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File 2012 state taxes online free 13. File 2012 state taxes online free   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. File 2012 state taxes online free It is divided into the following sections. File 2012 state taxes online free Cost basis. File 2012 state taxes online free Adjusted basis. File 2012 state taxes online free Basis other than cost. File 2012 state taxes online free Your basis is the amount of your investment in property for tax purposes. File 2012 state taxes online free Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. File 2012 state taxes online free Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. File 2012 state taxes online free If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. File 2012 state taxes online free Only the basis allocated to the business or investment use of the property can be depreciated. File 2012 state taxes online free Your original basis in property is adjusted (increased or decreased) by certain events. File 2012 state taxes online free For example, if you make improvements to the property, increase your basis. File 2012 state taxes online free If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. File 2012 state taxes online free Keep accurate records of all items that affect the basis of your property. File 2012 state taxes online free For more information on keeping records, see chapter 1. File 2012 state taxes online free Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. File 2012 state taxes online free The cost is the amount you pay in cash, debt obligations, other property, or services. File 2012 state taxes online free Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). File 2012 state taxes online free In addition, the basis of real estate and business assets may include other items. File 2012 state taxes online free Loans with low or no interest. File 2012 state taxes online free    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. File 2012 state taxes online free You generally have unstated interest if your interest rate is less than the applicable federal rate. File 2012 state taxes online free   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. File 2012 state taxes online free Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. File 2012 state taxes online free If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. File 2012 state taxes online free Lump sum purchase. File 2012 state taxes online free   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. File 2012 state taxes online free Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. File 2012 state taxes online free Figure the basis of each asset by multiplying the lump sum by a fraction. File 2012 state taxes online free The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. File 2012 state taxes online free    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. File 2012 state taxes online free Fair market value (FMV). File 2012 state taxes online free   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. File 2012 state taxes online free Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. File 2012 state taxes online free Assumption of mortgage. File 2012 state taxes online free   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. File 2012 state taxes online free Settlement costs. File 2012 state taxes online free   Your basis includes the settlement fees and closing costs you paid for buying the property. File 2012 state taxes online free (A fee for buying property is a cost that must be paid even if you buy the property for cash. File 2012 state taxes online free ) Do not include fees and costs for getting a loan on the property in your basis. File 2012 state taxes online free   The following are some of the settlement fees or closing costs you can include in the basis of your property. File 2012 state taxes online free Abstract fees (abstract of title fees). File 2012 state taxes online free Charges for installing utility services. File 2012 state taxes online free Legal fees (including fees for the title search and preparation of the sales contract and deed). File 2012 state taxes online free Recording fees. File 2012 state taxes online free Survey fees. File 2012 state taxes online free Transfer taxes. File 2012 state taxes online free Owner's title insurance. File 2012 state taxes online free Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. File 2012 state taxes online free   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. File 2012 state taxes online free   The following are some of the settlement fees and closing costs you cannot include in the basis of property. File 2012 state taxes online free Casualty insurance premiums. File 2012 state taxes online free Rent for occupancy of the property before closing. File 2012 state taxes online free Charges for utilities or other services related to occupancy of the property before closing. File 2012 state taxes online free Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. File 2012 state taxes online free Fees for refinancing a mortgage. File 2012 state taxes online free Real estate taxes. File 2012 state taxes online free   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. File 2012 state taxes online free You cannot deduct them as an expense. File 2012 state taxes online free    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. File 2012 state taxes online free Do not include that amount in the basis of your property. File 2012 state taxes online free If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. File 2012 state taxes online free Points. File 2012 state taxes online free   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. File 2012 state taxes online free Generally, you deduct the points over the term of the loan. File 2012 state taxes online free For more information on how to deduct points, see chapter 23. File 2012 state taxes online free Points on home mortgage. File 2012 state taxes online free   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. File 2012 state taxes online free If certain requirements are met, you can deduct the points in full for the year in which they are paid. File 2012 state taxes online free Reduce the basis of your home by any seller-paid points. File 2012 state taxes online free Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. File 2012 state taxes online free The result is the adjusted basis. File 2012 state taxes online free Increases to Basis Increase the basis of any property by all items properly added to a capital account. File 2012 state taxes online free Examples of items that increase basis are shown in Table 13-1. File 2012 state taxes online free These include the items discussed below. File 2012 state taxes online free Improvements. File 2012 state taxes online free   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. File 2012 state taxes online free For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. File 2012 state taxes online free Assessments for local improvements. File 2012 state taxes online free   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. File 2012 state taxes online free Do not deduct them as taxes. File 2012 state taxes online free However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. File 2012 state taxes online free Example. File 2012 state taxes online free Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. File 2012 state taxes online free Add the assessment to your property's basis. File 2012 state taxes online free In this example, the assessment is a depreciable asset. File 2012 state taxes online free Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. File 2012 state taxes online free Examples of items that decrease basis are shown in Table 13-1. File 2012 state taxes online free These include the items discussed below. File 2012 state taxes online free Table 13-1. File 2012 state taxes online free Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. File 2012 state taxes online free   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. File 2012 state taxes online free    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. File 2012 state taxes online free   For more information on casualty and theft losses, see chapter 25. File 2012 state taxes online free Depreciation and section 179 deduction. File 2012 state taxes online free   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. File 2012 state taxes online free   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. File 2012 state taxes online free Example. File 2012 state taxes online free You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. File 2012 state taxes online free You added an improvement to the duplex that cost $10,000. File 2012 state taxes online free In February last year, the duplex was damaged by fire. File 2012 state taxes online free Up to that time, you had been allowed depreciation of $23,000. File 2012 state taxes online free You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. File 2012 state taxes online free You deducted a casualty loss of $1,000 on your income tax return for last year. File 2012 state taxes online free You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. File 2012 state taxes online free You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. File 2012 state taxes online free Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. File 2012 state taxes online free Your basis in the land is its original cost of $5,000. File 2012 state taxes online free Easements. File 2012 state taxes online free   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. File 2012 state taxes online free It reduces the basis of the affected part of the property. File 2012 state taxes online free If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. File 2012 state taxes online free   If the gain is on a capital asset, see chapter 16 for information about how to report it. File 2012 state taxes online free If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. File 2012 state taxes online free Exclusion of subsidies for energy conservation measures. File 2012 state taxes online free   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. File 2012 state taxes online free Reduce the basis of the property for which you received the subsidy by the excluded amount. File 2012 state taxes online free For more information about this subsidy, see chapter 12. File 2012 state taxes online free Postponed gain from sale of home. File 2012 state taxes online free    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. File 2012 state taxes online free For more information on the rules for the sale of a home, see chapter 15. File 2012 state taxes online free Basis Other Than Cost There are many times when you cannot use cost as basis. File 2012 state taxes online free In these cases, the fair market value or the adjusted basis of the property can be used. File 2012 state taxes online free Fair market value (FMV) and adjusted basis were discussed earlier. File 2012 state taxes online free Property Received for Services If you receive property for your services, include the FMV of the property in income. File 2012 state taxes online free The amount you include in income becomes your basis. File 2012 state taxes online free If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. File 2012 state taxes online free Restricted property. File 2012 state taxes online free   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. File 2012 state taxes online free However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. File 2012 state taxes online free Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). File 2012 state taxes online free For more information, see Restricted Property in Publication 525. File 2012 state taxes online free Bargain purchases. File 2012 state taxes online free   A bargain purchase is a purchase of an item for less than its FMV. File 2012 state taxes online free If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. File 2012 state taxes online free Your basis in the property is its FMV (your purchase price plus the amount you include in income). File 2012 state taxes online free   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. File 2012 state taxes online free However, your basis in the property is still its FMV. File 2012 state taxes online free See Employee Discounts in Publication 15-B. File 2012 state taxes online free Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. File 2012 state taxes online free A taxable gain or deductible loss also is known as a recognized gain or loss. File 2012 state taxes online free If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. File 2012 state taxes online free Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. File 2012 state taxes online free Similar or related property. File 2012 state taxes online free   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. File 2012 state taxes online free Decrease the basis by the following. File 2012 state taxes online free Any loss you recognize on the involuntary conversion. File 2012 state taxes online free Any money you receive that you do not spend on similar property. File 2012 state taxes online free Increase the basis by the following. File 2012 state taxes online free Any gain you recognize on the involuntary conversion. File 2012 state taxes online free Any cost of acquiring the replacement property. File 2012 state taxes online free Money or property not similar or related. File 2012 state taxes online free    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. File 2012 state taxes online free Example. File 2012 state taxes online free The state condemned your property. File 2012 state taxes online free The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. File 2012 state taxes online free You realized a gain of $5,000 ($31,000 − $26,000). File 2012 state taxes online free You bought replacement property similar in use to the converted property for $29,000. File 2012 state taxes online free You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. File 2012 state taxes online free Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. File 2012 state taxes online free The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. File 2012 state taxes online free   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. File 2012 state taxes online free Basis for depreciation. File 2012 state taxes online free   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. File 2012 state taxes online free For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. File 2012 state taxes online free Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. File 2012 state taxes online free If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. File 2012 state taxes online free See Nontaxable Trades in chapter 14. File 2012 state taxes online free Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. File 2012 state taxes online free To qualify as a like-kind exchange, the property traded and the property received must be both of the following. File 2012 state taxes online free Qualifying property. File 2012 state taxes online free Like-kind property. File 2012 state taxes online free The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. File 2012 state taxes online free If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. File 2012 state taxes online free Qualifying property. File 2012 state taxes online free   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. File 2012 state taxes online free Like-kind property. File 2012 state taxes online free   There must be an exchange of like-kind property. File 2012 state taxes online free Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. File 2012 state taxes online free The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. File 2012 state taxes online free Example. File 2012 state taxes online free You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. File 2012 state taxes online free The dealer allows you $2,000 on the old truck, and you pay $4,800. File 2012 state taxes online free This is a like-kind exchange. File 2012 state taxes online free The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). File 2012 state taxes online free If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). File 2012 state taxes online free The basis of the new truck is the price you pay the dealer. File 2012 state taxes online free Partially nontaxable exchanges. File 2012 state taxes online free   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. File 2012 state taxes online free The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. File 2012 state taxes online free Decrease the basis by the following amounts. File 2012 state taxes online free Any money you receive. File 2012 state taxes online free Any loss you recognize on the exchange. File 2012 state taxes online free Increase the basis by the following amounts. File 2012 state taxes online free Any additional costs you incur. File 2012 state taxes online free Any gain you recognize on the exchange. File 2012 state taxes online free If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. File 2012 state taxes online free Allocation of basis. File 2012 state taxes online free   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. File 2012 state taxes online free The rest is the basis of the like-kind property. File 2012 state taxes online free More information. File 2012 state taxes online free   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. File 2012 state taxes online free Basis for depreciation. File 2012 state taxes online free   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. File 2012 state taxes online free For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. File 2012 state taxes online free Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. File 2012 state taxes online free The same rule applies to a transfer by your former spouse that is incident to divorce. File 2012 state taxes online free However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. File 2012 state taxes online free If the property transferred to you is a series E, series EE, or series I U. File 2012 state taxes online free S. File 2012 state taxes online free savings bond, the transferor must include in income the interest accrued to the date of transfer. File 2012 state taxes online free Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. File 2012 state taxes online free For more information on these bonds, see chapter 7. File 2012 state taxes online free At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. File 2012 state taxes online free For more information about the transfer of property from a spouse, see chapter 14. File 2012 state taxes online free Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. File 2012 state taxes online free FMV less than donor's adjusted basis. File 2012 state taxes online free   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. File 2012 state taxes online free Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. File 2012 state taxes online free Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. File 2012 state taxes online free See Adjusted Basis , earlier. File 2012 state taxes online free Example. File 2012 state taxes online free You received an acre of land as a gift. File 2012 state taxes online free At the time of the gift, the land had an FMV of $8,000. File 2012 state taxes online free The donor's adjusted basis was $10,000. File 2012 state taxes online free After you received the property, no events occurred to increase or decrease your basis. File 2012 state taxes online free If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. File 2012 state taxes online free If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. File 2012 state taxes online free If the sales price is between $8,000 and $10,000, you have neither gain nor loss. File 2012 state taxes online free Business property. File 2012 state taxes online free   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. File 2012 state taxes online free FMV equal to or greater than donor's adjusted basis. File 2012 state taxes online free   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. File 2012 state taxes online free Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. File 2012 state taxes online free   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. File 2012 state taxes online free See Adjusted Basis , earlier. File 2012 state taxes online free   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. File 2012 state taxes online free Figure the increase by multiplying the gift tax paid by a fraction. File 2012 state taxes online free The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. File 2012 state taxes online free   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. File 2012 state taxes online free The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. File 2012 state taxes online free Example. File 2012 state taxes online free In 2013, you received a gift of property from your mother that had an FMV of $50,000. File 2012 state taxes online free Her adjusted basis was $20,000. File 2012 state taxes online free The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). File 2012 state taxes online free She paid a gift tax of $7,320 on the property. File 2012 state taxes online free Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . File 2012 state taxes online free 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. File 2012 state taxes online free If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. File 2012 state taxes online free However, your basis cannot exceed the FMV of the gift at the time it was given to you. File 2012 state taxes online free Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. File 2012 state taxes online free The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. File 2012 state taxes online free The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. File 2012 state taxes online free The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. File 2012 state taxes online free If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. File 2012 state taxes online free For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. File 2012 state taxes online free Property inherited from a decedent who died in 2010. File 2012 state taxes online free   If you inherited property from a decedent who died in 2010, special rules may apply. File 2012 state taxes online free For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. File 2012 state taxes online free Community property. File 2012 state taxes online free   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. File 2012 state taxes online free When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. File 2012 state taxes online free For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. File 2012 state taxes online free Example. File 2012 state taxes online free You and your spouse owned community property that had a basis of $80,000. File 2012 state taxes online free When your spouse died, half the FMV of the community interest was includible in your spouse's estate. File 2012 state taxes online free The FMV of the community interest was $100,000. File 2012 state taxes online free The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). File 2012 state taxes online free The basis of the other half to your spouse's heirs is also $50,000. File 2012 state taxes online free For more information about community property, see Publication 555, Community Property. File 2012 state taxes online free Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. File 2012 state taxes online free To do so, you must figure its basis for depreciation at the time of the change. File 2012 state taxes online free An example of changing property held for personal use to business or rental use would be renting out your former personal residence. File 2012 state taxes online free Basis for depreciation. File 2012 state taxes online free   The basis for depreciation is the lesser of the following amounts. File 2012 state taxes online free The FMV of the property on the date of the change. File 2012 state taxes online free Your adjusted basis on the date of the change. File 2012 state taxes online free Example. File 2012 state taxes online free Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. File 2012 state taxes online free You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. File 2012 state taxes online free Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. File 2012 state taxes online free Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). File 2012 state taxes online free On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. File 2012 state taxes online free The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). File 2012 state taxes online free Sale of property. File 2012 state taxes online free   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. File 2012 state taxes online free Gain. File 2012 state taxes online free   The basis for figuring a gain is your adjusted basis in the property when you sell the property. File 2012 state taxes online free Example. File 2012 state taxes online free Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. File 2012 state taxes online free Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). File 2012 state taxes online free Loss. File 2012 state taxes online free   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. File 2012 state taxes online free Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . File 2012 state taxes online free Example. File 2012 state taxes online free Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. File 2012 state taxes online free In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. File 2012 state taxes online free Reduce that amount ($180,000) by the depreciation deductions ($37,500). File 2012 state taxes online free The basis for loss is $142,500 ($180,000 − $37,500). File 2012 state taxes online free Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. File 2012 state taxes online free If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. File 2012 state taxes online free You must adjust the basis of stocks for certain events that occur after purchase. File 2012 state taxes online free For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. File 2012 state taxes online free This rule applies only when the additional stock received is identical to the stock held. File 2012 state taxes online free Also reduce your basis when you receive nontaxable distributions. File 2012 state taxes online free They are a return of capital. File 2012 state taxes online free Example. File 2012 state taxes online free In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. File 2012 state taxes online free In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. File 2012 state taxes online free In 2013 XYZ declared a 2-for-1 stock split. File 2012 state taxes online free You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. File 2012 state taxes online free Other basis. File 2012 state taxes online free   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. File 2012 state taxes online free For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. File 2012 state taxes online free Identifying stocks or bonds sold. File 2012 state taxes online free   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. File 2012 state taxes online free If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. File 2012 state taxes online free For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. File 2012 state taxes online free Mutual fund shares. File 2012 state taxes online free   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. File 2012 state taxes online free For more information, see Publication 550. File 2012 state taxes online free Bond premium. File 2012 state taxes online free   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. File 2012 state taxes online free See Bond Premium Amortization in chapter 3 of Publication 550 for more information. File 2012 state taxes online free Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. File 2012 state taxes online free Original issue discount (OID) on debt instruments. File 2012 state taxes online free   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. File 2012 state taxes online free See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. File 2012 state taxes online free Tax-exempt obligations. File 2012 state taxes online free    OID on tax-exempt obligations is generally not taxable. File 2012 state taxes online free However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. File 2012 state taxes online free The accrued OID is added to the basis of the obligation to determine your gain or loss. File 2012 state taxes online free See chapter 4 of Publication 550. File 2012 state taxes online free Prev  Up  Next   Home   More Online Publications
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Tax Quotes

When it comes to taxes, everyone has an opinion. These quotes reflect the opinions of their authors; their inclusion here is not an official IRS endorsement of the sentiments expressed.

"Taxes are what we pay for civilized society.'' — Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice

"The power of taxing people and their property is essential to the very existence of government.'' — James Madison, U.S. President

"To tax and to please, no more than to love and to be wise, is not given to men." —  Edmund Burke, 18th Century Irish political philosopher and British statesman

“I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer

“People who complain about taxes can be divided into two classes: men and women.” 
— Unknown

"No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.'' — Frederick the Great, 18th Century Prussian king

"Like mothers, taxes are often misunderstood, but seldom forgotten.'' — Lord Bramwell, 19th Century English jurist

"The best measure of a man's honesty isn't his income tax return. It's the zero adjust on his bathroom scale.'' — Arthur C. Clarke, author

"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” — F. J. Raymond, humorist

A tax loophole is "something that benefits the other guy. If it benefits you, it is tax reform.'' 
— Russell B. Long, U.S. Senator

"Few of us ever test our powers of deduction, except when filling out an income tax form.'' 
— Laurence J. Peter, author

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist

“Taxation with representation ain’t so hot either.” — Gerald Barzan, humorist

“Where there is an income tax, the just man will pay more and the unjust less on the same amount of income.” — Plato

“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist

Page Last Reviewed or Updated: 10-Mar-2014

The File 2012 State Taxes Online Free

File 2012 state taxes online free Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. File 2012 state taxes online free Gross monthly rate. File 2012 state taxes online free Your cost. File 2012 state taxes online free Choosing a survivor annuity after retirement. File 2012 state taxes online free Canceling a survivor annuity after retirement. File 2012 state taxes online free Annuity starting date after 1986. File 2012 state taxes online free Annuity starting date before 1987. File 2012 state taxes online free Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. File 2012 state taxes online free Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. File 2012 state taxes online free The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. File 2012 state taxes online free If the refund includes only your contributions, none of the refund is taxable. File 2012 state taxes online free If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). File 2012 state taxes online free If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. File 2012 state taxes online free See Rollover Rules in Part II for information on how to make a rollover. File 2012 state taxes online free Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. File 2012 state taxes online free Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. File 2012 state taxes online free If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File 2012 state taxes online free If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. File 2012 state taxes online free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File 2012 state taxes online free A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. File 2012 state taxes online free Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. File 2012 state taxes online free OPM will tell you how to make the choice. File 2012 state taxes online free The choice for no withholding remains in effect until you change it. File 2012 state taxes online free These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. File 2012 state taxes online free 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. File 2012 state taxes online free You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. File 2012 state taxes online free Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. File 2012 state taxes online free For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. File 2012 state taxes online free Form CSA 1099R. File 2012 state taxes online free   Form CSA 1099R is mailed to you by OPM each year. File 2012 state taxes online free It will show any tax you had withheld. File 2012 state taxes online free File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. File 2012 state taxes online free    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. File 2012 state taxes online free servicesonline. File 2012 state taxes online free opm. File 2012 state taxes online free gov. File 2012 state taxes online free To log in, you will need your retirement CSA claim number and your personal identification number. File 2012 state taxes online free Choosing no withholding on payments outside the United States. File 2012 state taxes online free   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. File 2012 state taxes online free   To choose no withholding if you are a U. File 2012 state taxes online free S. File 2012 state taxes online free citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. File 2012 state taxes online free Otherwise, OPM has to withhold tax. File 2012 state taxes online free For example, OPM must withhold if you provide a U. File 2012 state taxes online free S. File 2012 state taxes online free address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. File 2012 state taxes online free S. File 2012 state taxes online free home address. File 2012 state taxes online free   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. File 2012 state taxes online free S. File 2012 state taxes online free citizen, a U. File 2012 state taxes online free S. File 2012 state taxes online free resident alien, or someone who left the United States to avoid tax. File 2012 state taxes online free But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. File 2012 state taxes online free For details, see Publication 519, U. File 2012 state taxes online free S. File 2012 state taxes online free Tax Guide for Aliens. File 2012 state taxes online free Withholding certificate. File 2012 state taxes online free   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. File 2012 state taxes online free The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. File 2012 state taxes online free If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. File 2012 state taxes online free To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File 2012 state taxes online free C. File 2012 state taxes online free calling area must call 202-606-0500). File 2012 state taxes online free No special form is needed. File 2012 state taxes online free You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. File 2012 state taxes online free If you have TTY/TDD equipment, call 1-855–887–4957. File 2012 state taxes online free If you need a PIN, call OPM's Retirement Information Office. File 2012 state taxes online free You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. File 2012 state taxes online free servicesonline. File 2012 state taxes online free opm. File 2012 state taxes online free gov. File 2012 state taxes online free You will need your retirement CSA or CSF claim number and your PIN. File 2012 state taxes online free Withholding from certain lump-sum payments. File 2012 state taxes online free   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. File 2012 state taxes online free Tax will be withheld at a 20% rate on the interest distributed. File 2012 state taxes online free However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. File 2012 state taxes online free If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. File 2012 state taxes online free Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. File 2012 state taxes online free See Rollover Rules in Part II. File 2012 state taxes online free If you receive only your contributions, no tax will be withheld. File 2012 state taxes online free Withholding from Thrift Savings Plan payments. File 2012 state taxes online free   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. File 2012 state taxes online free The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. File 2012 state taxes online free  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. File 2012 state taxes online free By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. File 2012 state taxes online free   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. File 2012 state taxes online free The above document is also available in the “Forms & Publications” section of the TSP website at www. File 2012 state taxes online free tsp. File 2012 state taxes online free gov. File 2012 state taxes online free Estimated tax. File 2012 state taxes online free   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). File 2012 state taxes online free The return must cover all 12 months. File 2012 state taxes online free   You do not have to pay estimated tax for 2014 if you were a U. File 2012 state taxes online free S. File 2012 state taxes online free citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. File 2012 state taxes online free   Publication 505 contains information that you can use to help you figure your estimated tax payments. File 2012 state taxes online free Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. File 2012 state taxes online free The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. File 2012 state taxes online free Children. File 2012 state taxes online free   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. File 2012 state taxes online free   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. File 2012 state taxes online free Form CSF 1099R. File 2012 state taxes online free   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. File 2012 state taxes online free It will show the total amount of the annuity you received in the past year. File 2012 state taxes online free It also should show, separately, the survivor annuity for a child or children. File 2012 state taxes online free Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. File 2012 state taxes online free   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. File 2012 state taxes online free    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. File 2012 state taxes online free servicesonline. File 2012 state taxes online free opm. File 2012 state taxes online free gov. File 2012 state taxes online free To log in you will need your retirement CSF claim number and personal identification number. File 2012 state taxes online free    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File 2012 state taxes online free C. File 2012 state taxes online free calling area must call 202-606-0500). File 2012 state taxes online free You will need your CSF claim number and your social security number when you call. File 2012 state taxes online free Taxable part of annuity. File 2012 state taxes online free   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. File 2012 state taxes online free To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. File 2012 state taxes online free Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. File 2012 state taxes online free If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. File 2012 state taxes online free However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. File 2012 state taxes online free Annuity statement. File 2012 state taxes online free   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). File 2012 state taxes online free You will use this information to figure the tax-free recovery of your cost. File 2012 state taxes online free Annuity starting date. File 2012 state taxes online free   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. File 2012 state taxes online free If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. File 2012 state taxes online free Gross monthly rate. File 2012 state taxes online free   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. File 2012 state taxes online free Your cost. File 2012 state taxes online free   Your monthly annuity payment contains an amount on which you have previously paid income tax. File 2012 state taxes online free This amount represents part of your contributions to the retirement plan. File 2012 state taxes online free Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. File 2012 state taxes online free   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. File 2012 state taxes online free If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. File 2012 state taxes online free (See Lump-sum credit under Alternative Annuity Option, later. File 2012 state taxes online free )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. File 2012 state taxes online free You cannot claim an interest deduction for any interest payments. File 2012 state taxes online free You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. File 2012 state taxes online free Recovering your cost tax free. File 2012 state taxes online free   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. File 2012 state taxes online free If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. File 2012 state taxes online free If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). File 2012 state taxes online free If your annuity starting date is after November 18, 1996, you must use the Simplified Method. File 2012 state taxes online free   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). File 2012 state taxes online free The tax-free part is a fixed dollar amount. File 2012 state taxes online free It remains the same, even if your annuity is increased. File 2012 state taxes online free Generally, this rule applies as long as you receive your annuity. File 2012 state taxes online free However, see Exclusion limit , later. File 2012 state taxes online free Choosing a survivor annuity after retirement. File 2012 state taxes online free    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. File 2012 state taxes online free   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. File 2012 state taxes online free To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. File 2012 state taxes online free Figure the expected return as of the date the reduced annuity begins. File 2012 state taxes online free For details on the General Rule, see Publication 939. File 2012 state taxes online free Canceling a survivor annuity after retirement. File 2012 state taxes online free   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. File 2012 state taxes online free The increased annuity does not change the cost recovery you figured at the annuity starting date. File 2012 state taxes online free The tax-free part of each annuity payment remains the same. File 2012 state taxes online free    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File 2012 state taxes online free C. File 2012 state taxes online free calling area must call 202-606-0500). File 2012 state taxes online free Exclusion limit. File 2012 state taxes online free   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. File 2012 state taxes online free Annuity starting date after 1986. File 2012 state taxes online free   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. File 2012 state taxes online free Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. File 2012 state taxes online free Example. File 2012 state taxes online free Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. File 2012 state taxes online free If your cost is $12,000, the exclusion ends after 10 years (120 months). File 2012 state taxes online free Thereafter, your entire annuity is generally fully taxable. File 2012 state taxes online free Annuity starting date before 1987. File 2012 state taxes online free   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. File 2012 state taxes online free If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. File 2012 state taxes online free The total exclusion may be more than your cost. File 2012 state taxes online free Deduction of unrecovered cost. File 2012 state taxes online free   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. File 2012 state taxes online free The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). File 2012 state taxes online free If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. File 2012 state taxes online free Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. File 2012 state taxes online free (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. File 2012 state taxes online free ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. File 2012 state taxes online free The Simplified Method does not apply if your annuity starting date is before July 2, 1986. File 2012 state taxes online free Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. File 2012 state taxes online free This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. File 2012 state taxes online free If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. File 2012 state taxes online free Worksheet A. File 2012 state taxes online free   Use Worksheet A. File 2012 state taxes online free Simplified Method (near the end of this publication), to figure your taxable annuity. File 2012 state taxes online free Be sure to keep the completed worksheet. File 2012 state taxes online free It will help you figure your taxable amounts for later years. File 2012 state taxes online free Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. File 2012 state taxes online free However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. File 2012 state taxes online free Line 2. File 2012 state taxes online free   See Your cost , earlier, for an explanation of your cost in the plan. File 2012 state taxes online free If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. File 2012 state taxes online free Line 3. File 2012 state taxes online free   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. File 2012 state taxes online free If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. File 2012 state taxes online free If your annuity starting date is before 1998, use Table 1. File 2012 state taxes online free Line 6. File 2012 state taxes online free   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. File 2012 state taxes online free If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. File 2012 state taxes online free Example. File 2012 state taxes online free Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. File 2012 state taxes online free His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. File 2012 state taxes online free He must use the Simplified Method to figure the tax-free part of his annuity benefits. File 2012 state taxes online free Bill's monthly annuity benefit is $1,000. File 2012 state taxes online free He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. File 2012 state taxes online free At his annuity starting date, he was 65 and Kathy was 57. File 2012 state taxes online free Bill's completed Worksheet A is shown later. File 2012 state taxes online free To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). File 2012 state taxes online free Bill keeps a copy of the completed worksheet for his records. File 2012 state taxes online free It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. File 2012 state taxes online free Bill's tax-free monthly amount is $100. File 2012 state taxes online free (See line 4 of the worksheet. File 2012 state taxes online free ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. File 2012 state taxes online free If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. File 2012 state taxes online free If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. File 2012 state taxes online free General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. File 2012 state taxes online free If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. File 2012 state taxes online free If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. File 2012 state taxes online free Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. File 2012 state taxes online free Figuring this percentage is complex and requires the use of actuarial tables. File 2012 state taxes online free For these tables and other information about using the General Rule, see Publication 939. File 2012 state taxes online free Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. File 2012 state taxes online free Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. File 2012 state taxes online free After your cost was recovered, all payments became fully taxable. File 2012 state taxes online free You cannot use another rule to again exclude amounts from income. File 2012 state taxes online free The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. File 2012 state taxes online free Worksheet A. File 2012 state taxes online free Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. File 2012 state taxes online free 1. File 2012 state taxes online free Enter the total pension or annuity payments received this year. File 2012 state taxes online free Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File 2012 state taxes online free $ 8,000 2. File 2012 state taxes online free Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File 2012 state taxes online free See Your cost in Part II, Rules for Retirees, earlier 2. File 2012 state taxes online free 31,000 Note: 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). File 2012 state taxes online free Otherwise, go to line 3. File 2012 state taxes online free   3. File 2012 state taxes online free Enter the appropriate number from Table 1 below. File 2012 state taxes online free 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. File 2012 state taxes online free 3. File 2012 state taxes online free 310 4. File 2012 state taxes online free Divide line 2 by the number on line 3 4. File 2012 state taxes online free 100 5. File 2012 state taxes online free Multiply line 4 by the number of months for which this year's payments were made. File 2012 state taxes online free If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File 2012 state taxes online free Otherwise, go to line 6 5. File 2012 state taxes online free 800 6. File 2012 state taxes online free Enter any amounts previously recovered tax free in years after 1986. File 2012 state taxes online free This is the amount shown on line 10 of your worksheet for last year 6. File 2012 state taxes online free 0 7. File 2012 state taxes online free Subtract line 6 from line 2 7. File 2012 state taxes online free 31,000 8. File 2012 state taxes online free Enter the smaller of line 5 or line 7 8. File 2012 state taxes online free 800 9. File 2012 state taxes online free Taxable amount for year. File 2012 state taxes online free Subtract line 8 from line 1. File 2012 state taxes online free Enter the result, but not less than zero. File 2012 state taxes online free Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File 2012 state taxes online free If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File 2012 state taxes online free If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File 2012 state taxes online free If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. File 2012 state taxes online free $7,200 10. File 2012 state taxes online free Was your annuity starting date before 1987?   Yes. File 2012 state taxes online free Do not complete the rest of this worksheet. File 2012 state taxes online free    No. File 2012 state taxes online free Add lines 6 and 8. File 2012 state taxes online free This is the amount you have recovered tax free through 2013. File 2012 state taxes online free You will need this number if you need to fill out this worksheet next year 10. File 2012 state taxes online free 800 11. File 2012 state taxes online free Balance of cost to be recovered. File 2012 state taxes online free Subtract line 10 from line 2. File 2012 state taxes online free If zero, you will not have to complete this worksheet next year. File 2012 state taxes online free The payments you receive next year will generally be fully taxable 11. File 2012 state taxes online free $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. File 2012 state taxes online free Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. File 2012 state taxes online free If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. File 2012 state taxes online free You are eligible to make this choice if you meet all of the following requirements. File 2012 state taxes online free You are retiring, but not on disability. File 2012 state taxes online free You have a life-threatening illness or other critical medical condition. File 2012 state taxes online free You do not have a former spouse entitled to court ordered benefits based on your service. File 2012 state taxes online free If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. File 2012 state taxes online free Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. File 2012 state taxes online free The tax-free part represents part of your cost. File 2012 state taxes online free The taxable part represents part of the earnings on your annuity contract. File 2012 state taxes online free Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. File 2012 state taxes online free Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. File 2012 state taxes online free Your taxable amount may therefore be more than the lump-sum payment you receive. File 2012 state taxes online free You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. File 2012 state taxes online free If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. File 2012 state taxes online free See Rollover Rules , later, for information on how to make a rollover. File 2012 state taxes online free OPM can make a direct rollover only up to the amount of the lump-sum payment. File 2012 state taxes online free Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. File 2012 state taxes online free The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File 2012 state taxes online free It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. File 2012 state taxes online free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File 2012 state taxes online free Worksheet B. File 2012 state taxes online free   Use Worksheet B. File 2012 state taxes online free Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. File 2012 state taxes online free Be sure to keep the completed worksheet for your records. File 2012 state taxes online free   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. File 2012 state taxes online free Lump-sum credit. File 2012 state taxes online free   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). File 2012 state taxes online free However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. File 2012 state taxes online free Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. File 2012 state taxes online free Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. File 2012 state taxes online free You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. File 2012 state taxes online free Present value of your annuity contract. File 2012 state taxes online free   The present value of your annuity contract is figured using actuarial tables provided by the IRS. File 2012 state taxes online free If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. File 2012 state taxes online free Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. File 2012 state taxes online free , NW Washington, DC 20224-0002 Example. File 2012 state taxes online free David Brown retired from the federal government in 2013, one month after his 55th birthday. File 2012 state taxes online free He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. File 2012 state taxes online free The present value of his annuity contract was $155,000. File 2012 state taxes online free The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. File 2012 state taxes online free The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. File 2012 state taxes online free See Reduced Annuity , later. File 2012 state taxes online free Worksheet B. File 2012 state taxes online free Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . File 2012 state taxes online free  1. File 2012 state taxes online free Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. File 2012 state taxes online free $ 31,000 2. File 2012 state taxes online free Enter the present value of your annuity contract 2. File 2012 state taxes online free 155,000 3. File 2012 state taxes online free Divide line 1 by line 2 3. File 2012 state taxes online free . File 2012 state taxes online free 20 4. File 2012 state taxes online free Tax-free amount. File 2012 state taxes online free Multiply line 1 by line 3. File 2012 state taxes online free (Caution: Do not include this amount on line 6 of Worksheet A in this publication. File 2012 state taxes online free ) 4. File 2012 state taxes online free $6,200 5. File 2012 state taxes online free Taxable amount (net cost in the plan). File 2012 state taxes online free Subtract line 4 from line 1. File 2012 state taxes online free Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. File 2012 state taxes online free Also, enter this amount on line 2 of Worksheet A in this publication. File 2012 state taxes online free 5. File 2012 state taxes online free $24,800   Lump-sum payment in installments. File 2012 state taxes online free   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. File 2012 state taxes online free You will receive the first installment after you make the choice upon retirement. File 2012 state taxes online free The second installment will be paid to you, with interest, in the next calendar year. File 2012 state taxes online free (Exceptions to the installment rule are provided for cases of critical medical need. File 2012 state taxes online free )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. File 2012 state taxes online free If the payment has a tax-free part, you must treat the taxable part as received first. File 2012 state taxes online free How to report. File 2012 state taxes online free   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. File 2012 state taxes online free Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. File 2012 state taxes online free    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. File 2012 state taxes online free Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. File 2012 state taxes online free These annuity payments each will have a tax-free and a taxable part. File 2012 state taxes online free To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). File 2012 state taxes online free For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. File 2012 state taxes online free To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. File 2012 state taxes online free Enter as your net cost on line 2 the amount from Worksheet B, line 5. File 2012 state taxes online free Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. File 2012 state taxes online free Example. File 2012 state taxes online free The facts are the same as in the example for David Brown in the preceding discussion. File 2012 state taxes online free In addition, David received 10 annuity payments in 2013 of $1,200 each. File 2012 state taxes online free Using Worksheet A, he figures the taxable part of his annuity payments. File 2012 state taxes online free He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. File 2012 state taxes online free His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). File 2012 state taxes online free He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. File 2012 state taxes online free David's filled-in Worksheet A is shown on the next page. File 2012 state taxes online free Worksheet A. File 2012 state taxes online free Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . File 2012 state taxes online free 1. File 2012 state taxes online free Enter the total pension or annuity payments received this year. File 2012 state taxes online free Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File 2012 state taxes online free $ 12,000 2. File 2012 state taxes online free Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File 2012 state taxes online free See Your cost in Part II, Rules for Retirees, earlier 2. File 2012 state taxes online free 24,800 Note: 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). File 2012 state taxes online free Otherwise, go to line 3. File 2012 state taxes online free   3. File 2012 state taxes online free Enter the appropriate number from Table 1 below. File 2012 state taxes online free 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. File 2012 state taxes online free 3. File 2012 state taxes online free 360 4. File 2012 state taxes online free Divide line 2 by the number on line 3 4. File 2012 state taxes online free 68. File 2012 state taxes online free 89 5. File 2012 state taxes online free Multiply line 4 by the number of months for which this year's payments were made. File 2012 state taxes online free If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File 2012 state taxes online free Otherwise, go to line 6 5. File 2012 state taxes online free 688. File 2012 state taxes online free 90 6. File 2012 state taxes online free Enter any amounts previously recovered tax free in years after 1986. File 2012 state taxes online free This is the amount shown on line 10 of your worksheet for last year 6. File 2012 state taxes online free 0 7. File 2012 state taxes online free Subtract line 6 from line 2 7. File 2012 state taxes online free 24,800 8. File 2012 state taxes online free Enter the smaller of line 5 or line 7 8. File 2012 state taxes online free 688. File 2012 state taxes online free 90 9. File 2012 state taxes online free Taxable amount for year. File 2012 state taxes online free Subtract line 8 from line 1. File 2012 state taxes online free Enter the result, but not less than zero. File 2012 state taxes online free Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File 2012 state taxes online free If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File 2012 state taxes online free If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File 2012 state taxes online free If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. File 2012 state taxes online free $11,311. File 2012 state taxes online free 10 10. File 2012 state taxes online free Was your annuity starting date before 1987?   Yes. File 2012 state taxes online free Do not complete the rest of this worksheet. File 2012 state taxes online free    No. File 2012 state taxes online free Add lines 6 and 8. File 2012 state taxes online free This is the amount you have recovered tax free through 2013. File 2012 state taxes online free You will need this number if you need to fill out this worksheet next year 10. File 2012 state taxes online free 688. File 2012 state taxes online free 90 11. File 2012 state taxes online free Balance of cost to be recovered. File 2012 state taxes online free Subtract line 10 from line 2. File 2012 state taxes online free If zero, you will not have to complete this worksheet next year. File 2012 state taxes online free The payments you receive next year will generally be fully taxable 11. File 2012 state taxes online free $24,111. File 2012 state taxes online free 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. File 2012 state taxes online free Reemployment after choosing the alternative annuity option. File 2012 state taxes online free If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. File 2012 state taxes online free If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. File 2012 state taxes online free Annuity starting date before November 19, 1996. File 2012 state taxes online free   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. File 2012 state taxes online free Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. File 2012 state taxes online free However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. File 2012 state taxes online free Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. File 2012 state taxes online free The gift may be taxable for gift tax purposes. File 2012 state taxes online free The value of the gift is equal to the value of the annuity. File 2012 state taxes online free Joint and survivor annuity. File 2012 state taxes online free   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. File 2012 state taxes online free This will eliminate any gift tax liability with regard to that gift. File 2012 state taxes online free   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. File 2012 state taxes online free This may result in a taxable gift. File 2012 state taxes online free More information. File 2012 state taxes online free   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. File 2012 state taxes online free Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. File 2012 state taxes online free Annual leave. File 2012 state taxes online free   A payment for accrued annual leave received on retirement is a salary payment. File 2012 state taxes online free It is taxable as wages in the tax year you receive it. File 2012 state taxes online free Voluntary contributions. File 2012 state taxes online free   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. File 2012 state taxes online free They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. File 2012 state taxes online free Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. File 2012 state taxes online free See Thrift Savings Plan , later. File 2012 state taxes online free Additional annuity benefit. File 2012 state taxes online free   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. File 2012 state taxes online free This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. File 2012 state taxes online free It does not matter that you receive only one monthly check covering both benefits. File 2012 state taxes online free Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. File 2012 state taxes online free   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. File 2012 state taxes online free Refund of voluntary contributions. File 2012 state taxes online free   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. File 2012 state taxes online free If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. File 2012 state taxes online free See Rollover Rules , later. File 2012 state taxes online free The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File 2012 state taxes online free It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. File 2012 state taxes online free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File 2012 state taxes online free Community property laws. File 2012 state taxes online free   State community property laws apply to your annuity. File 2012 state taxes online free These laws will affect your income tax only if you file a return separately from your spouse. File 2012 state taxes online free   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. File 2012 state taxes online free Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. File 2012 state taxes online free   At any time, you have only one domicile even though you may have more than one home. File 2012 state taxes online free Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. File 2012 state taxes online free The question of your domicile is mainly a matter of your intentions as indicated by your actions. File 2012 state taxes online free   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. File 2012 state taxes online free The division is based on your periods of service and domicile in community and noncommunity property states while you were married. File 2012 state taxes online free   For more information, see Publication 555, Community Property. File 2012 state taxes online free Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. File 2012 state taxes online free The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. File 2012 state taxes online free This amount is taxable as wages. File 2012 state taxes online free Your annuity will continue to be taxed just as it was before. File 2012 state taxes online free If you are still recovering your cost, you continue to do so. File 2012 state taxes online free If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. File 2012 state taxes online free Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. File 2012 state taxes online free A nonresident alien is an individual who is not a citizen or a resident alien of the United States. File 2012 state taxes online free Special rule for figuring your total contributions. File 2012 state taxes online free   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. File 2012 state taxes online free You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. File 2012 state taxes online free For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. File 2012 state taxes online free Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. File 2012 state taxes online free   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. File 2012 state taxes online free Limit on taxable amount. File 2012 state taxes online free   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. File 2012 state taxes online free Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. File 2012 state taxes online free The numerator of the fraction is the retiree's total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay, other than tax-exempt pay for services performed outside the United States. File 2012 state taxes online free The denominator is the retiree's total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay for all services. File 2012 state taxes online free    Basic pay includes regular pay plus any standby differential. File 2012 state taxes online free It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. File 2012 state taxes online free   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. File 2012 state taxes online free (For an annuity, first complete Worksheet A in this publication. File 2012 state taxes online free ) Worksheet C. File 2012 state taxes online free Limited Taxable Amount for Nonresident Alien 1. File 2012 state taxes online free Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File 2012 state taxes online free   2. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File 2012 state taxes online free   3. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay for all services 3. File 2012 state taxes online free   4. File 2012 state taxes online free Divide line 2 by line 3 4. File 2012 state taxes online free   5. File 2012 state taxes online free Limited taxable amount. File 2012 state taxes online free Multiply line 1 by line 4. File 2012 state taxes online free Enter this amount on Form 1040NR, line 17b 5. File 2012 state taxes online free   Example 1. File 2012 state taxes online free You are a nonresident alien who performed all services for the U. File 2012 state taxes online free S. File 2012 state taxes online free Government abroad as a nonresident alien. File 2012 state taxes online free You retired and began to receive a monthly annuity of $200. File 2012 state taxes online free Your total basic pay for all services for the U. File 2012 state taxes online free S. File 2012 state taxes online free Government was $100,000. File 2012 state taxes online free All of your basic pay was tax exempt because it was not U. File 2012 state taxes online free S. File 2012 state taxes online free source income. File 2012 state taxes online free The taxable amount of your annuity using Worksheet A in this publication is $720. File 2012 state taxes online free You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File 2012 state taxes online free Worksheet C. File 2012 state taxes online free Limited Taxable Amount for Nonresident Alien — Example 1 1. File 2012 state taxes online free Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File 2012 state taxes online free $ 720 2. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File 2012 state taxes online free 0 3. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay for all services 3. File 2012 state taxes online free 100,000 4. File 2012 state taxes online free Divide line 2 by line 3 4. File 2012 state taxes online free 0 5. File 2012 state taxes online free Limited taxable amount. File 2012 state taxes online free Multiply line 1 by line 4. File 2012 state taxes online free Enter this amount on Form 1040NR, line 17b 5. File 2012 state taxes online free 0 Example 2. File 2012 state taxes online free You are a nonresident alien who performed services for the U. File 2012 state taxes online free S. File 2012 state taxes online free Government as a nonresident alien both within the United States and abroad. File 2012 state taxes online free You retired and began to receive a monthly annuity of $240. File 2012 state taxes online free Your total basic pay for your services for the U. File 2012 state taxes online free S. File 2012 state taxes online free Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. File 2012 state taxes online free The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. File 2012 state taxes online free S. File 2012 state taxes online free source income. File 2012 state taxes online free The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. File 2012 state taxes online free You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File 2012 state taxes online free Worksheet C. File 2012 state taxes online free Limited Taxable Amount for Nonresident Alien — Example 2 1. File 2012 state taxes online free Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File 2012 state taxes online free $ 1,980 2. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File 2012 state taxes online free 40,000 3. File 2012 state taxes online free Enter the total U. File 2012 state taxes online free S. File 2012 state taxes online free Government basic pay for all services 3. File 2012 state taxes online free 120,000 4. File 2012 state taxes online free Divide line 2 by line 3 4. File 2012 state taxes online free . File 2012 state taxes online free 333 5. File 2012 state taxes online free Limited taxable amount. File 2012 state taxes online free Multiply line 1 by line 4. File 2012 state taxes online free Enter this amount on Form 1040NR, line 17b 5. File 2012 state taxes online free 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. File 2012 state taxes online free (However, see Roth TSP balance and Uniformed services TSP accounts, next. File 2012 state taxes online free ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. File 2012 state taxes online free The way that you withdraw your account balance determines when you must pay the tax. File 2012 state taxes online free Roth TSP balance. File 2012 state taxes online free   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. File 2012 state taxes online free This means Roth TSP contributions are included in your income. File 2012 state taxes online free The contribution limits are the same as the traditional TSP. File 2012 state taxes online free You can elect to have part or all of your TSP contributions designated as a Roth TSP. File 2012 state taxes online free Agency contributions will be part of your traditional TSP balance. File 2012 state taxes online free Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. File 2012 state taxes online free   Qualified distributions from your Roth TSP are not included in income. File 2012 state taxes online free This applies to both your cost in the account and income earned on that account. File 2012 state taxes online free 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. File 2012 state taxes online free   For more information, go to the TSP website, www. File 2012 state taxes online free tsp. File 2012 state taxes online free gov, or the TSP Service Office. File 2012 state taxes online free See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. File 2012 state taxes online free Uniformed services TSP accounts. File 2012 state taxes online free   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. File 2012 state taxes online free However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. File 2012 state taxes online free See Roth TSP balance discussed previously to get more information about Roth contributions. File 2012 state taxes online free The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. File 2012 state taxes online free You can get more information from the TSP website, www. File 2012 state taxes online free tsp. File 2012 state taxes online free gov, or the TSP Service Office. File 2012 state taxes online free Direct rollover by the TSP. File 2012 state taxes online free   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. File 2012 state taxes online free However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File 2012 state taxes online free Also, see Rollover Rules , later. File 2012 state taxes online free Direct rollover by the TSP to a Roth IRA. File 2012 state taxes online free   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. File 2012 state taxes online free However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File 2012 state taxes online free Also, see Rollovers to Roth IRAs for more information, later. File 2012 state taxes online free Note. File 2012 state taxes online free A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. File 2012 state taxes online free This is because you already paid tax on those contributions. File 2012 state taxes online free You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. File 2012 state taxes online free TSP annuity. File 2012 state taxes online free   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. File 2012 state taxes online free The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. File 2012 state taxes online free However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. File 2012 state taxes online free See Roth TSP balance , earlier. File 2012 state taxes online free This is because you already paid tax on those contributions. File 2012 state taxes online free Cash withdrawals. File 2012 state taxes online free   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. File 2012 state taxes online free (See Rollover Rules , later. File 2012 state taxes online free ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. File 2012 state taxes online free See Lump-Sum Distributions in Publication 575 for details. File 2012 state taxes online free However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. File 2012 state taxes online free See Roth TSP balance , earlier. File 2012 state taxes online free    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. File 2012 state taxes online free   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. File 2012 state taxes online free If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. File 2012 state taxes online free See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. File 2012 state taxes online free However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. File 2012 state taxes online free See Roth TSP balance , earlier, for a discussion of those conditions. File 2012 state taxes online free Tax on early distributions. File 2012 state taxes online free   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. File 2012 state taxes online free However, this additional tax does not apply in certain situations, including any of the following. File 2012 state taxes online free You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. File 2012 state taxes online free You choose to receive your account balance in monthly payments based on your life expectancy. File 2012 state taxes online free You are totally and permanently disabled. File 2012 state taxes online free You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). File 2012 state taxes online free The earnings may be subject to the 10% tax depending on whether you met certain conditions. File 2012 state taxes online free See Roth TSP balance , earlier. File 2012 state taxes online free   For more information, see Tax on Early Distributions in Publication 575. File 2012 state taxes online free Outstanding loan. File 2012 state taxes online free   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. File 2012 state taxes online free The distribution also may be subject to the additional 10% tax on early distributions. File 2012 state taxes online free However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. File 2012 state taxes online free See Rollover Rules , later. File 2012 state taxes online free   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. File 2012 state taxes online free However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. File 2012 state taxes online free See Roth TSP balance , earlier. File 2012 state taxes online free More information. File 2012 state taxes online free   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. File 2012 state taxes online free Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). File 2012 state taxes online free    The above documents are also available on the TSP website at www. File 2012 state taxes online free tsp. File 2012 state taxes online free gov. File 2012 state taxes online free Select “Forms & Publications. File 2012 state taxes online free ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. File 2012 state taxes online free You do not include the amount rolled over in your income, and you cannot take a deduction for it. File 2012 state taxes online free The amount rolled over is taxed later as the new program pays that amount to you. File 2012 state taxes online free If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. File 2012 state taxes online free However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. File 2012 state taxes online free To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. File 2012 state taxes online free You can also roll over a distribution from a qualified retirement plan into a Roth IRA. File 2012 state taxes online free Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. File 2012 state taxes online free See Rollovers to Roth IRAs , later, for more information. File 2012 state taxes online free Qualified retirement plan. File 2012 state taxes online free   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. File 2012 state taxes online free The CSRS, FERS, and TSP are considered qualified retirement plans. File 2012 state taxes online free Distributions eligible for rollover treatment. File 2012 state taxes online free   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. File 2012 state taxes online free You cannot roll over any part of your CSRS or FERS annuity payments. File 2012 state taxes online free   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. File 2012 state taxes online free   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. File 2012 state taxes online free However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. File 2012 state taxes online free Direct rollover option. File 2012 state taxes online free   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. File 2012 state taxes online free   There is an automatic rollover requirement for mandatory distributions. File 2012 state taxes online free A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. File 2012 state taxes online free The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. File 2012 state taxes online free You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. File 2012 state taxes online free If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. File 2012 state taxes online free No tax withheld. File 2012 state taxes online free   If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. File 2012 state taxes online free However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. File 2012 state taxes online free Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. File 2012 state taxes online free Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. File 2012 state taxes online free Payment to you option. File 2012 state taxes online free   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. File 2012 state taxes online free However, the full amount is treated as distributed to you even though you actually receive only 80%. File 2012 state taxes online free You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. File 2012 state taxes online free Rollovers to Roth IRAs are generally included in income. File 2012 state taxes online free Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. File 2012 state taxes online free If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. File 2012 state taxes online free However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). File 2012 state taxes online free Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. File 2012 state taxes online free See Roth TSP balance , earlier. File 2012 state taxes online free Also, see Tax on Early Distributions in Publication 575. File 2012 state taxes online free Exception to withholding. File 2012 state taxes online free   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. File 2012 state taxes online free Partial rollovers. File 2012 state taxes online free   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. File 2012 state taxes online free See Lump-Sum Distributions in Publication 575. File 2012 state taxes online free However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. File 2012 state taxes online free Rolling over more than amount received. File 2012 state taxes online free   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). File 2012 state taxes online free Example. File 2012 state taxes online free You left government service at age 53. File 2012 state taxes online free On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you