012   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. 1040nr 2012 Distributions of employer securities. 1040nr 2012    If you receive a distribution of employer securities from a qualified retirement plan, you may be able to defer the tax on the net unrealized appreciation (NUA) in the securities. 1040nr 2012 The NUA is the net increase in the securities' value while they were in the trust. 1040nr 2012 This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. 1040nr 2012   If the distribution is a lump-sum distribution, tax is deferred on all of the NUA unless you choose to include it in your income for the year of the distribution. 1040nr 2012    A lump-sum distribution for this purpose is the distribution or payment of a plan participant's entire balance (within a single tax year) from all of the employer's qualified plans of one kind (pension, profit-sharing, or stock bonus plans), but only if paid: Because of the plan participant's death, After the participant reaches age 59½, Because the participant, if an employee, separates from service, or After the participant, if a self-employed individual, becomes totally and permanently disabled. 1040nr 2012    If you choose to include NUA in your income for the year of the distribution and the participant was born before January 2, 1936, you may be able to figure the tax on the NUA using the optional methods described und