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E file taxes Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. E file taxes Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. E file taxes Method 2. E file taxes How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. E file taxes In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. E file taxes You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. E file taxes Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. E file taxes If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. E file taxes These wages must be included on line 7 of Form 1040. E file taxes See Form 8919 for more information. E file taxes Childcare providers. E file taxes   If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. E file taxes If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. E file taxes You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. E file taxes Babysitting. E file taxes   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. E file taxes Bankruptcy. E file taxes   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. E file taxes Your W-2 will show your total wages and withheld income tax for the year. E file taxes On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. E file taxes Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. E file taxes If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. E file taxes   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. E file taxes For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. E file taxes   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. E file taxes The statement must show the allocation and describe the method used to make the allocation. E file taxes For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. E file taxes R. E file taxes B. E file taxes 596, available at www. E file taxes irs. E file taxes gov/irb/2006-40_IRB/ar12. E file taxes html. E file taxes Miscellaneous Compensation This section discusses many types of employee compensation. E file taxes The subjects are arranged in alphabetical order. E file taxes Advance commissions and other earnings. E file taxes   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. E file taxes    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. E file taxes If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. E file taxes See Repayments , later. E file taxes Allowances and reimbursements. E file taxes    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. E file taxes If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. E file taxes Back pay awards. E file taxes   Include in income amounts you are awarded in a settlement or judgment for back pay. E file taxes These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. E file taxes They should be reported to you by your employer on Form W-2. E file taxes Bonuses and awards. E file taxes    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. E file taxes These include prizes such as vacation trips for meeting sales goals. E file taxes If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. E file taxes However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. E file taxes Employee achievement award. E file taxes   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. E file taxes However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. E file taxes Your employer can tell you whether your award is a qualified plan award. E file taxes Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. E file taxes   However, the exclusion does not apply to the following awards. E file taxes A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. E file taxes A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. E file taxes Example. E file taxes Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. E file taxes Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. E file taxes However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 − $1,600) in his income. E file taxes Differential wage payments. E file taxes   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. E file taxes These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. E file taxes The payments are reported as wages on Form W-2. E file taxes Government cost-of-living allowances. E file taxes   Most payments received by U. E file taxes S. E file taxes Government civilian employees for working abroad are taxable. E file taxes However, certain cost-of-living allowances are tax free. E file taxes Publication 516, U. E file taxes S. E file taxes Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. E file taxes Nonqualified deferred compensation plans. E file taxes   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. E file taxes This amount is shown on Form W-2, box 12, using code Y. E file taxes This amount is not included in your income. E file taxes   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. E file taxes This amount is included in your wages shown on Form W-2, box 1. E file taxes It is also shown on Form W-2, box 12, using code Z. E file taxes Nonqualified deferred compensation plans of nonqualified entities. E file taxes   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. E file taxes For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. E file taxes A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. E file taxes Note received for services. E file taxes   If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. E file taxes When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. E file taxes Do not include that part again in your income. E file taxes Include the rest of the payment in your income in the year of payment. E file taxes   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. E file taxes Severance pay. E file taxes   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. E file taxes Accrued leave payment. E file taxes   If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. E file taxes   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. E file taxes You can reduce gross wages by the amount you repaid in the same tax year in which you received it. E file taxes Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. E file taxes Outplacement services. E file taxes   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. E file taxes    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). E file taxes Sick pay. E file taxes   Pay you receive from your employer while you are sick or injured is part of your salary or wages. E file taxes In addition, you must include in your income sick pay benefits received from any of the following payers. E file taxes A welfare fund. E file taxes A state sickness or disability fund. E file taxes An association of employers or employees. E file taxes An insurance company, if your employer paid for the plan. E file taxes However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. E file taxes For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. E file taxes Social security and Medicare taxes paid by employer. E file taxes   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. E file taxes The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. E file taxes However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. E file taxes Stock appreciation rights. E file taxes   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. E file taxes When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. E file taxes You include the cash payment in income in the year you use the right. E file taxes Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. E file taxes Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. E file taxes See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. E file taxes Recipient of fringe benefit. E file taxes   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. E file taxes You are considered to be the recipient even if it is given to another person, such as a member of your family. E file taxes An example is a car your employer gives to your spouse for services you perform. E file taxes The car is considered to have been provided to you and not to your spouse. E file taxes   You do not have to be an employee of the provider to be a recipient of a fringe benefit. E file taxes If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. E file taxes Provider of benefit. E file taxes   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. E file taxes The provider can be a client or customer of an independent contractor. E file taxes Accounting period. E file taxes   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. E file taxes Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. E file taxes The general rule: benefits are reported for a full calendar year (January 1–December 31). E file taxes The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. E file taxes For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. E file taxes Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. E file taxes   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). E file taxes Form W-2. E file taxes   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. E file taxes Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). E file taxes However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). E file taxes Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. E file taxes Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . E file taxes For information on the items covered in this section, other than Long-term care coverage , see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. E file taxes Long-term care coverage. E file taxes   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. E file taxes However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. E file taxes This amount will be reported as wages in box 1 of your Form W-2. E file taxes Archer MSA contributions. E file taxes    Contributions by your employer to your Archer MSA generally are not included in your income. E file taxes Their total will be reported in box 12 of Form W-2, with code R. E file taxes You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. E file taxes File the form with your return. E file taxes Health flexible spending arrangement (health FSA). E file taxes   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. E file taxes   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. E file taxes The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. E file taxes For more information, see Notice 2012-40, 2012-26 I. E file taxes R. E file taxes B. E file taxes 1046, available at www. E file taxes irs. E file taxes gov/irb/2012-26 IRB/ar09. E file taxes html. E file taxes Health reimbursement arrangement (HRA). E file taxes   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. E file taxes Health savings accounts (HSA). E file taxes   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. E file taxes Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. E file taxes Contributions made by your employer are not included in your income. E file taxes Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. E file taxes Distributions not used for qualified medical expenses are included in your income. E file taxes See Publication 969 for the requirements of an HSA. E file taxes   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. E file taxes The contributions are treated as a distribution of money and are not included in the partner's gross income. E file taxes Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. E file taxes In both situations, the partner can deduct the contribution made to the partner's HSA. E file taxes   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. E file taxes The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. E file taxes Qualified HSA funding distribution. E file taxes   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. E file taxes See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. E file taxes Failure to maintain eligibility. E file taxes   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. E file taxes If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. E file taxes This income is also subject to an additional 10% tax. E file taxes Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. E file taxes See Instructions for Form 8839, Qualified Adoption Expenses, for more information. E file taxes Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. E file taxes They also are included as social security and Medicare wages in boxes 3 and 5. E file taxes However, they are not included as wages in box 1. E file taxes To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. E file taxes File the form with your return. E file taxes Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. E file taxes The gym must be used primarily by employees, their spouses, and their dependent children. E file taxes If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. E file taxes De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. E file taxes In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. E file taxes Also see Employee Discounts , later. E file taxes Holiday gifts. E file taxes   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. E file taxes However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. E file taxes Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. E file taxes Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. E file taxes The amount you can exclude is limited to the lesser 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 taxes Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. E file taxes Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. E file taxes To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. E file taxes See the Instructions for Form 2441 for more information. E file taxes Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. E file taxes For more information, see Publication 970. E file taxes Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. E file taxes The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. E file taxes However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). E file taxes The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. E file taxes For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. E file taxes (Ask your employer for this percentage. E file taxes ) For a discount on services, 20%. E file taxes Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. E file taxes If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). E file taxes Qualified retirement planning services paid for you by your employer may be excluded from your income. E file taxes For more information, see Retirement Planning Services , later. E file taxes Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. E file taxes However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. E file taxes For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. E file taxes If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. E file taxes Also, it is shown separately in box 12 with code C. E file taxes Group-term life insurance. E file taxes   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. E file taxes Permanent benefits. E file taxes   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. E file taxes Your employer should be able to tell you the amount to include in your income. E file taxes Accidental death benefits. E file taxes   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. E file taxes Former employer. E file taxes   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. E file taxes Also, it is shown separately in box 12 with code C. E file taxes Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. E file taxes You must pay these taxes with your income tax return. E file taxes Include them on line 60, Form 1040, and follow the instructions forline 60. E file taxes For more information, see the Instructions for Form 1040. E file taxes Two or more employers. E file taxes   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. E file taxes If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. E file taxes You must figure how much to include in your income. E file taxes Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. E file taxes Figuring the taxable cost. E file taxes    Use the following worksheet to figure the amount to include in your income. E file taxes   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. E file taxes However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . E file taxes Worksheet 1. E file taxes Figuring the Cost of Group-Term Life Insurance To Include in Income 1. E file taxes Enter the total amount of your insurance coverage from your employer(s) 1. E file taxes   2. E file taxes Limit on exclusion for employer-provided group-term life insurance coverage 2. E file taxes 50,000 3. E file taxes Subtract line 2 from line 1 3. E file taxes   4. E file taxes Divide line 3 by $1,000. E file taxes Figure to the nearest tenth 4. E file taxes   5. E file taxes Go to Table 1. E file taxes Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. E file taxes   6. E file taxes Multiply line 4 by line 5 6. E file taxes     7. E file taxes Enter the number of full months of coverage at this cost 7. E file taxes   8. E file taxes Multiply line 6 by line 7 8. E file taxes   9. E file taxes Enter the premiums you paid per month 9. E file taxes       10. E file taxes Enter the number of months you paid the  premiums 10. E file taxes       11. E file taxes Multiply line 9 by line 10. E file taxes 11. E file taxes   12. E file taxes Subtract line 11 from line 8. E file taxes Include this amount in your income as wages 12. E file taxes   Table 1. E file taxes Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . E file taxes 05     25 through 29 . E file taxes 06     30 through 34 . E file taxes 08     35 through 39 . E file taxes 09     40 through 44 . E file taxes 10     45 through 49 . E file taxes 15     50 through 54 . E file taxes 23     55 through 59 . E file taxes 43     60 through 64 . E file taxes 66     65 through 69 1. E file taxes 27     70 and older 2. E file taxes 06   Example. E file taxes You are 51 years old and work for employers A and B. E file taxes Both employers provide group-term life insurance coverage for you for the entire year. E file taxes Your coverage is $35,000 with employer A and $45,000 with employer B. E file taxes You pay premiums of $4. E file taxes 15 a month under the employer B group plan. E file taxes You figure the amount to include in your income as follows. E file taxes   Worksheet 1. E file taxes Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. E file taxes Enter the total amount of your insurance coverage from your employer(s) 1. E file taxes 80,000 2. E file taxes Limit on exclusion for employer-provided group-term life insurance coverage 2. E file taxes 50,000 3. E file taxes Subtract line 2 from line 1 3. E file taxes 30,000 4. E file taxes Divide line 3 by $1,000. E file taxes Figure to the nearest tenth 4. E file taxes 30. E file taxes 0 5. E file taxes Go to Table 1. E file taxes Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. E file taxes . E file taxes 23 6. E file taxes Multiply line 4 by line 5 6. E file taxes 6. E file taxes 90 7. E file taxes Enter the number of full months of coverage at this cost. E file taxes 7. E file taxes 12 8. E file taxes Multiply line 6 by line 7 8. E file taxes 82. E file taxes 80 9. E file taxes Enter the premiums you paid per month 9. E file taxes 4. E file taxes 15     10. E file taxes Enter the number of months you paid the premiums 10. E file taxes 12     11. E file taxes Multiply line 9 by line 10. E file taxes 11. E file taxes 49. E file taxes 80 12. E file taxes Subtract line 11 from line 8. E file taxes Include this amount in your income as wages 12. E file taxes 33. E file taxes 00 The total amount to include in income for the cost of excess group-term life insurance is $33. E file taxes Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. E file taxes You must add it to the wages shown on your Forms W-2 and include the total on your return. E file taxes Entire cost excluded. E file taxes   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. E file taxes You are permanently and totally disabled and have ended your employment. E file taxes Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. E file taxes A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. E file taxes (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. E file taxes ) The plan existed on January 1, 1984, and: You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. E file taxes Entire cost taxed. E file taxes   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. E file taxes The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. E file taxes You are a key employee and your employer's plan discriminates in favor of key employees. E file taxes Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. E file taxes The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. E file taxes The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. E file taxes (You must accept it in order to be able to properly perform your duties. E file taxes ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. E file taxes See De Minimis (Minimal) Benefits , earlier. E file taxes Faculty lodging. E file taxes   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. E file taxes However, the lodging must be qualified campus lodging, and you must pay an adequate rent. E file taxes Academic health center. E file taxes   This is an organization that meets the following conditions. E file taxes Its principal purpose or function is to provide medical or hospital care or medical education or research. E file taxes It receives payments for graduate medical education under the Social Security Act. E file taxes One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. E file taxes Qualified campus lodging. E file taxes   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. E file taxes The lodging must be located on or near a campus of the educational institution or academic health center. E file taxes Adequate rent. E file taxes   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. E file taxes If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. E file taxes   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. E file taxes Example. E file taxes Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. E file taxes The house is appraised at $200,000. E file taxes The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. E file taxes Carl pays an annual rent of $11,000. E file taxes Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). E file taxes If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). E file taxes Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. E file taxes See Publication 521 for more information. E file taxes No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). E file taxes In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. E file taxes Example. E file taxes You are employed as a flight attendant for a company that owns both an airline and a hotel chain. E file taxes Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. E file taxes The value of the personal flight is not included in your income. E file taxes However, the value of the hotel room is included in your income because you do not work in the hotel business. E file taxes Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. E file taxes Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. E file taxes You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. E file taxes Also, see Financial Counseling Fees , earlier. E file taxes Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. E file taxes A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. E file taxes Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. E file taxes However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. E file taxes Exclusion limit. E file taxes   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. E file taxes   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. E file taxes   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. E file taxes   If the benefits have a value that is more than these limits, the excess must be included in your income. E file taxes You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. E file taxes Commuter highway vehicle. E file taxes   This is a highway vehicle that seats at least six adults (not including the driver). E file taxes At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). E file taxes Transit pass. E file taxes   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. E file taxes Qualified parking. E file taxes   This is parking provided to an employee at or near the employer's place of business. E file taxes It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. E file taxes It does not include parking at or near the employee's home. E file taxes Qualified bicycle commuting. E file taxes   This is reimbursement based on the number of qualified bicycle commuting months for the year. E file taxes A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. E file taxes The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. E file taxes Tuition Reduction You can exclude a qualified tuition reduction from your income. E file taxes This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. E file taxes For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. E file taxes Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. E file taxes For more information, see Publication 970. E file taxes Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. E file taxes Example. E file taxes You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. E file taxes The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. E file taxes Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. E file taxes For an exception, see Group-Term Life Insurance , earlier. E file taxes General valuation rule. E file taxes   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. E file taxes If you pay fair market value for a fringe benefit, no amount is included in your income. E file taxes Fair market value. E file taxes   The fair market value of a fringe benefit is determined by all the facts and circumstances. E file taxes It is the amount you would have to pay a third party to buy or lease the benefit. E file taxes This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. E file taxes Employer-provided vehicles. E file taxes   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. E file taxes   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. E file taxes An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. E file taxes The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. E file taxes Flights on employer-provided aircraft. E file taxes   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. E file taxes   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. E file taxes The division must be based on all the facts, including which employee or employees control the use of the aircraft. E file taxes Special valuation rules. E file taxes   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. E file taxes If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. E file taxes You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. E file taxes   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. E file taxes The special valuation rules are the following. E file taxes The automobile lease rule. E file taxes The vehicle cents-per-mile rule. E file taxes The commuting rule. E file taxes The unsafe conditions commuting rule. E file taxes The employer-operated eating-facility rule. E file taxes   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. E file taxes    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. E file taxes 61-21(g) and 1. E file taxes 61-21(h) of the regulations. E file taxes Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. E file taxes (Your employer can tell you whether your retirement plan is qualified. E file taxes ) However, the cost of life insurance coverage included in the plan may have to be included. E file taxes See Group-Term Life Insurance , earlier, under Fringe Benefits. E file taxes If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. E file taxes However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. E file taxes For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. E file taxes S. E file taxes Civil Service Retirement Benefits, if you are a federal employee or retiree). E file taxes Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. E file taxes The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. E file taxes An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. E file taxes However, it is included in wages subject to social security and Medicare taxes. E file taxes Elective deferrals include elective contributions to the following retirement plans. E file taxes Cash or deferred arrangements (section 401(k) plans). E file taxes The Thrift Savings Plan for federal employees. E file taxes Salary reduction simplified employee pension plans (SARSEP). E file taxes Savings incentive match plans for employees (SIMPLE plans). E file taxes Tax-sheltered annuity plans (403(b) plans). E file taxes Section 501(c)(18)(D) plans. E file taxes (But see Reporting by employer , later. E file taxes ) Section 457 plans. E file taxes Qualified automatic contribution arrangements. E file taxes   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. E file taxes You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. E file taxes The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. E file taxes   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. E file taxes Overall limit on deferrals. E file taxes   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. E file taxes The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. E file taxes Amounts deferred under specific plan limits are part of the overall limit on deferrals. E file taxes   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. E file taxes However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. E file taxes Catch-up contributions. E file taxes   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. E file taxes For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. E file taxes   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. E file taxes SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. E file taxes Section 457 plans, see Limit for deferrals under section 457 plans , later. E file taxes Limit for deferrals under SIMPLE plans. E file taxes   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. E file taxes Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. E file taxes Limit for tax-sheltered annuities. E file taxes   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. E file taxes However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. E file taxes $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. E file taxes   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. E file taxes   For more information, see Publication 571. E file taxes Limit for deferral under section 501(c)(18) plans. E file taxes   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. E file taxes Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. E file taxes Limit for deferrals under section 457 plans. E file taxes   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. E file taxes However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. E file taxes See Increased limit , later. E file taxes Includible compensation. E file taxes   This is the pay you received for the year from the employer who maintained the section 457 plan. E file taxes In most cases, it includes all the following payments. E file taxes Wages and salaries. E file taxes Fees for professional services. E file taxes The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. E file taxes Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. E file taxes Commissions and tips. E file taxes Fringe benefits. E file taxes Bonuses. E file taxes Employer contributions (elective deferrals) to: The section 457 plan. E file taxes Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. E file taxes A salary reduction simplified employee pension (SARSEP). E file taxes A tax-sheltered annuity (section 403(b) plan). E file taxes A savings incentive match plan for employees (SIMPLE plan). E file taxes A section 125 cafeteria plan. E file taxes   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. E file taxes Your wages as defined for income tax withholding purposes. E file taxes Your wages as reported in box 1 of Form W-2. E file taxes Your wages that are subject to social security withholding (including elective deferrals). E file taxes Increased limit. E file taxes   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). E file taxes Catch-up contributions. E file taxes   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. E file taxes If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. E file taxes However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. E file taxes Designated Roth contributions. E file taxes   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. E file taxes Designated Roth contributions are treated as elective deferrals, except that they are included in income. E file taxes Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. E file taxes   Qualified distributions from a Roth plan are not included in income. E file taxes In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. E file taxes Reporting by employer. E file taxes   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. E file taxes Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. E file taxes Section 501(c)(18)(D) contributions. E file taxes   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. E file taxes The amount you contributed should be identified with code “H” in box 12. E file taxes You may deduct the amount deferred subject to the limits that apply. E file taxes Include your deduction in the total on Form 1040, line 36. E file taxes Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. E file taxes Designated Roth contributions. E file taxes    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. E file taxes Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. E file taxes Excess deferrals. E file taxes   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. E file taxes If the plan permits, the excess amount will be distributed to you. E file taxes If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. E file taxes You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. E file taxes The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. E file taxes   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. E file taxes File Form 1040 to add the excess deferral amount to your wages on line 7. E file taxes Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. E file taxes Excess not distributed. E file taxes   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. E file taxes Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. E file taxes Excess distributed to you. E file taxes   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. E file taxes If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. E file taxes Any income on the excess deferral taken out is taxable in the tax year in which you take it out. E file taxes If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. E file taxes    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. E file taxes Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. E file taxes If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. E file taxes Add the excess deferral amount to your wages on your 2013 tax return. E file taxes If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. E file taxes Do not add this amount to your wages on your 2013 return. E file taxes If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. E file taxes If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. E file taxes S. E file taxes Individual Income Tax Return. E file taxes If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. E file taxes If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. E file taxes Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. E file taxes Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. E file taxes Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. E file taxes ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. E file taxes It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. E file taxes Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. E file taxes If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. E file taxes You must include the excess contributions in your income as wages on Form 1040, line 7. E file taxes You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. E file taxes If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. E file taxes The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. E file taxes You should receive a Form 1099-R for the year the excess contributions are distributed to you. E file taxes Add the distribution to your wages for that year. E file taxes Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. E file taxes It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. E file taxes Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. E file taxes Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. E file taxes A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. E file taxes A corrective payment consisting of your after-tax contributions is not taxable. E file taxes If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. E file taxes Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. E file taxes Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. E file taxes Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. E file taxes It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. E file taxes Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. E file taxes The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. E file taxes Your employer can tell you which kind of option you hold. E file taxes Nonstatutory Stock Options Grant of option. E file taxes   If you are granted a nonstatutory stock option, you may have income when you receive the option. E file taxes The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. E file taxes The fair market value of an option can be readily determined if it is actively traded on an established market. E file taxes    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. E file taxes You can transfer the option. E file taxes You can exercise the option immediately in full. E file taxes The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. E file taxes The fair market value of the option privilege can be readily determined. E file taxes The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. E file taxes For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. E file taxes The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. E file taxes If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. E file taxes For more information on the excise tax, see Internal Revenue Code section 4985. E file taxes Option with readily determinable value. E file taxes   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. E file taxes See Restricted Property , later, for rules on how much income to include and when to include it. E file taxes However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. E file taxes Option without readily determinable value. E file taxes   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. E file taxes    Exercise or transfer of option. E file taxes   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. E file taxes Option with readily determinable value. E file taxes   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. E file taxes Option without readily determinable value. E file taxes   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope
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Supreme Court of the United States

The U.S. Supreme Court is the final appellate court of the U.S. judicial system, having the power to review and overturn the decisions of lower courts. The Supreme Court also has original jurisdiction (being the first and final court to hear a case) in certain cases involving public officials, ambassadors, or disputes between states.

Contact the Agency or Department

Website: Supreme Court of the United States

Address: 1 First St NE
Washington, DC 20543

Phone Number: (202) 479-3000(202) 479-3030 (Visitor Information)

TTY: (202) 479-3472

The E File Taxes

E file taxes Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. E file taxes Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. E file taxes Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. E file taxes Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. E file taxes Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. E file taxes Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. E file taxes C Campaign contributions, Lobbying and political activities. E file taxes , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. E file taxes Check-writing fees, Check-Writing Fees on Personal Account Claim of right repayments, Repayments Under Claim of Right Clerical help, deductibility of, Clerical Help and Office Rent Clothes Protective, Protective clothing. E file taxes Work, Work Clothes and Uniforms Club dues, Club Dues Commissions, Commissions Commuting expenses, Commuting Expenses Computers Depreciation, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Convenience fees, Credit or Debit Card Convenience Fees Criminal prosecutions Travel expenses for federal staff, Federal crime investigation and prosecution. E file taxes D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. E file taxes Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. E file taxes Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. E file taxes Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. E file taxes Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. E file taxes Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. E file taxes Educator Expenses, Eligible educator. E file taxes Employee business (see Employee business expenses) Entertainment, Meals and entertainment. E file taxes Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. E file taxes Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. E file taxes , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. E file taxes Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. E file taxes F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. E file taxes Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. E file taxes Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. E file taxes Form 4562 Depreciation and amortization, Reporting your depreciation deduction. E file taxes , Depreciation. E file taxes , Computer used in a home office. E file taxes Free tax services, Free help with your tax return. E file taxes Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. E file taxes State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. E file taxes Expenses, Home Office Principal place of business, Principal place of business. E file taxes Travel and transportation expenses, Home office. E file taxes I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. E file taxes K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. E file taxes Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. E file taxes , Lobbying Expenses, Exceptions. E file taxes Local transportation, Local transportation expenses. E file taxes Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. E file taxes Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. E file taxes P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. E file taxes , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. E file taxes Prosecution travel expenses, Federal crime investigation and prosecution. E file taxes Protective clothing, Protective clothing. E file taxes Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. E file taxes Computer used in a home office, Computer used in a home office. E file taxes Depreciation, Depreciation. E file taxes Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. E file taxes Impairment-related work expenses, Impairment-related work expenses. E file taxes Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. E file taxes Research expenses, Research Expenses of a College Professor Résumé, Résumé. E file taxes Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. E file taxes , Additional information. E file taxes Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. E file taxes Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. E file taxes Education, Travel as education. E file taxes Indefinite work assignments, Indefinite work assignment. E file taxes Job search, Travel and transportation expenses. E file taxes Local transportation, Local transportation expenses. E file taxes Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. E file taxes Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. E file taxes Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. E file taxes W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications