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2012 Federal Tax Forms 1040 Instructions

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2012 Federal Tax Forms 1040 Instructions

2012 federal tax forms 1040 instructions 3. 2012 federal tax forms 1040 instructions   Limit on Annual Additions Table of Contents Ministers and church employees. 2012 federal tax forms 1040 instructions Includible Compensation for Your Most Recent Year of ServiceMost Recent Year of Service Includible Compensation The first component of MAC is the limit on annual additions. 2012 federal tax forms 1040 instructions This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. 2012 federal tax forms 1040 instructions The limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or 100% of your includible compensation for your most recent year of service. 2012 federal tax forms 1040 instructions More than one 403(b) account. 2012 federal tax forms 1040 instructions If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts on your behalf by your employer. 2012 federal tax forms 1040 instructions Ministers and church employees. 2012 federal tax forms 1040 instructions   If you are a minister or a church employee, you may be able to increase your limit on annual additions or use different rules when figuring your limit on annual additions. 2012 federal tax forms 1040 instructions For more information, see chapter 5. 2012 federal tax forms 1040 instructions Participation in a qualified plan. 2012 federal tax forms 1040 instructions If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. 2012 federal tax forms 1040 instructions You can use Part I of Worksheet 1 in chapter 9 to figure your limit on annual additions. 2012 federal tax forms 1040 instructions Includible Compensation for Your Most Recent Year of Service Definition. 2012 federal tax forms 1040 instructions   Generally, includible compensation for your most recent year of service is the amount of taxable wages and benefits you received from the employer that maintained a 403(b) account for your benefit during your most recent year of service. 2012 federal tax forms 1040 instructions When figuring your includible compensation for your most recent year of service, keep in mind that your most recent year of service may not be the same as your employer's most recent annual work period. 2012 federal tax forms 1040 instructions This can happen if your tax year is not the same as your employer's annual work period. 2012 federal tax forms 1040 instructions When figuring includible compensation for your most recent year of service, do not mix compensation or service of one employer with compensation or service of another employer. 2012 federal tax forms 1040 instructions Most Recent Year of Service Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf. 2012 federal tax forms 1040 instructions Tax year different from employer's annual work period. 2012 federal tax forms 1040 instructions   If your tax year is not the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). 2012 federal tax forms 1040 instructions To figure her includible compensation for 2013, the professor's most recent year of service is her service from January through May 2013 and from October through December 2013. 2012 federal tax forms 1040 instructions Figuring Your Most Recent Year of Service To figure your most recent year of service, begin by determining what is a full year of service for your position. 2012 federal tax forms 1040 instructions A full year of service is equal to full-time employment for your employer's annual work period. 2012 federal tax forms 1040 instructions After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year. 2012 federal tax forms 1040 instructions Part-time or employed only part of the year. 2012 federal tax forms 1040 instructions   If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. 2012 federal tax forms 1040 instructions To determine your most recent year of service, add the following periods of service: Your service during the year for which you are figuring the limit on annual additions, and Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions You were employed on a full-time basis from July through December 2011 (1/2 year of service), July through December 2012 (1/2 year of service), and October through December 2013 (1/4 year of service). 2012 federal tax forms 1040 instructions Your most recent year of service for computing your limit on annual additions for 2013 is the total of your service during 2013 (1/4 year of service), your service during 2012 (1/2 year of service), and your service during the months October through December 2011 (1/4 year of service). 2012 federal tax forms 1040 instructions Not yet employed for 1 year. 2012 federal tax forms 1040 instructions   If, at the close of the year, you have not yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service. 2012 federal tax forms 1040 instructions Includible Compensation After identifying your most recent year of service, the next step is to identify the includible compensation associated with that full year of service. 2012 federal tax forms 1040 instructions Includible compensation is not the same as income included on your tax return. 2012 federal tax forms 1040 instructions Compensation is a combination of income and benefits received in exchange for services provided to your employer. 2012 federal tax forms 1040 instructions Generally, includible compensation is the amount of income and benefits: Received from the employer who maintains your 403(b) account, and Must be included in your income. 2012 federal tax forms 1040 instructions Includible compensation includes the following amounts. 2012 federal tax forms 1040 instructions Elective deferrals (employer's contributions made on your behalf under a salary reduction agreement). 2012 federal tax forms 1040 instructions Amounts contributed or deferred by your employer under a section 125 cafeteria plan. 2012 federal tax forms 1040 instructions Amounts contributed or deferred, at the election of the employee, under an eligible section 457 nonqualified deferred compensation plan (state or local government or tax-exempt organization plan). 2012 federal tax forms 1040 instructions  Note. 2012 federal tax forms 1040 instructions For information about treating elective deferrals under section 457 plans as Roth contributions, see Publication 575. 2012 federal tax forms 1040 instructions Wages, salaries, and fees for personal services earned with the employer maintaining your 403(b) account. 2012 federal tax forms 1040 instructions Income otherwise excluded under the foreign earned income exclusion. 2012 federal tax forms 1040 instructions Pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan. 2012 federal tax forms 1040 instructions Includible compensation does not include the following items. 2012 federal tax forms 1040 instructions Your employer's contributions to your 403(b) account. 2012 federal tax forms 1040 instructions Compensation earned while your employer was not an eligible employer. 2012 federal tax forms 1040 instructions Your employer's contributions to a qualified plan that: Are on your behalf, and Are excludable from income. 2012 federal tax forms 1040 instructions The cost of incidental life insurance. 2012 federal tax forms 1040 instructions See Cost of Incidental Life Insurance, later. 2012 federal tax forms 1040 instructions If you are a church employee or a foreign missionary, figure includible compensation using the rules explained in chapter 5. 2012 federal tax forms 1040 instructions Contributions after retirement. 2012 federal tax forms 1040 instructions   Nonelective contributions may be made for an employee for up to 5 years after retirement. 2012 federal tax forms 1040 instructions These contributions would be based on includible compensation for the last year of service before retirement. 2012 federal tax forms 1040 instructions Cost of Incidental Life Insurance Includible compensation does not include the cost of incidental life insurance. 2012 federal tax forms 1040 instructions If all of your 403(b) accounts invest only in mutual funds, then you have no incidental life insurance. 2012 federal tax forms 1040 instructions If you have an annuity contract, a portion of the cost of that contract may be for incidental life insurance. 2012 federal tax forms 1040 instructions If so, the cost of the insurance is taxable to you in the year contributed and is considered part of your basis when distributed. 2012 federal tax forms 1040 instructions Your employer will include the cost of your insurance as taxable wages in box 1 of Form W-2. 2012 federal tax forms 1040 instructions Not all annuity contracts include life insurance. 2012 federal tax forms 1040 instructions Contact your plan administrator to determine if your contract includes incidental life insurance. 2012 federal tax forms 1040 instructions If it does, you will need to figure the cost of life insurance each year the policy is in effect. 2012 federal tax forms 1040 instructions Figuring the cost of incidental life insurance. 2012 federal tax forms 1040 instructions If you have determined that part of the cost of your annuity contract is for an incidental life insurance premium, you will need to determine the amount of the premium and subtract it from your includible compensation. 2012 federal tax forms 1040 instructions To determine the amount of the life insurance premiums, you will need to know the following information. 2012 federal tax forms 1040 instructions The value of your life insurance contract, which is the amount payable upon your death. 2012 federal tax forms 1040 instructions The cash value of your life insurance contract at the end of the tax year. 2012 federal tax forms 1040 instructions Your age on your birthday nearest the beginning of the policy year. 2012 federal tax forms 1040 instructions Your current life insurance protection under an ordinary retirement income life insurance policy, which is the amount payable upon your death minus the cash value of the contract at the end of the year. 2012 federal tax forms 1040 instructions You can use Worksheet A, in chapter 9, to determine the cost of your incidental life insurance. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions Your new contract provides that your beneficiary will receive $10,000 if you should die before retirement. 2012 federal tax forms 1040 instructions Your cash value in the contract at the end of the first year is zero. 2012 federal tax forms 1040 instructions Your current life insurance protection for the first year is $10,000 ($10,000 − 0). 2012 federal tax forms 1040 instructions The cash value in the contract at the end of year two is $1,000, and the current life insurance protection for the second year is $9,000 ($10,000 – $1,000). 2012 federal tax forms 1040 instructions The 1-year cost of the protection can be calculated by using Figure 3-1, Table of One-Year Term Premiums for $1,000 Life Insurance Protection . 2012 federal tax forms 1040 instructions The premium rate is determined based on your age on your birthday nearest the beginning of the policy year. 2012 federal tax forms 1040 instructions Figure 3-1. 2012 federal tax forms 1040 instructions Table of One-Year Term Premiums for $1,000 Life Insurance Protection Age Cost   Age Cost   Age Cost 0 $0. 2012 federal tax forms 1040 instructions 70   35 $0. 2012 federal tax forms 1040 instructions 99   70 $20. 2012 federal tax forms 1040 instructions 62 1 0. 2012 federal tax forms 1040 instructions 41   36 1. 2012 federal tax forms 1040 instructions 01   71 22. 2012 federal tax forms 1040 instructions 72 2 0. 2012 federal tax forms 1040 instructions 27   37 1. 2012 federal tax forms 1040 instructions 04   72 25. 2012 federal tax forms 1040 instructions 07 3 0. 2012 federal tax forms 1040 instructions 19   38 1. 2012 federal tax forms 1040 instructions 06   73 27. 2012 federal tax forms 1040 instructions 57 4 0. 2012 federal tax forms 1040 instructions 13   39 1. 2012 federal tax forms 1040 instructions 07   74 30. 2012 federal tax forms 1040 instructions 18 5 0. 2012 federal tax forms 1040 instructions 13   40 1. 2012 federal tax forms 1040 instructions 10   75 33. 2012 federal tax forms 1040 instructions 05 6 0. 2012 federal tax forms 1040 instructions 14   41 1. 2012 federal tax forms 1040 instructions 13   76 36. 2012 federal tax forms 1040 instructions 33 7 0. 2012 federal tax forms 1040 instructions 15   42 1. 2012 federal tax forms 1040 instructions 20   77 40. 2012 federal tax forms 1040 instructions 17 8 0. 2012 federal tax forms 1040 instructions 16   43 1. 2012 federal tax forms 1040 instructions 29   78 44. 2012 federal tax forms 1040 instructions 33 9 0. 2012 federal tax forms 1040 instructions 16   44 1. 2012 federal tax forms 1040 instructions 40   79 49. 2012 federal tax forms 1040 instructions 23 10 0. 2012 federal tax forms 1040 instructions 16   45 1. 2012 federal tax forms 1040 instructions 53   80 54. 2012 federal tax forms 1040 instructions 56 11 0. 2012 federal tax forms 1040 instructions 19   46 1. 2012 federal tax forms 1040 instructions 67   81 60. 2012 federal tax forms 1040 instructions 51 12 0. 2012 federal tax forms 1040 instructions 24   47 1. 2012 federal tax forms 1040 instructions 83   82 66. 2012 federal tax forms 1040 instructions 74 13 0. 2012 federal tax forms 1040 instructions 28   48 1. 2012 federal tax forms 1040 instructions 98   83 73. 2012 federal tax forms 1040 instructions 07 14 0. 2012 federal tax forms 1040 instructions 33   49 2. 2012 federal tax forms 1040 instructions 13   84 80. 2012 federal tax forms 1040 instructions 35 15 0. 2012 federal tax forms 1040 instructions 38   50 2. 2012 federal tax forms 1040 instructions 30   85 88. 2012 federal tax forms 1040 instructions 76 16 0. 2012 federal tax forms 1040 instructions 52   51 2. 2012 federal tax forms 1040 instructions 52   86 99. 2012 federal tax forms 1040 instructions 16 17 0. 2012 federal tax forms 1040 instructions 57   52 2. 2012 federal tax forms 1040 instructions 81   87 110. 2012 federal tax forms 1040 instructions 40 18 0. 2012 federal tax forms 1040 instructions 59   53 3. 2012 federal tax forms 1040 instructions 20   88 121. 2012 federal tax forms 1040 instructions 85 19 0. 2012 federal tax forms 1040 instructions 61   54 3. 2012 federal tax forms 1040 instructions 65   89 133. 2012 federal tax forms 1040 instructions 40 20 0. 2012 federal tax forms 1040 instructions 62   55 4. 2012 federal tax forms 1040 instructions 15   90 144. 2012 federal tax forms 1040 instructions 30 21 0. 2012 federal tax forms 1040 instructions 62   56 4. 2012 federal tax forms 1040 instructions 68   91 155. 2012 federal tax forms 1040 instructions 80 22 0. 2012 federal tax forms 1040 instructions 64   57 5. 2012 federal tax forms 1040 instructions 20   92 168. 2012 federal tax forms 1040 instructions 75 23 0. 2012 federal tax forms 1040 instructions 66   58 5. 2012 federal tax forms 1040 instructions 66   93 186. 2012 federal tax forms 1040 instructions 44 24 0. 2012 federal tax forms 1040 instructions 68   59 6. 2012 federal tax forms 1040 instructions 06   94 206. 2012 federal tax forms 1040 instructions 70 25 0. 2012 federal tax forms 1040 instructions 71   60 6. 2012 federal tax forms 1040 instructions 51   95 228. 2012 federal tax forms 1040 instructions 35 26 0. 2012 federal tax forms 1040 instructions 73   61 7. 2012 federal tax forms 1040 instructions 11   96 250. 2012 federal tax forms 1040 instructions 01 27 0. 2012 federal tax forms 1040 instructions 76   62 7. 2012 federal tax forms 1040 instructions 96   97 265. 2012 federal tax forms 1040 instructions 09 28 0. 2012 federal tax forms 1040 instructions 80   63 9. 2012 federal tax forms 1040 instructions 08   98 270. 2012 federal tax forms 1040 instructions 11 29 0. 2012 federal tax forms 1040 instructions 83   64 10. 2012 federal tax forms 1040 instructions 41   99 281. 2012 federal tax forms 1040 instructions 05 30 0. 2012 federal tax forms 1040 instructions 87   65 11. 2012 federal tax forms 1040 instructions 90       31 0. 2012 federal tax forms 1040 instructions 90   66 13. 2012 federal tax forms 1040 instructions 51       32 0. 2012 federal tax forms 1040 instructions 93   67 15. 2012 federal tax forms 1040 instructions 20       33 0. 2012 federal tax forms 1040 instructions 96   68 16. 2012 federal tax forms 1040 instructions 92       34 0. 2012 federal tax forms 1040 instructions 98   69 18. 2012 federal tax forms 1040 instructions 70                       If the current published premium rates per $1,000 of insurance protection charged by an insurer for individual 1-year term life insurance premiums available to all standard risks are lower than those in the preceding table, you can use the lower rates for figuring the cost of insurance in connection with individual policies issued by the same insurer. 2012 federal tax forms 1040 instructions Example 1. 2012 federal tax forms 1040 instructions Lynne Green, age 44, and her employer enter into a 403(b) plan that will provide her with a $500 a month annuity upon retirement at age 65. 2012 federal tax forms 1040 instructions The agreement also provides that if she should die before retirement, her beneficiary will receive the greater of $20,000 or the cash surrender value in the life insurance contract. 2012 federal tax forms 1040 instructions Using the facts presented we can determine the cost of Lynne's life insurance protection as shown in Table 3-1. 2012 federal tax forms 1040 instructions Lynne's employer has included $28 for the cost of the life insurance protection in her current year's income. 2012 federal tax forms 1040 instructions When figuring her includible compensation for this year, Lynne will subtract $28. 2012 federal tax forms 1040 instructions Table 3-1. 2012 federal tax forms 1040 instructions Worksheet A. 2012 federal tax forms 1040 instructions Cost of Incidental Life Insurance Note. 2012 federal tax forms 1040 instructions Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. 2012 federal tax forms 1040 instructions This amount will be used to figure includible compensation for your most recent year of service. 2012 federal tax forms 1040 instructions 1. 2012 federal tax forms 1040 instructions Enter the value of the contract (amount payable upon your death) 1. 2012 federal tax forms 1040 instructions $20,000. 2012 federal tax forms 1040 instructions 00 2. 2012 federal tax forms 1040 instructions Enter the cash value in the contract at the end of the year 2. 2012 federal tax forms 1040 instructions 0. 2012 federal tax forms 1040 instructions 00 3. 2012 federal tax forms 1040 instructions Subtract line 2 from line 1. 2012 federal tax forms 1040 instructions This is the value of your current life insurance protection 3. 2012 federal tax forms 1040 instructions $20,000. 2012 federal tax forms 1040 instructions 00 4. 2012 federal tax forms 1040 instructions Enter your age on your birthday nearest the beginning of the policy year 4. 2012 federal tax forms 1040 instructions 44 5. 2012 federal tax forms 1040 instructions Enter the 1-year term premium for $1,000 of life insurance based on your age. 2012 federal tax forms 1040 instructions (From Figure 3-1) 5. 2012 federal tax forms 1040 instructions $1. 2012 federal tax forms 1040 instructions 40 6. 2012 federal tax forms 1040 instructions Divide line 3 by $1,000 6. 2012 federal tax forms 1040 instructions 20 7. 2012 federal tax forms 1040 instructions Multiply line 6 by line 5. 2012 federal tax forms 1040 instructions This is the cost of your incidental life insurance 7. 2012 federal tax forms 1040 instructions $28. 2012 federal tax forms 1040 instructions 00 Example 2. 2012 federal tax forms 1040 instructions Lynne's cash value in the contract at the end of the second year is $1,000. 2012 federal tax forms 1040 instructions In year two, the cost of Lynne's life insurance is calculated as shown in Table 3-2. 2012 federal tax forms 1040 instructions In year two, Lynne's employer will include $29. 2012 federal tax forms 1040 instructions 07 in her current year's income. 2012 federal tax forms 1040 instructions Lynne will subtract this amount when figuring her includible compensation. 2012 federal tax forms 1040 instructions Table 3-2. 2012 federal tax forms 1040 instructions Worksheet A. 2012 federal tax forms 1040 instructions Cost of Incidental Life Insurance Note. 2012 federal tax forms 1040 instructions Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. 2012 federal tax forms 1040 instructions This amount will be used to figure includible compensation for your most recent year of service. 2012 federal tax forms 1040 instructions 1. 2012 federal tax forms 1040 instructions Enter the value of the contract (amount payable upon your death) 1. 2012 federal tax forms 1040 instructions $20,000. 2012 federal tax forms 1040 instructions 00 2. 2012 federal tax forms 1040 instructions Enter the cash value in the contract at the end of the year 2. 2012 federal tax forms 1040 instructions $1,000. 2012 federal tax forms 1040 instructions 00 3. 2012 federal tax forms 1040 instructions Subtract line 2 from line 1. 2012 federal tax forms 1040 instructions This is the value of your current life insurance protection 3. 2012 federal tax forms 1040 instructions $19,000. 2012 federal tax forms 1040 instructions 00 4. 2012 federal tax forms 1040 instructions Enter your age on your birthday nearest the beginning of the policy year 4. 2012 federal tax forms 1040 instructions 45 5. 2012 federal tax forms 1040 instructions Enter the 1-year term premium for $1,000 of life insurance based on your age. 2012 federal tax forms 1040 instructions (From Figure 3-1) 5. 2012 federal tax forms 1040 instructions $1. 2012 federal tax forms 1040 instructions 53 6. 2012 federal tax forms 1040 instructions Divide line 3 by $1,000 6. 2012 federal tax forms 1040 instructions 19 7. 2012 federal tax forms 1040 instructions Multiply line 6 by line 5. 2012 federal tax forms 1040 instructions This is the cost of your incidental life insurance 7. 2012 federal tax forms 1040 instructions $29. 2012 federal tax forms 1040 instructions 07 Figuring Includible Compensation for Your Most Recent Year of Service You can use Worksheet B in chapter 9 to determine your includible compensation for your most recent year of service. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions Floyd has been periodically working full-time for a local hospital since September 2011. 2012 federal tax forms 1040 instructions He needs to figure his limit on annual additions for 2014. 2012 federal tax forms 1040 instructions The hospital's normal annual work period for employees in Floyd's general type of work runs from January to December. 2012 federal tax forms 1040 instructions During the periods that Floyd was employed with the hospital, the hospital has always been eligible to provide a 403(b) plan to employees. 2012 federal tax forms 1040 instructions Additionally, the hospital has never provided the employees with a 457 deferred compensation plan, a transportation fringe benefit plan, or a cafeteria plan. 2012 federal tax forms 1040 instructions Floyd has never worked abroad and there is no life insurance provided under the plan. 2012 federal tax forms 1040 instructions Table 3-3 shows the service Floyd provided to his employer, his compensation for the periods worked, his elective deferrals, and his taxable wages. 2012 federal tax forms 1040 instructions Table 3-3. 2012 federal tax forms 1040 instructions Floyd's Compensation Note. 2012 federal tax forms 1040 instructions This table shows information Floyd will use to figure includible compensation for his most recent year of service. 2012 federal tax forms 1040 instructions   Year Years of Service Taxable Wages Elective Deferrals 2014 6/12 of  a year $42,000 $2,000 2013 4/12 of  a year $16,000 $1,650 2012 4/12 of  a year $16,000 $1,650 Before Floyd can figure his limit on annual additions, he must figure includible compensation for his most recent year of service. 2012 federal tax forms 1040 instructions Because Floyd is not planning to work the entire 2014 year, his most recent year of service will include the time he is planning to work in 2014 plus time he worked in the preceding 3 years until the time he worked for the hospital totals 1 year. 2012 federal tax forms 1040 instructions If the total time he worked is less than 1 year, Floyd will treat it as if it were 1 year. 2012 federal tax forms 1040 instructions He figures his most recent year of service shown in the following list. 2012 federal tax forms 1040 instructions Time he will work in 2014 is 6/12 of a year. 2012 federal tax forms 1040 instructions Time worked in 2013 is 4/12 of a year. 2012 federal tax forms 1040 instructions All of this time will be used to determine Floyd's most recent year of service. 2012 federal tax forms 1040 instructions Time worked in 2012 is 4/12 of a year. 2012 federal tax forms 1040 instructions Floyd only needs 2 months of the 4 months he worked in 2012 to have enough time to total 1 full year. 2012 federal tax forms 1040 instructions Because he needs only one-half of the actual time he worked, Floyd will use only one-half of his income earned during that period to calculate wages that will be used in figuring his includible compensation. 2012 federal tax forms 1040 instructions Using the information provided in Table 3-3, wages for Floyd's most recent year of service are $66,000 ($42,000 + $16,000 + $8,000). 2012 federal tax forms 1040 instructions His includible compensation for his most recent year of service is figured as shown in Table 3-4. 2012 federal tax forms 1040 instructions After figuring his includible compensation, Floyd determines his limit on annual additions for 2014 to be $52,000, the lesser of his includible compensation, $70,475 (Table 3-4), and the maximum amount of $52,000. 2012 federal tax forms 1040 instructions Table 3-4. 2012 federal tax forms 1040 instructions Worksheet B. 2012 federal tax forms 1040 instructions Includible Compensation for Your Most Recent Year of Service1 Note. 2012 federal tax forms 1040 instructions Use this worksheet to figure includible compensation for your most recent year of service. 2012 federal tax forms 1040 instructions 1. 2012 federal tax forms 1040 instructions Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. 2012 federal tax forms 1040 instructions $66,000 2. 2012 federal tax forms 1040 instructions Enter elective deferrals excluded from your gross income for your most recent year of service2 2. 2012 federal tax forms 1040 instructions 4,4753 3. 2012 federal tax forms 1040 instructions Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. 2012 federal tax forms 1040 instructions -0- 4. 2012 federal tax forms 1040 instructions Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government, or of a tax-exempt organization) for your most recent year of service 4. 2012 federal tax forms 1040 instructions -0- 5. 2012 federal tax forms 1040 instructions Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. 2012 federal tax forms 1040 instructions -0- 6. 2012 federal tax forms 1040 instructions Enter your foreign earned income exclusion for your most recent year of service 6. 2012 federal tax forms 1040 instructions -0- 7. 2012 federal tax forms 1040 instructions Add lines 1, 2, 3, 4, 5, and 6 7. 2012 federal tax forms 1040 instructions 70,475 8. 2012 federal tax forms 1040 instructions Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. 2012 federal tax forms 1040 instructions -0- 9. 2012 federal tax forms 1040 instructions Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. 2012 federal tax forms 1040 instructions -0- 10. 2012 federal tax forms 1040 instructions Add lines 8 and 9 10. 2012 federal tax forms 1040 instructions -0- 11. 2012 federal tax forms 1040 instructions Subtract line 10 from line 7. 2012 federal tax forms 1040 instructions This is your includible compensation for your most recent year of service 11. 2012 federal tax forms 1040 instructions 70,475 1Use estimated amounts if figuring includible compensation before the end of the year. 2012 federal tax forms 1040 instructions 2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. 2012 federal tax forms 1040 instructions  3$4,475 ($2,000 + $1,650 + $825). 2012 federal tax forms 1040 instructions Prev  Up  Next   Home   More Online Publications
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Understanding Your CP211A Notice

We approved your Form 8868, Application for Extension of Time To File an Exempt Organization Return.


What you need to do

  • Keep this notice for your records.
  • File your required form by your new due date shown on the notice. We encourage you to use electronic filing – the fastest and easiest way to file.

You may want to

  • Visit www.irs.gov/Charities-&-Non-Profits to learn about approved e-File providers, what types of returns can be filed electronically, and whether you are required to file electronically.

Answers to Common Questions

Q. Where can I go for more information about tax-exempt organizations?

A. For more information on Employee Benefit Plans, see Tax Information for Charities & Other Non-Profits.

Q. Can I get help over the phone?

A. If you have questions and/or need help, you can call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.


Tips for next year

Be sure to mail your Form 8868 on or before the due date of your return.

Page Last Reviewed or Updated: 24-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The 2012 Federal Tax Forms 1040 Instructions

2012 federal tax forms 1040 instructions 6. 2012 federal tax forms 1040 instructions   Tip Income Table of Contents Introduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. 2012 federal tax forms 1040 instructions Reporting Tips to Your EmployerElectronic tip statement. 2012 federal tax forms 1040 instructions Final report. 2012 federal tax forms 1040 instructions Reporting Tips on Your Tax Return Allocated Tips Introduction This chapter is for employees who receive tips. 2012 federal tax forms 1040 instructions All tips you receive are income and are subject to federal income tax. 2012 federal tax forms 1040 instructions You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. 2012 federal tax forms 1040 instructions The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. 2012 federal tax forms 1040 instructions Reporting your tip income correctly is not difficult. 2012 federal tax forms 1040 instructions You must do three things. 2012 federal tax forms 1040 instructions Keep a daily tip record. 2012 federal tax forms 1040 instructions Report tips to your employer. 2012 federal tax forms 1040 instructions Report all your tips on your income tax return. 2012 federal tax forms 1040 instructions  This chapter will explain these three things and show you what to do on your tax return if you have not done the first two. 2012 federal tax forms 1040 instructions This chapter will also show you how to treat allocated tips. 2012 federal tax forms 1040 instructions For information on special tip programs and agreements, see Publication 531. 2012 federal tax forms 1040 instructions Useful Items - You may want to see: Publication 531 Reporting Tip Income 1244 Employee's Daily Record of Tips and Report to Employer Form (and Instructions) 4137 Social Security and Medicare Tax on Unreported Tip Income 4070 Employee's Report of Tips to Employer Keeping a Daily Tip Record Why keep a daily tip record. 2012 federal tax forms 1040 instructions   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. 2012 federal tax forms 1040 instructions How to keep a daily tip record. 2012 federal tax forms 1040 instructions   There are two ways to keep a daily tip record. 2012 federal tax forms 1040 instructions You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. 2012 federal tax forms 1040 instructions You should keep your daily tip record with your tax or other personal records. 2012 federal tax forms 1040 instructions You must keep your records for as long as they are important for administration of the federal tax law. 2012 federal tax forms 1040 instructions For information on how long to keep records, see How long to keep records in chapter 1. 2012 federal tax forms 1040 instructions    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. 2012 federal tax forms 1040 instructions To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244. 2012 federal tax forms 1040 instructions Also, Publication 1244 is available online at www. 2012 federal tax forms 1040 instructions irs. 2012 federal tax forms 1040 instructions gov/pub/irs-pdf/p1244. 2012 federal tax forms 1040 instructions pdf. 2012 federal tax forms 1040 instructions Publication 1244 includes a 1-year supply of Form 4070A. 2012 federal tax forms 1040 instructions Each day, write in the information asked for on the form. 2012 federal tax forms 1040 instructions   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. 2012 federal tax forms 1040 instructions Although you do not report these tips to your employer, you must report them on your tax return. 2012 federal tax forms 1040 instructions   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). 2012 federal tax forms 1040 instructions Then, each workday, write the date and the following information. 2012 federal tax forms 1040 instructions Cash tips you get directly from customers or from other employees. 2012 federal tax forms 1040 instructions Tips from credit and debit card charge customers that your employer pays you. 2012 federal tax forms 1040 instructions The value of any noncash tips you get, such as tickets, passes, or other items of value. 2012 federal tax forms 1040 instructions The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. 2012 federal tax forms 1040 instructions Electronic tip record. 2012 federal tax forms 1040 instructions   You can use an electronic system provided by your employer to record your daily tips. 2012 federal tax forms 1040 instructions If you do, you must receive and keep a paper copy of this record. 2012 federal tax forms 1040 instructions Service charges. 2012 federal tax forms 1040 instructions    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. 2012 federal tax forms 1040 instructions This is part of your wages, not a tip. 2012 federal tax forms 1040 instructions See examples below. 2012 federal tax forms 1040 instructions Example 1. 2012 federal tax forms 1040 instructions Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. 2012 federal tax forms 1040 instructions Jane’s bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. 2012 federal tax forms 1040 instructions Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. 2012 federal tax forms 1040 instructions Do not include the 18% charge in your tip diary. 2012 federal tax forms 1040 instructions Service charges that are paid to you are considered wages, not tips. 2012 federal tax forms 1040 instructions Example 2. 2012 federal tax forms 1040 instructions Good Food Restaurant also includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. 2012 federal tax forms 1040 instructions David’s bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of his charges for food and beverages at the bottom of the bill beneath the signature line. 2012 federal tax forms 1040 instructions Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. 2012 federal tax forms 1040 instructions Be sure to include this amount in your tip diary. 2012 federal tax forms 1040 instructions Reporting Tips to Your Employer Why report tips to your employer. 2012 federal tax forms 1040 instructions   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). 2012 federal tax forms 1040 instructions What tips to report. 2012 federal tax forms 1040 instructions   Report to your employer only cash, check, and debit and credit card tips you receive. 2012 federal tax forms 1040 instructions   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. 2012 federal tax forms 1040 instructions   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. 2012 federal tax forms 1040 instructions Do not report to your employer any portion of the tips you receive that you pass on to other employees. 2012 federal tax forms 1040 instructions However, you must report tips you receive from other employees. 2012 federal tax forms 1040 instructions    Do not report the value of any noncash tips, such as tickets or passes, to your employer. 2012 federal tax forms 1040 instructions You do not pay social security, Medicare, Additional Medicare or railroad retirement taxes on these tips. 2012 federal tax forms 1040 instructions How to report. 2012 federal tax forms 1040 instructions    If your employer does not give you any other way to report tips, you can use Form 4070. 2012 federal tax forms 1040 instructions Fill in the information asked for on the form, sign and date the form, and give it to your employer. 2012 federal tax forms 1040 instructions To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. 2012 federal tax forms 1040 instructions   If you do not use Form 4070, give your employer a statement with the following information. 2012 federal tax forms 1040 instructions Your name, address, and social security number. 2012 federal tax forms 1040 instructions Your employer's name, address, and business name (if it is different from your employer's name). 2012 federal tax forms 1040 instructions The month (or the dates of any shorter period) in which you received tips. 2012 federal tax forms 1040 instructions The total tips required to be reported for that period. 2012 federal tax forms 1040 instructions You must sign and date the statement. 2012 federal tax forms 1040 instructions Be sure to keep a copy with your tax or other personal records. 2012 federal tax forms 1040 instructions   Your employer may require you to report your tips more than once a month. 2012 federal tax forms 1040 instructions However, the statement cannot cover a period of more than 1 calendar month. 2012 federal tax forms 1040 instructions Electronic tip statement. 2012 federal tax forms 1040 instructions   Your employer can have you furnish your tip statements electronically. 2012 federal tax forms 1040 instructions When to report. 2012 federal tax forms 1040 instructions   Give your report for each month to your employer by the 10th of the next month. 2012 federal tax forms 1040 instructions If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions You must report your tips received in September 2014 by October 10, 2014. 2012 federal tax forms 1040 instructions Final report. 2012 federal tax forms 1040 instructions   If your employment ends during the month, you can report your tips when your employment ends. 2012 federal tax forms 1040 instructions Penalty for not reporting tips. 2012 federal tax forms 1040 instructions   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes or railroad retirement tax you owe on the unreported tips. 2012 federal tax forms 1040 instructions (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. 2012 federal tax forms 1040 instructions ) The penalty amount is in addition to the taxes you owe. 2012 federal tax forms 1040 instructions   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. 2012 federal tax forms 1040 instructions To do so, attach a statement to your return explaining why you did not report them. 2012 federal tax forms 1040 instructions Giving your employer money for taxes. 2012 federal tax forms 1040 instructions   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. 2012 federal tax forms 1040 instructions If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. 2012 federal tax forms 1040 instructions   If you do not give your employer enough money, your employer will apply your regular pay and any money you give in the following order. 2012 federal tax forms 1040 instructions All taxes on your regular pay. 2012 federal tax forms 1040 instructions Social security, Medicare, and Additional Medicare taxes or railroad retirement taxes on your reported tips. 2012 federal tax forms 1040 instructions Federal, state, and local income taxes on your reported tips. 2012 federal tax forms 1040 instructions    Any taxes that remain unpaid can be collected by your employer from your next paycheck. 2012 federal tax forms 1040 instructions If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. 2012 federal tax forms 1040 instructions See Publication 505, Tax Withholding and Estimated Tax, for more information. 2012 federal tax forms 1040 instructions    Uncollected taxes. 2012 federal tax forms 1040 instructions You must report on your tax return any social security and Medicare taxes or railroad retirement tax that remained uncollected at the end of 2013. 2012 federal tax forms 1040 instructions These uncollected taxes will be shown on your 2013 Form W-2. 2012 federal tax forms 1040 instructions See Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. 2012 federal tax forms 1040 instructions Reporting Tips on Your Tax Return How to report tips. 2012 federal tax forms 1040 instructions    Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1. 2012 federal tax forms 1040 instructions What tips to report. 2012 federal tax forms 1040 instructions   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. 2012 federal tax forms 1040 instructions Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. 2012 federal tax forms 1040 instructions Add to the amount in box 1 only the tips you did not report to your employer. 2012 federal tax forms 1040 instructions    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. 2012 federal tax forms 1040 instructions    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. 2012 federal tax forms 1040 instructions   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. 2012 federal tax forms 1040 instructions Cash and charge tips you received that totaled less than $20 for any month. 2012 federal tax forms 1040 instructions The value of noncash tips, such as tickets, passes, or other items of value. 2012 federal tax forms 1040 instructions Example. 2012 federal tax forms 1040 instructions Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. 2012 federal tax forms 1040 instructions Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. 2012 federal tax forms 1040 instructions He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. 2012 federal tax forms 1040 instructions Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages plus $7,000 reported tips) in box 1. 2012 federal tax forms 1040 instructions He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. 2012 federal tax forms 1040 instructions Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. 2012 federal tax forms 1040 instructions    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. 2012 federal tax forms 1040 instructions To report these taxes, you must file a return even if you would not otherwise have to file. 2012 federal tax forms 1040 instructions You must use Form 1040. 2012 federal tax forms 1040 instructions (You cannot file Form 1040EZ or Form 1040A. 2012 federal tax forms 1040 instructions )    Use Form 4137 to figure social security and Medicare taxes. 2012 federal tax forms 1040 instructions Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. 2012 federal tax forms 1040 instructions Use Form 8959 to figure Additional Medicare Tax. 2012 federal tax forms 1040 instructions    If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. 2012 federal tax forms 1040 instructions To get railroad retirement credit, you must report tips to your employer. 2012 federal tax forms 1040 instructions Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer. 2012 federal tax forms 1040 instructions   You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. 2012 federal tax forms 1040 instructions For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. 2012 federal tax forms 1040 instructions   If your employer could not collect all the social security and Medicare taxes or railroad retirement tax you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). 2012 federal tax forms 1040 instructions You must report these amounts as additional tax on your return. 2012 federal tax forms 1040 instructions Unlike the uncollected portion of the regular (1. 2012 federal tax forms 1040 instructions 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported in box 12 of Form W-2 with code B. 2012 federal tax forms 1040 instructions    To report these uncollected taxes, you must file a return even if you would not otherwise have to file. 2012 federal tax forms 1040 instructions You must report these taxes on Form 1040, line 60. 2012 federal tax forms 1040 instructions See the instructions for Form 1040, line 60. 2012 federal tax forms 1040 instructions (You cannot file Form 1040EZ or Form 1040A. 2012 federal tax forms 1040 instructions ) Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. 2012 federal tax forms 1040 instructions They are not included in box 1 with your wages and reported tips. 2012 federal tax forms 1040 instructions If box 8 is blank, this discussion does not apply to you. 2012 federal tax forms 1040 instructions What are allocated tips. 2012 federal tax forms 1040 instructions   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. 2012 federal tax forms 1040 instructions Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. 2012 federal tax forms 1040 instructions No income, social security, Medicare, Additional Medicare or railroad retirement taxes are withheld on allocated tips. 2012 federal tax forms 1040 instructions How were your allocated tips figured. 2012 federal tax forms 1040 instructions   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). 2012 federal tax forms 1040 instructions Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. 2012 federal tax forms 1040 instructions For information about the exact allocation method used, ask your employer. 2012 federal tax forms 1040 instructions Must you report your allocated tips on your tax return. 2012 federal tax forms 1040 instructions   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. 2012 federal tax forms 1040 instructions Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. 2012 federal tax forms 1040 instructions Add to the amount in box 1 only the tips you did not report to your employer. 2012 federal tax forms 1040 instructions This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated figures. 2012 federal tax forms 1040 instructions   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. 2012 federal tax forms 1040 instructions How to report allocated tips. 2012 federal tax forms 1040 instructions   Report the amount in box 1 and the allocated tips in box 8 of your Form(s) W-2 as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. 2012 federal tax forms 1040 instructions (You cannot file Form 1040A or Form 1040EZ when you have allocated tips. 2012 federal tax forms 1040 instructions )    Because social security, Medicare, and Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. 2012 federal tax forms 1040 instructions Complete Form 4137, and include the allocated tips on line 1 of the form. 2012 federal tax forms 1040 instructions See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. 2012 federal tax forms 1040 instructions Prev  Up  Next   Home   More Online Publications