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E File Tax Extension

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E File Tax Extension

E file tax extension Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. E file tax extension Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. E file tax extension The care must be for one or more qualifying persons who are identified on Form 2441. E file tax extension (See Qualifying Person Test. E file tax extension ) You (and your spouse if filing jointly) must have earned income during the year. E file tax extension (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. E file tax extension ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. E file tax extension (See Work-Related Expense Test, later. E file tax extension ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. E file tax extension If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. E file tax extension You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. E file tax extension See Payments to Relatives or Dependents under Work-Related Expense Test, later. E file tax extension Your filing status may be single, head of household, or qualifying widow(er) with dependent child. E file tax extension If you are married, you must file a joint return, unless an exception applies to you. E file tax extension See Joint Return Test, later. E file tax extension You must identify the care provider on your tax return. E file tax extension (See Provider Identification Test, later. E file tax extension ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). E file tax extension (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. E file tax extension See Reduced Dollar Limit under How To Figure the Credit, later. E file tax extension ) These tests are presented in Figure A and are also explained in detail in this publication. E file tax extension Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. E file tax extension A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. E file tax extension Dependent defined. E file tax extension   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. E file tax extension To be your dependent, a person must be your qualifying child (or your qualifying relative). E file tax extension Qualifying child. E file tax extension   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. E file tax extension More information. E file tax extension   For more information about who is a dependent or a qualifying child, see Publication 501. E file tax extension Physically or mentally not able to care for oneself. E file tax extension   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. E file tax extension Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. E file tax extension Person qualifying for part of year. E file tax extension   You determine a person's qualifying status each day. E file tax extension For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. E file tax extension Also see Yearly limit under Dollar Limit, later. E file tax extension Birth or death of otherwise qualifying person. E file tax extension   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. E file tax extension Taxpayer identification number. E file tax extension   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). E file tax extension If the correct information is not shown, the credit may be reduced or disallowed. E file tax extension Individual taxpayer identification number (ITIN) for aliens. E file tax extension   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. E file tax extension The ITIN is entered wherever an SSN is requested on a tax return. E file tax extension If the alien does not have an ITIN, he or she must apply for one. E file tax extension See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. E file tax extension   An ITIN is for tax use only. E file tax extension It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. E file tax extension S. E file tax extension law. E file tax extension Adoption taxpayer identification number (ATIN). E file tax extension   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. E file tax extension File Form W-7A, Application for Taxpayer Identification Number for Pending U. E file tax extension S. E file tax extension Adoptions. E file tax extension Child of divorced or separated parents or parents living apart. E file tax extension   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. E file tax extension   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. E file tax extension If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. E file tax extension For details and an exception for a parent who works at night, see Publication 501. E file tax extension   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. E file tax extension Please click here for the text description of the image. E file tax extension Figure a. E file tax extension Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. E file tax extension Earned income. E file tax extension   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. E file tax extension A net loss from self-employment reduces earned income. E file tax extension Earned income also includes strike benefits and any disability pay you report as wages. E file tax extension   Generally, only taxable compensation is included. E file tax extension However, you can elect to include nontaxable combat pay in earned income. E file tax extension If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. E file tax extension (In other words, if one of you makes the election, the other one can also make it but does not have to. E file tax extension ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. E file tax extension You should figure your credit both ways and make the election if it gives you a greater tax benefit. E file tax extension    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. E file tax extension Members of certain religious faiths opposed to social security. E file tax extension   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. E file tax extension These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. E file tax extension   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. E file tax extension For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. E file tax extension Form 4361. E file tax extension   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. E file tax extension This includes wages, salaries, tips, and other taxable employee compensation. E file tax extension   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. E file tax extension Examples include fees for performing marriages and honoraria for delivering speeches. E file tax extension   Any amount you received for work that is not related to your ministerial duties is earned income. E file tax extension Form 4029. E file tax extension   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. E file tax extension   However, amounts you received as a self-employed individual do not count as earned income. E file tax extension What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. E file tax extension S. E file tax extension trade or business, or Any amount received for work while an inmate in a penal institution. E file tax extension Rule for student-spouse or spouse not able to care for self. E file tax extension   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. E file tax extension (Your spouse also must live with you for more than half the year. E file tax extension )   If you are filing a joint return, this rule also applies to you. E file tax extension You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. E file tax extension   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. E file tax extension   This rule applies to only one spouse for any one month. E file tax extension If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. E file tax extension Full-time student. E file tax extension    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. E file tax extension You must have been a full-time student for some part of each of 5 calendar months during the year. E file tax extension (The months need not be consecutive. E file tax extension ) School. E file tax extension   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. E file tax extension A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. E file tax extension Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. E file tax extension Expenses are considered work-related only if both of the following are true. E file tax extension They allow you (and your spouse if filing jointly) to work or look for work. E file tax extension They are for a qualifying person's care. E file tax extension Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. E file tax extension If you are married, generally both you and your spouse must work or look for work. E file tax extension One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. E file tax extension Your work can be for others or in your own business or partnership. E file tax extension It can be either full time or part time. E file tax extension Work also includes actively looking for work. E file tax extension However, if you do not find a job and have no earned income for the year, you cannot take this credit. E file tax extension See Earned Income Test, earlier. E file tax extension An expense is not considered work-related merely because you had it while you were working. E file tax extension The purpose of the expense must be to allow you to work. E file tax extension Whether your expenses allow you to work or look for work depends on the facts. E file tax extension Example 1. E file tax extension The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. E file tax extension Example 2. E file tax extension You work during the day. E file tax extension Your spouse works at night and sleeps during the day. E file tax extension You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. E file tax extension Your expenses are considered work-related. E file tax extension Volunteer work. E file tax extension   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. E file tax extension Work for part of year. E file tax extension   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. E file tax extension For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. E file tax extension However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). E file tax extension Temporary absence from work. E file tax extension   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. E file tax extension Instead, you can figure your credit including the expenses you paid for the period of absence. E file tax extension   An absence of 2 weeks or less is a short, temporary absence. E file tax extension An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. E file tax extension Example. E file tax extension You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. E file tax extension You become ill and miss 4 months of work but receive sick pay. E file tax extension You continue to pay the nanny to care for the children while you are ill. E file tax extension Your absence is not a short, temporary absence, and your expenses are not considered work-related. E file tax extension Part-time work. E file tax extension   If you work part-time, you generally must figure your expenses for each day. E file tax extension However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. E file tax extension Any day when you work at least 1 hour is a day of work. E file tax extension Example 1. E file tax extension You work 3 days a week. E file tax extension While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. E file tax extension You can pay the center $150 for any 3 days a week or $250 for 5 days a week. E file tax extension Your child attends the center 5 days a week. E file tax extension Your work-related expenses are limited to $150 a week. E file tax extension Example 2. E file tax extension The facts are the same as in Example 1 except the center does not offer a 3-day option. E file tax extension The entire $250 weekly fee may be a work-related expense. E file tax extension Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. E file tax extension You do not have to choose the least expensive way of providing the care. E file tax extension The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. E file tax extension Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. E file tax extension Expenses for household services qualify if part of the services is for the care of qualifying persons. E file tax extension See Household Services, later. E file tax extension Expenses not for care. E file tax extension   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. E file tax extension However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. E file tax extension Otherwise, see the discussion of Expenses partly work-related, later. E file tax extension   Child support payments are not for care and do not qualify for the credit. E file tax extension Education. E file tax extension   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. E file tax extension   Expenses to attend kindergarten or a higher grade are not expenses for care. E file tax extension Do not use these expenses to figure your credit. E file tax extension   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. E file tax extension   Summer school and tutoring programs are not for care. E file tax extension Example 1. E file tax extension You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. E file tax extension The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. E file tax extension You can count the total cost when you figure the credit. E file tax extension Example 2. E file tax extension You place your 10-year-old child in a boarding school so you can work full time. E file tax extension Only the part of the boarding school expense that is for the care of your child is a work-related expense. E file tax extension You can count that part of the expense in figuring your credit if it can be separated from the cost of education. E file tax extension You cannot count any part of the amount you pay the school for your child's education. E file tax extension Care outside your home. E file tax extension   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. E file tax extension Dependent care center. E file tax extension   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. E file tax extension   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. E file tax extension Camp. E file tax extension   The cost of sending your child to an overnight camp is not considered a work-related expense. E file tax extension    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. E file tax extension Transportation. E file tax extension   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. E file tax extension This includes transportation by bus, subway, taxi, or private car. E file tax extension However, transportation not provided by a care provider is not for the care of a qualifying person. E file tax extension Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. E file tax extension Fees and deposits. E file tax extension   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. E file tax extension However, a forfeited deposit is not for the care of a qualifying person if care is not provided. E file tax extension Example 1. E file tax extension You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. E file tax extension The fee you paid is a work-related expense. E file tax extension Example 2. E file tax extension You placed a deposit with a preschool to reserve a place for your 3-year-old child. E file tax extension You later sent your child to a different preschool and forfeited the deposit. E file tax extension The forfeited deposit is not for care and so is not a work-related expense. E file tax extension Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. E file tax extension Definition. E file tax extension   Household services are ordinary and usual services done in and around your home that are necessary to run your home. E file tax extension They include the services of a housekeeper, maid, or cook. E file tax extension However, they do not include the services of a chauffeur, bartender, or gardener. E file tax extension Housekeeper. E file tax extension   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. E file tax extension Expenses partly work-related. E file tax extension   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. E file tax extension To figure your credit, count only the part that is work-related. E file tax extension However, you do not have to divide the expense if only a small part is for other purposes. E file tax extension Example. E file tax extension You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. E file tax extension The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. E file tax extension You do not have to divide the expenses. E file tax extension You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. E file tax extension Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. E file tax extension However, the dollar limit (discussed later) is based on one qualifying person, not two. E file tax extension Meals and lodging provided for housekeeper. E file tax extension   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. E file tax extension If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. E file tax extension Example. E file tax extension To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. E file tax extension You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. E file tax extension However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. E file tax extension Taxes paid on wages. E file tax extension   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. E file tax extension For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. E file tax extension Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. E file tax extension However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. E file tax extension Joint Return Test Generally, married couples must file a joint return to take the credit. E file tax extension However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. E file tax extension Legally separated. E file tax extension   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. E file tax extension You may be eligible to take the credit on your return using head of household filing status. E file tax extension Married and living apart. E file tax extension   You are not considered married and are eligible to take the credit if all the following apply. E file tax extension You file a return apart from your spouse. E file tax extension Your home is the home of a qualifying person for more than half the year. E file tax extension You pay more than half the cost of keeping up your home for the year. E file tax extension Your spouse does not live in your home for the last 6 months of the year. E file tax extension Costs of keeping up a home. E file tax extension   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. E file tax extension   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. E file tax extension   They also do not include the purchase, permanent improvement, or replacement of property. E file tax extension For example, you cannot include the cost of replacing a water heater. E file tax extension However, you can include the cost of repairing a water heater. E file tax extension Death of spouse. E file tax extension   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. E file tax extension If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. E file tax extension Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. E file tax extension Use Form 2441, Part I, to show the information. E file tax extension If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). E file tax extension Information needed. E file tax extension   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. E file tax extension    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. E file tax extension If the care provider is an organization, then it is the employer identification number (EIN). E file tax extension   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). E file tax extension In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. E file tax extension   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. E file tax extension Getting the information. E file tax extension    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. E file tax extension If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. E file tax extension    You should keep this information with your tax records. E file tax extension Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. E file tax extension Due diligence. E file tax extension   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. E file tax extension However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. E file tax extension   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. E file tax extension Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. E file tax extension Provider refusal. E file tax extension    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). E file tax extension Enter “See Attached Statement” in the columns calling for the information you do not have. E file tax extension Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. E file tax extension Be sure to write your name and social security number on this statement. E file tax extension The statement will show that you used due diligence in trying to furnish the necessary information. E file tax extension U. E file tax extension S. E file tax extension citizens and resident aliens living abroad. E file tax extension   If you are living abroad, your care provider may not have, and may not be required to get, a U. E file tax extension S. E file tax extension taxpayer identification number (for example, an SSN or an EIN). E file tax extension If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. E file tax extension How To Figure the Credit Your credit is a percentage of your work-related expenses. E file tax extension Your expenses are subject to the earned income limit and the dollar limit. E file tax extension The percentage is based on your adjusted gross income. E file tax extension Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. E file tax extension Expenses prepaid in an earlier year. E file tax extension   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. E file tax extension Claim the expenses for the later year as if they were actually paid in that later year. E file tax extension Expenses not paid until the following year. E file tax extension   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. E file tax extension You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. E file tax extension See Payments for prior year's expenses under Amount of Credit, later. E file tax extension If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. E file tax extension You may be able to claim a credit for them on your 2014 return. E file tax extension Expenses reimbursed. E file tax extension   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. E file tax extension Example. E file tax extension You paid work-related expenses of $3,000. E file tax extension You are reimbursed $2,000 by a state social services agency. E file tax extension You can use only $1,000 to figure your credit. E file tax extension Medical expenses. E file tax extension   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. E file tax extension You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. E file tax extension   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. E file tax extension However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. E file tax extension For information on medical expenses, see Publication 502, Medical and Dental Expenses. E file tax extension    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. E file tax extension Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. E file tax extension See Reduced Dollar Limit, later. E file tax extension But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. E file tax extension Dependent care benefits. E file tax extension    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. E file tax extension Your salary may have been reduced to pay for these benefits. E file tax extension If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. E file tax extension See Statement for employee, later. E file tax extension Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. E file tax extension   Enter the amount of these benefits on Form 2441, Part III, line 12. E file tax extension Exclusion or deduction. E file tax extension   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. E file tax extension Your employer can tell you whether your benefit plan qualifies. E file tax extension To claim the exclusion, you must complete Part III of Form 2441. E file tax extension You cannot use Form 1040EZ. E file tax extension   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. E file tax extension Therefore, you would not get an exclusion from wages. E file tax extension Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. E file tax extension To claim the deduction, you must use Form 2441. E file tax extension   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). E file tax extension   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. E file tax extension    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. E file tax extension Statement for employee. E file tax extension   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. E file tax extension Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. E file tax extension Effect of exclusion on credit. E file tax extension   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. E file tax extension Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. E file tax extension Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. E file tax extension For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. E file tax extension Example. E file tax extension You remarried on December 3. E file tax extension Your earned income for the year was $18,000. E file tax extension Your new spouse's earned income for the year was $2,000. E file tax extension You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. E file tax extension The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). E file tax extension Separated spouse. E file tax extension   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. E file tax extension Use only your income in figuring the earned income limit. E file tax extension Surviving spouse. E file tax extension   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. E file tax extension Community property laws. E file tax extension   Disregard community property laws when you figure earned income for this credit. E file tax extension Self-employment earnings. E file tax extension   If you are self-employed, include your net earnings in earned income. E file tax extension For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. E file tax extension Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. E file tax extension Clergy or church employee. E file tax extension   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. E file tax extension Statutory employee. E file tax extension   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). E file tax extension Net loss. E file tax extension   You must reduce your earned income by any net loss from self-employment. E file tax extension Optional method if earnings are low or a net loss. E file tax extension   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. E file tax extension Get Publication 334, Tax Guide for Small Business, for details. E file tax extension If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. E file tax extension In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. E file tax extension You or your spouse is a student or not able to care for self. E file tax extension   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. E file tax extension His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. E file tax extension Spouse works. E file tax extension   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. E file tax extension Spouse qualifies for part of month. E file tax extension   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. E file tax extension You are a student or not able to care for self. E file tax extension   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. E file tax extension For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). E file tax extension If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. E file tax extension Both spouses qualify. E file tax extension   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. E file tax extension Example. E file tax extension Jim works and keeps up a home for himself and his wife Sharon. E file tax extension Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. E file tax extension During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. E file tax extension These expenses also qualify as medical expenses. E file tax extension Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. E file tax extension Jim and Sharon's earned income limit is the smallest of the following amounts. E file tax extension   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. E file tax extension However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. E file tax extension Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. E file tax extension This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. E file tax extension If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. E file tax extension This limit does not need to be divided equally among them. E file tax extension For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. E file tax extension Yearly limit. E file tax extension   The dollar limit is a yearly limit. E file tax extension The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. E file tax extension Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. E file tax extension Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. E file tax extension Example 1. E file tax extension You pay $500 a month for after-school care for your son. E file tax extension He turned 13 on May 1 and is no longer a qualifying person. E file tax extension You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. E file tax extension Example 2. E file tax extension In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. E file tax extension You paid $300 per month for the childcare. E file tax extension You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. E file tax extension Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. E file tax extension Your reduced dollar limit is figured on Form 2441, Part III. E file tax extension See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. E file tax extension Example 1. E file tax extension George is a widower with one child and earns $24,000 a year. E file tax extension He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. E file tax extension His employer pays an additional $1,000 under a qualified dependent care benefit plan. E file tax extension This $1,000 is excluded from George's income. E file tax extension Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. E file tax extension This is because his dollar limit is reduced as shown next. E file tax extension   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. E file tax extension Randall is married and both he and his wife are employed. E file tax extension Each has earned income in excess of $6,000. E file tax extension They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. E file tax extension Randall's work-related expenses are $6,000 for the year. E file tax extension Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. E file tax extension Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. E file tax extension Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. E file tax extension This is because his dollar limit is reduced as shown next. E file tax extension   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. E file tax extension This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. E file tax extension The following table shows the percentage to use based on adjusted gross income. E file tax extension   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. E file tax extension You should show the expenses for each person on Form 2441, line 2, column (c). E file tax extension However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. E file tax extension You should list -0- for the one person and the actual amount for the second person. E file tax extension The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. E file tax extension Example. E file tax extension Roger and Megan Paris have two qualifying children. E file tax extension They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. E file tax extension They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). E file tax extension Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. E file tax extension Line 30 tells them to complete line 2 without including any dependent care benefits. E file tax extension They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. E file tax extension Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. E file tax extension 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. E file tax extension However, their son James has special needs and they paid $18,500 for his care. E file tax extension Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. E file tax extension Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. E file tax extension Payments for prior year's expenses. E file tax extension   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. E file tax extension Attach a statement to your form showing how you figured the additional amount from 2012. E file tax extension Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. E file tax extension Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. E file tax extension Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. E file tax extension See Worksheet A. E file tax extension Example. E file tax extension In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. E file tax extension Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. E file tax extension Their adjusted gross income for 2012 was $30,000. E file tax extension Sam's earned income of $14,000 was less than Kate's earned income. E file tax extension A credit for their 2012 expenses paid in 2013 is not allowed in 2012. E file tax extension It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. E file tax extension The filled-in Worksheet A they used to figure this credit is shown later. E file tax extension Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. E file tax extension They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. E file tax extension Worksheet A. E file tax extension Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. E file tax extension 1. E file tax extension   Enter your 2012 qualified expenses paid in 2012 1. E file tax extension     2. E file tax extension   Enter your 2012 qualified expenses paid in 2013 2. E file tax extension     3. E file tax extension   Add the amounts on lines 1 and 2 3. E file tax extension     4. E file tax extension   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. E file tax extension     5. E file tax extension   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. E file tax extension     6. E file tax extension   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. E file tax extension     7. E file tax extension   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. E file tax extension     8. E file tax extension   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. E file tax extension     9. E file tax extension   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. E file tax extension     10. E file tax extension   Subtract the amount on line 9 from the amount on line 8 and enter the result. E file tax extension If zero or less, stop here. E file tax extension You cannot increase your 2013 credit by any previous year's expenses 10. E file tax extension     11. E file tax extension   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. E file tax extension     12. E file tax extension   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. E file tax extension             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . E file tax extension 35                 15,000 — 17,000     . E file tax extension 34                 17,000 — 19,000     . E file tax extension 33                 19,000 — 21,000     . E file tax extension 32                 21,000 — 23,000     . E file tax extension 31                 23,000 — 25,000     . E file tax extension 30                 25,000 — 27,000     . E file tax extension 29                 27,000 — 29,000     . E file tax extension 28                 29,000 — 31,000     . E file tax extension 27                 31,000 — 33,000     . E file tax extension 26                 33,000 — 35,000     . E file tax extension 25                 35,000 — 37,000     . E file tax extension 24                 37,000 — 39,000     . E file tax extension 23                 39,000 — 41,000     . E file tax extension 22                 41,000 — 43,000     . E file tax extension 21                 43,000 — No limit     . E file tax extension 20           13. E file tax extension   Multiply line 10 by line 12. E file tax extension Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. E file tax extension Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. E file tax extension       Worksheet A. E file tax extension Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. E file tax extension 1. E file tax extension   Enter your 2012 qualified expenses paid in 2012 1. E file tax extension   $2,000 2. E file tax extension   Enter your 2012 qualified expenses paid in 2013 2. E file tax extension   600 3. E file tax extension   Add the amounts on lines 1 and 2 3. E file tax extension   2,600 4. E file tax extension   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. E file tax extension   3,000 5. E file tax extension   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. E file tax extension   0 6. E file tax extension   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. E file tax extension   3,000 7. E file tax extension   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. E file tax extension   14,000 8. E file tax extension   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. E file tax extension   2,600 9. E file tax extension   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. E file tax extension   2,000 10. E file tax extension   Subtract the amount on line 9 from the amount on line 8 and enter the result. E file tax extension If zero or less, stop here. E file tax extension You cannot increase your 2013 credit by any previous year's expenses 10. E file tax extension   600 11. E file tax extension   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. E file tax extension   30,000 12. E file tax extension   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. E file tax extension   . E file tax extension 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . E file tax extension 35                 15,000 — 17,000     . E file tax extension 34                 17,000 — 19,000     . E file tax extension 33                 19,000 — 21,000     . E file tax extension 32                 21,000 — 23,000     . E file tax extension 31                 23,000 — 25,000     . E file tax extension 30                 25,000 — 27,000     . E file tax extension 29                 27,000 — 29,000     . E file tax extension 28                 29,000 — 31,000     . E file tax extension 27                 31,000 — 33,000     . E file tax extension 26                 33,000 — 35,000     . E file tax extension 25                 35,000 — 37,000     . E file tax extension 24                 37,000 — 39,000     . E file tax extension 23                 39,000 — 41,000     . E file tax extension 22                 41,000 — 43,000     . E file tax extension 21                 43,000 — No limit     . E file tax extension 20           13. E file tax extension   Multiply line 10 by line 12. E file tax extension Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. E file tax extension Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. E file tax extension   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. E file tax extension You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. E file tax extension Form 1040, Form 1040A, or Form 1040NR. E file tax extension    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. E file tax extension Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. E file tax extension Limit on credit. E file tax extension    The amount of credit you can claim is limited to your tax. E file tax extension For more information, see the Instructions for Form 2441. E file tax extension Tax credit not refundable. E file tax extension   You cannot get a refund for any part of the credit that is more than this limit. E file tax extension Recordkeeping. E file tax extension You should keep records of your work-related expenses. E file tax extension Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. E file tax extension Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. E file tax extension Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. E file tax extension If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. E file tax extension If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. E file tax extension Self-employed persons who are in business for themselves are not household employees. E file tax extension Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. E file tax extension If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. E file tax extension This control could include providing rules of conduct and appearance and requiring regular reports. E file tax extension In this case, you do not have to pay employment taxes. E file tax extension But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. E file tax extension If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. E file tax extension Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. E file tax extension Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. E file tax extension Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. E file tax extension For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. E file tax extension State employment tax. E file tax extension   You may also have to pay state unemployment tax. E file tax extension Contact your state unemployment tax office for information. E file tax extension You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. E file tax extension For a list of state unemployment tax agencies, visit the U. E file tax extension S. E file tax extension Department of Labor's website. E file tax extension To find that website, use the link in Publication 926 or search online. E file tax extension How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. E file tax extension Free help with your tax return. E file tax extension   You can get free help preparing your return nationwide from IRS-certified volunteers. E file tax extension The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. E file tax extension The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. E file tax extension Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. E file tax extension In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. E file tax extension To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. E file tax extension gov, download the IRS2Go app, or call 1-800-906-9887. E file tax extension   As part of the TCE program, AARP offers the Tax-Aide counseling program. E file tax extension To find the nearest AARP Tax-Aide site, visit AARP's website at www. E file tax extension aarp. E file tax extension org/money/taxaide or call 1-888-227-7669. E file tax extension For more information on these programs, go to IRS. E file tax extension gov and enter “VITA” in the search box. E file tax extension Internet. E file tax extension    IRS. E file tax extension gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. E file tax extension Download the free IRS2Go app from the iTunes app store or from Google Play. E file tax extension Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. E file tax extension Check the status of your 2013 refund with the Where's My Refund? application on IRS. E file tax extension gov or download the IRS2Go app and select the Refund Status option. E file tax extension The IRS issues more than 9 out of 10 refunds in less than 21 days. E file tax extension Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. E file tax extension You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. E file tax extension The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. E file tax extension Use the Interactive Tax Assistant (ITA) to research your tax questions. E file tax extension No need to wait on the phone or stand in line. E file tax extension The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. E file tax extension When you reach the response screen, you can print the entire interview and the final response for your records. E file tax extension New subject areas are added on a regular basis. E file tax extension  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. E file tax extension gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. E file tax extension You can use the IRS Tax Map, to search publications and instructions by topic or keyword. E file tax extension The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. E file tax extension When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. E file tax extension Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. E file tax extension You can also ask the IRS to mail a return or an account transcript to you. E file tax extension Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. E file tax extension gov or by calling 1-800-908-9946. E file tax extension Tax return and tax account transcripts are generally available for the current year and the past three years. E file tax extension Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. E file tax extension Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. E file tax extension If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. E file tax extension Check the status of your amended return using Where's My Amended Return? Go to IRS. E file tax extension gov and enter Where's My Amended Return? in the search box. E file tax extension You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. E file tax extension It can take up to 3 weeks from the date you mailed it to show up in our system. E file tax extension Make a payment using one of several safe and convenient electronic payment options available on IRS. E file tax extension gov. E file tax extension Select the Payment tab on the front page of IRS. E file tax extension gov for more information. E file tax extension Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. E file tax extension Figure your income tax withholding with the IRS Withholding Calculator on IRS. E file tax extension gov. E file tax extension Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. E file tax extension Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. E file tax extension gov. E file tax extension Request an Electronic Filing PIN by going to IRS. E file tax extension gov and entering Electronic Filing PIN in the search box. E file tax extension Download forms, instructions and publications, including accessible versions for people with disabilities. E file tax extension Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. E file tax extension gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. E file tax extension An employee can answer questions about your tax account or help you set up a payment plan. E file tax extension Before you visit, check the Office Locator on IRS. E file tax extension gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. E file tax extension If you have a special need, such as a disability, you can request an appointment. E file tax extension Call the local number listed in the Office Locator, or look in the phone book under Unit
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Tax Relief for Victims of May 25 Flooding in Iowa

MIL-2011-07, Oct. 19, 2011

MILWAUKEE — Victims of the flooding that began on May 25, 2011 in parts of Iowa may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Fremont, Harrison, Mills, Monona and Pottawattamie. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after May 25, and on or before Aug. 1, have been postponed to Aug. 1, 2011.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 25, and on or before June 9, as long as the deposits are made by June 9, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Aug. 1 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 25 and on or before Aug. 1.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 25 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 25 and on or before June 9 provided the taxpayer makes these deposits by June 9.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Iowa/Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 13-Mar-2014

The E File Tax Extension

E file tax extension Publication 575 - Main Content Table of Contents General InformationPension. E file tax extension Annuity. E file tax extension Qualified employee plan. E file tax extension Qualified employee annuity. E file tax extension Designated Roth account. E file tax extension Tax-sheltered annuity plan. E file tax extension Fixed-period annuities. E file tax extension Annuities for a single life. E file tax extension Joint and survivor annuities. E file tax extension Variable annuities. E file tax extension Disability pensions. E file tax extension 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. E file tax extension Taxation of Periodic PaymentsPeriod of participation. E file tax extension 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. E file tax extension No tax withheld. E file tax extension Partial rollovers. E file tax extension Frozen deposits. E file tax extension Reasonable period of time. E file tax extension 20% Mandatory withholding. E file tax extension How to report. E file tax extension How to report. E file tax extension Special rule for Roth IRAs and designated Roth accounts. E file tax extension Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. E file tax extension How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. E file tax extension   Some of the terms used in this publication are defined in the following paragraphs. E file tax extension Pension. E file tax extension   A pension is generally a series of definitely determinable payments made to you after you retire from work. E file tax extension Pension payments are made regularly and are based on such factors as years of service and prior compensation. E file tax extension Annuity. E file tax extension   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. E file tax extension They can be either fixed (under which you receive a definite amount) or variable (not fixed). E file tax extension You can buy the contract alone or with the help of your employer. E file tax extension Qualified employee plan. E file tax extension   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. E file tax extension 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). E file tax extension To determine whether your plan is a qualified plan, check with your employer or the plan administrator. E file tax extension Qualified employee annuity. E file tax extension   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. E file tax extension Designated Roth account. E file tax extension   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. E file tax extension Elective deferrals that are designated as Roth contributions are included in your income. E file tax extension However, qualified distributions (explained later) are not included in your income. E file tax extension You should check with your plan administrator to determine if your plan will accept designated Roth contributions. E file tax extension Tax-sheltered annuity plan. E file tax extension   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. E file tax extension Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. E file tax extension Types of pensions and annuities. E file tax extension   Pensions and annuities include the following types. E file tax extension Fixed-period annuities. E file tax extension   You receive definite amounts at regular intervals for a specified length of time. E file tax extension Annuities for a single life. E file tax extension   You receive definite amounts at regular intervals for life. E file tax extension The payments end at death. E file tax extension Joint and survivor annuities. E file tax extension   The first annuitant receives a definite amount at regular intervals for life. E file tax extension After he or she dies, a second annuitant receives a definite amount at regular intervals for life. E file tax extension The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. E file tax extension Variable annuities. E file tax extension   You receive payments that may vary in amount for a specified length of time or for life. E file tax extension 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. E file tax extension Disability pensions. E file tax extension   You receive disability payments because you retired on disability and have not reached minimum retirement age. E file tax extension More than one program. E file tax extension   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. E file tax extension 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. E file tax extension Also, you may be considered to have received more than one pension or annuity. E file tax extension Your former employer or the plan administrator should be able to tell you if you have more than one contract. E file tax extension Example. E file tax extension Your employer set up a noncontributory profit-sharing plan for its employees. E file tax extension The plan provides that the amount held in the account of each participant will be paid when that participant retires. E file tax extension 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. E file tax extension 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. E file tax extension Under the pension plan, however, a formula determines the amount of the pension benefits. E file tax extension The amount of contributions is the amount necessary to provide that pension. E file tax extension Each plan is a separate program and a separate contract. E file tax extension 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. E file tax extension Distributions from a designated Roth account are treated separately from other distributions from the plan. E file tax extension Qualified domestic relations order (QDRO). E file tax extension   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. E file tax extension 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. E file tax extension A QDRO may not award an amount or form of benefit that is not available under the plan. E file tax extension   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. E file tax extension 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. E file tax extension The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. E file tax extension The denominator is the present value of all benefits payable to the participant. E file tax extension   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. E file tax extension 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. E file tax extension 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. E file tax extension 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. E file tax extension The earnings are not taxed until distributed either in a withdrawal or in annuity payments. E file tax extension The taxable part of a distribution is treated as ordinary income. E file tax extension Net investment income tax. E file tax extension   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). E file tax extension For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. E file tax extension 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. E file tax extension Withdrawals. E file tax extension   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. E file tax extension The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. E file tax extension   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). E file tax extension 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. E file tax extension 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). E file tax extension   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. E file tax extension   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. E file tax extension The rest is taxable. E file tax extension   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. E file tax extension If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. E file tax extension Annuity payments. E file tax extension   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. E file tax extension For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. E file tax extension 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. E file tax extension For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. E file tax extension Death benefits. E file tax extension    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. E file tax extension If you choose to receive an annuity, the payments are subject to tax as described above. E file tax extension 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. E file tax extension See Survivors and Beneficiaries , later. E file tax extension 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. E file tax extension 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. E file tax extension You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. E file tax extension You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. E file tax extension Your 457(b) plan may have a designated Roth account option. E file tax extension If so, you may be able to roll over amounts to the designated Roth account or make contributions. E file tax extension Elective deferrals to a designated Roth account are included in your income. E file tax extension Qualified distributions (explained later) are not included in your income. E file tax extension See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. E file tax extension This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. E file tax extension For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. E file tax extension Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. E file tax extension 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. E file tax extension Nonelective deferred compensation plans for nonemployees (independent contractors). E file tax extension Deferred compensation plans maintained by churches. E file tax extension Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. E file tax extension An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. E file tax extension 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. E file tax extension 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. E file tax extension Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. E file tax extension You may be entitled to a tax credit if you were permanently and totally disabled when you retired. E file tax extension For information on this credit, see Publication 524. E file tax extension Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. E file tax extension Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. E file tax extension 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. E file tax extension For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. E file tax extension 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. E file tax extension The premiums can be for coverage for you, your spouse, or dependents. E file tax extension The distribution must be made directly from the plan to the insurance provider. E file tax extension You can exclude from income the smaller of the amount of the insurance premiums or $3,000. E file tax extension You can only make this election for amounts that would otherwise be included in your income. E file tax extension The amount excluded from your income cannot be used to claim a medical expense deduction. E file tax extension 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. E file tax extension If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. E file tax extension The amount shown in box 2a of Form 1099-R does not reflect this exclusion. E file tax extension Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. E file tax extension Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. E file tax extension Enter “PSO” next to the appropriate line on which you report the taxable amount. E file tax extension 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. E file tax extension Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. E file tax extension These categories are treated differently for income tax purposes. E file tax extension 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. E file tax extension 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. E file tax extension 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. E file tax extension S. E file tax extension Railroad Retirement Board (RRB). E file tax extension 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. E file tax extension The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). E file tax extension It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. E file tax extension Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. E file tax extension 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. E file tax extension (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. E file tax extension ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. E file tax extension See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. E file tax extension Form RRB-1099-R is used for U. E file tax extension S. E file tax extension citizens, resident aliens, and nonresident aliens. E file tax extension Nonresident aliens. E file tax extension   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. E file tax extension Nonresident aliens are subject to mandatory U. E file tax extension S. E file tax extension tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. E file tax extension A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. E file tax extension See Tax withholding next for more information. E file tax extension   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. E file tax extension 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. E file tax extension For information on filing requirements for aliens, see Publication 519, U. E file tax extension S. E file tax extension Tax Guide for Aliens. E file tax extension For information on tax treaties between the United States and other countries that may reduce or eliminate U. E file tax extension S. E file tax extension tax on your benefits, see Publication 901, U. E file tax extension S. E file tax extension Tax Treaties. E file tax extension Tax withholding. E file tax extension   To request or change your income tax withholding from SSEB payments, U. E file tax extension S. E file tax extension citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. E file tax extension 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. E file tax extension If you are a nonresident alien or a U. E file tax extension S. E file tax extension 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. E file tax extension S. E file tax extension tax withholding. E file tax extension Nonresident U. E file tax extension S. E file tax extension citizens cannot elect to be exempt from withholding on payments delivered outside of the U. E file tax extension S. E file tax extension Help from the RRB. E file tax extension   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. E file tax extension S. E file tax extension consulate/Embassy if you reside outside the United States. E file tax extension You can visit the RRB on the Internet at www. E file tax extension rrb. E file tax extension gov. E file tax extension Form RRB-1099-R. E file tax extension   The following discussion explains the items shown on Form RRB-1099-R. E file tax extension 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. E file tax extension   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. E file tax extension   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. E file tax extension To determine if any of these rules apply to your benefits, see the discussions about them later. E file tax extension   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. E file tax extension Use distribution code “7” if you are asked for a distribution code. E file tax extension Distribution codes are not shown on Form RRB-1099-R. E file tax extension   There are three copies of this form. E file tax extension Copy B is to be included with your income tax return if federal income tax is withheld. E file tax extension Copy C is for your own records. E file tax extension Copy 2 is filed with your state, city, or local income tax return, when required. E file tax extension See the illustrated Copy B (Form RRB-1099-R) above. E file tax extension       Each beneficiary will receive his or her own Form RRB-1099-R. E file tax extension If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. E file tax extension So that you get your form timely, make sure the RRB always has your current mailing address. E file tax extension Please click here for the text description of the image. E file tax extension Form RRB-1099-R Box 1—Claim Number and Payee Code. E file tax extension   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. E file tax extension This is the number under which the RRB paid your benefits. E file tax extension Your payee code follows your claim number and is the last number in this box. E file tax extension It is used by the RRB to identify you under your claim number. E file tax extension In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. E file tax extension Box 2—Recipient's Identification Number. E file tax extension   This is the recipient's U. E file tax extension S. E file tax extension taxpayer identification number. E file tax extension 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. E file tax extension 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. E file tax extension The Instructions for Form W-7 explain how and when to apply. E file tax extension Box 3—Employee Contributions. E file tax extension   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. E file tax extension 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). E file tax extension (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. E file tax extension ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. E file tax extension It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. E file tax extension If this amount has changed, the change is retroactive. E file tax extension You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. E file tax extension If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. E file tax extension    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. E file tax extension Box 4—Contributory Amount Paid. E file tax extension   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. E file tax extension (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. E file tax extension ) This amount is the total contributory pension paid in 2013. E file tax extension It may be partly taxable and partly tax free or fully taxable. E file tax extension 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. E file tax extension Box 5—Vested Dual Benefit. E file tax extension   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. E file tax extension It is fully taxable. E file tax extension VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. E file tax extension Note. E file tax extension The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. E file tax extension Box 6—Supplemental Annuity. E file tax extension   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. E file tax extension It is fully taxable. E file tax extension Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. E file tax extension Box 7—Total Gross Paid. E file tax extension   This is the sum of boxes 4, 5, and 6. E file tax extension The amount represents the total pension paid in 2013. E file tax extension Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. E file tax extension Box 8—Repayments. E file tax extension   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. E file tax extension The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. E file tax extension It only includes repayments of benefits that were taxable to you. E file tax extension 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. E file tax extension If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. E file tax extension For more information about repayments, see Repayment of benefits received in an earlier year , later. E file tax extension    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. E file tax extension Box 9—Federal Income Tax Withheld. E file tax extension   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. E file tax extension Include this on your income tax return as tax withheld. E file tax extension 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. E file tax extension Determine the total amount of U. E file tax extension S. E file tax extension 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. E file tax extension Box 10—Rate of Tax. E file tax extension   If you are taxed as a U. E file tax extension S. E file tax extension citizen or resident alien, this box does not apply to you. E file tax extension 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. E file tax extension 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. E file tax extension Box 11—Country. E file tax extension   If you are taxed as a U. E file tax extension S. E file tax extension citizen or resident alien, this box does not apply to you. E file tax extension 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. E file tax extension 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. E file tax extension Box 12—Medicare Premium Total. E file tax extension   This is for information purposes only. E file tax extension The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. E file tax extension Medicare premium refunds are not included in the Medicare total. E file tax extension 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). E file tax extension 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. E file tax extension 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. E file tax extension Repayment of benefits received in an earlier year. E file tax extension   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. E file tax extension   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. E file tax extension The 2%-of-adjusted-gross-income limit applies to this deduction. E file tax extension You cannot take this deduction if you file Form 1040A. E file tax extension    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. E file tax extension For more information, see Repayments in Publication 525. E file tax extension Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. E file tax extension However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. E file tax extension (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. E file tax extension ) 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. E file tax extension See Estimated tax , later. E file tax extension 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. E file tax extension For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. E file tax extension 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. E file tax extension Choosing no withholding. E file tax extension   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. E file tax extension You can make this choice on Form W-4P for periodic and nonperiodic payments. E file tax extension This choice generally remains in effect until you revoke it. E file tax extension   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. E file tax extension   To choose not to have tax withheld, a U. E file tax extension S. E file tax extension citizen or resident alien must give the payer a home address in the United States or its possessions. E file tax extension Without that address, the payer must withhold tax. E file tax extension For example, the payer has to withhold tax if the recipient has provided a U. E file tax extension S. E file tax extension address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. E file tax extension S. E file tax extension home address. E file tax extension   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. E file tax extension S. E file tax extension citizen, a U. E file tax extension S. E file tax extension resident alien, or someone who left the country to avoid tax. E file tax extension But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. E file tax extension This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. E file tax extension For details, get Publication 519. E file tax extension Periodic payments. E file tax extension   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. E file tax extension 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). E file tax extension You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). E file tax extension If you do not, tax will be withheld as if you were married and claiming three withholding allowances. E file tax extension   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. E file tax extension   You must file a new withholding certificate to change the amount of withholding. E file tax extension Nonperiodic distributions. E file tax extension    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. E file tax extension You can also ask the payer to withhold an additional amount using Form W-4P. E file tax extension 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. E file tax extension Eligible rollover distribution. E file tax extension    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. E file tax extension You cannot choose not to have tax withheld from an eligible rollover distribution. E file tax extension 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. E file tax extension For more information about eligible rollover distributions, see Rollovers , later. E file tax extension Estimated tax. E file tax extension   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. E file tax extension 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. E file tax extension 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. E file tax extension For more information, get Publication 505, Tax Withholding and Estimated Tax. E file tax extension 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. E file tax extension See Publication 915. E file tax extension You can choose to have income tax withheld from those benefits. E file tax extension Use Form W-4V to make this choice. E file tax extension 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). E file tax extension 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. E file tax extension Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. E file tax extension 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). E file tax extension To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. E file tax extension This includes the amounts your employer contributed that were taxable to you when paid. E file tax extension (However, see Foreign employment contributions , later. E file tax extension ) 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). E file tax extension It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). E file tax extension From this total cost you must subtract the following amounts. E file tax extension 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. E file tax extension Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). E file tax extension 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. E file tax extension (See Simplified Method , later, for information on its required use. E file tax extension ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. E file tax extension (See General Rule , later, for information on its use. E file tax extension ) 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. E file tax extension For more information, see Publication 939. E file tax extension The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . E file tax extension Form 1099-R. E file tax extension 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. E file tax extension Annuity starting date defined. E file tax extension   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. E file tax extension Example. E file tax extension 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. E file tax extension The annuity starting date is July 1. E file tax extension 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. E file tax extension Designated Roth accounts. E file tax extension   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. E file tax extension Your cost will also include any in-plan Roth rollovers you included in income. E file tax extension Foreign employment contributions. E file tax extension   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. E file tax extension 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. E file tax extension Foreign employment contributions while a nonresident alien. E file tax extension   In determining your cost, special rules apply if you are a U. E file tax extension S. E file tax extension citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. E file tax extension 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. E file tax extension Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. E file tax extension 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). E file tax extension These payments are also known as amounts received as an annuity. E file tax extension If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. E file tax extension In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. E file tax extension 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). E file tax extension Designated Roth accounts. E file tax extension   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. E file tax extension This applies to both your cost in the account and income earned on that account. E file tax extension 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. E file tax extension   If the distribution is not a qualified distribution, the rules discussed in this section apply. E file tax extension The designated Roth account is treated as a separate contract. E file tax extension Period of participation. E file tax extension   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. E file tax extension Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. E file tax extension   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. E file tax extension   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. E file tax extension This is known as an in-plan Roth rollover. E file tax extension For more details, see In-plan Roth rollovers , later. E file tax extension 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). E file tax extension You did not pay anything or are not considered to have paid anything for your pension or annuity. E file tax extension Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. E file tax extension Your employer did not withhold contributions from your salary. E file tax extension You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). E file tax extension Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. E file tax extension You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. E file tax extension Deductible voluntary employee contributions. E file tax extension   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. E file tax extension Accumulated deductible voluntary employee contributions include net earnings on the contributions. E file tax extension If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. E file tax extension 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. E file tax extension 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. E file tax extension The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). E file tax extension You figure the tax-free part of the payment using one of the following methods. E file tax extension Simplified Method. E file tax extension 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). E file tax extension You cannot use this method if your annuity is paid under a nonqualified plan. E file tax extension General Rule. E file tax extension You must use this method if your annuity is paid under a nonqualified plan. E file tax extension You generally cannot use this method if your annuity is paid under a qualified plan. E file tax extension 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. E file tax extension If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. E file tax extension Qualified plan annuity starting before November 19, 1996. E file tax extension   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. E file tax extension If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. E file tax extension 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. E file tax extension Exclusion limit. E file tax extension   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. E file tax extension Once your annuity starting date is determined, it does not change. E file tax extension 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. E file tax extension That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. E file tax extension Exclusion limited to cost. E file tax extension   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. E file tax extension 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. E file tax extension This deduction is not subject to the 2%-of-adjusted-gross-income limit. E file tax extension Example 1. E file tax extension Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. E file tax extension The total cost of your annuity is $12,000. E file tax extension Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). E file tax extension After that, your annuity payments are generally fully taxable. E file tax extension Example 2. E file tax extension The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. E file tax extension You have recovered tax free only $9,600 (8 × $1,200) of your cost. E file tax extension An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. E file tax extension Exclusion not limited to cost. E file tax extension   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. E file tax extension 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. E file tax extension The total exclusion may be more than your cost. E file tax extension 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. E file tax extension 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. E file tax extension For any other annuity, this number is the number of monthly annuity payments under the contract. E file tax extension Who must use the Simplified Method. E file tax extension   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. E file tax extension You receive your pension or annuity payments from any of the following plans. E file tax extension A qualified employee plan. E file tax extension A qualified employee annuity. E file tax extension A tax-sheltered annuity plan (403(b) plan). E file tax extension On your annuity starting date, at least one of the following conditions applies to you. E file tax extension You are under age 75. E file tax extension You are entitled to less than 5 years of guaranteed payments. E file tax extension Guaranteed payments. E file tax extension   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. E file tax extension 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. E file tax extension Annuity starting before November 19, 1996. E file tax extension   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. E file tax extension 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 . E file tax extension Who cannot use the Simplified Method. E file tax extension   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. E file tax extension See General Rule , later. E file tax extension How to use the Simplified Method. E file tax extension    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. E file tax extension Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. E file tax extension   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. E file tax extension How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. E file tax extension 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. E file tax extension    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. E file tax extension Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. E file tax extension Single-life annuity. E file tax extension   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. E file tax extension Enter on line 3 the number shown for your age on your annuity starting date. E file tax extension This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. E file tax extension Multiple-lives annuity. E file tax extension   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. E file tax extension Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. E file tax extension 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. E file tax extension 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. E file tax extension Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. E file tax extension   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. E file tax extension 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. E file tax extension This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. E file tax extension Fixed-period annuity. E file tax extension   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. E file tax extension Line 6. E file tax extension   The amount on line 6 should include all amounts that could have been recovered in prior years. E file tax extension If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. E file tax extension Example. E file tax extension Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. E file tax extension Bill's annuity starting date is January 1, 2013. E file tax extension The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. E file tax extension Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. E file tax extension 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. E file tax extension 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. E file tax extension 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. E file tax extension His completed worksheet is shown later. E file tax extension Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. E file tax extension Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. E file tax extension The full amount of any annuity payments received after 310 payments are paid must be included in gross income. E file tax extension 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. E file tax extension This deduction is not subject to the 2%-of-adjusted-gross-income limit. E file tax extension Worksheet A. E file tax extension Simplified Method Worksheet for Bill Smith 1. E file tax extension Enter the total pension or annuity payments received this year. E file tax extension Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. E file tax extension $14,400 2. E file tax extension Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. E file tax extension * See Cost (Investment in the Contract) , earlier 2. E file tax extension 31,000   Note. E file tax extension 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). E file tax extension Otherwise, go to line 3. E file tax extension     3. E file tax extension Enter the appropriate number from Table 1 below. E file tax extension 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. E file tax extension 310 4. E file tax extension Divide line 2 by the number on line 3 4. E file tax extension 100 5. E file tax extension Multiply line 4 by the number of months for which this year's payments were made. E file tax extension If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. E file tax extension Otherwise, go to line 6 5. E file tax extension 1,200 6. E file tax extension Enter any amount previously recovered tax free in years after 1986. E file tax extension This is the amount shown on line 10 of your worksheet for last year 6. E file tax extension -0- 7. E file tax extension Subtract line 6 from line 2 7. E file tax extension 31,000 8. E file tax extension Enter the smaller of line 5 or line 7 8. E file tax extension 1,200 9. E file tax extension Taxable amount for year. E file tax extension Subtract line 8 from line 1. E file tax extension Enter the result, but not less than zero. E file tax extension Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. E file tax extension Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. E file tax extension 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. E file tax extension $13,200 10. E file tax extension Was your annuity starting date before 1987? □ Yes. E file tax extension STOP. E file tax extension Do not complete the rest of this worksheet. E file tax extension  ☑ No. E file tax extension Add lines 6 and 8. E file tax extension This is the amount you have recovered tax free through 2013. E file tax extension You will need this number if you need to fill out this worksheet next year 10. E file tax extension 1,200 11. E file tax extension Balance of cost to be recovered. E file tax extension Subtract line 10 from line 2. E file tax extension If zero, you will not have to complete this worksheet next year. E file tax extension The payments you receive next year will generally be fully taxable 11. E file tax extension $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. E file tax extension           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. E file tax extension . E file tax extension . E file tax extension BEFORE November 19, 1996, enter on line 3. E file tax extension . E file tax extension . E file tax extension AFTER November 18, 1996, enter on line 3. E file tax extension . E file tax extension . E file tax extension     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. E file tax extension . E file tax extension . E file tax extension THEN enter on line 3. E file tax extension . E file tax extension . E file tax extension     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. E file tax extension   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. E file tax extension Figure your share by taking the following steps. E file tax extension Complete your worksheet through line 4 to figure the monthly tax-free amount. E file tax extension Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. E file tax extension Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. E file tax extension The result is your share of the monthly tax-free amount. E file tax extension   Replace the amount on line 4 of the worksheet with the result in (3) above. E file tax extension Enter that amount on line 4 of your worksheet each year. E file tax extension 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. E file tax extension Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. E file tax extension To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. E file tax extension Who must use the General Rule. E file tax extension   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. E file tax extension Annuity starting before November 19, 1996. E file tax extension   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. E file tax extension You also had to use it for any fixed-period annuity. E file tax extension If you did not have to use the General Rule, you could have chosen to use it. E file tax extension 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. E file tax extension   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. E file tax extension Who cannot use the General Rule. E file tax extension   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. E file tax extension See Simplified Method , earlier. E file tax extension More information. E file tax extension   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. E file tax extension Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. E file tax extension Nonperiodic distributions are also known as amounts not received as an annuity. E file tax extension They include all payments other than periodic payments and corrective distributions. E file tax extension For example, the following items are treated as nonperiodic distributions. E file tax extension Cash withdrawals. E file tax extension Distributions of current earnings (dividends) on your investment. E file tax extension 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. E file tax extension Certain loans. E file tax extension See Loans Treated as Distributions , later. E file tax extension The value of annuity contracts transferred without full and adequate consideration. E file tax extension See Transfers of Annuity Contracts , later. E file tax extension Corrective distributions of excess plan contributions. E file tax extension   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. E file tax extension To correct an excess, your plan may distribute it to you (along with any income earned on the excess). E file tax extension Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. E file tax extension 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. E file tax extension    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. E file tax extension   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. E file tax extension 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. E file tax extension 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. E file tax extension 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. E file tax extension 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. E file tax extension See Rollovers, later. E file tax extension 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. E file tax extension See Lump-Sum Distributions, later. E file tax extension Annuity starting date. E file tax extension   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. E file tax extension Distributions of employer securities. E file tax extension    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. E file tax extension The NUA is the net increase in the securities' value while they were in the trust. E file tax extension This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. E file tax extension   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. E file tax extension    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. E file tax extension    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