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Free federal and free state tax filing 3. Free federal and free state tax filing   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Free federal and free state tax filing Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Free federal and free state tax filing Certain contracts held by a charitable remainder trust. Free federal and free state tax filing Excise Taxes. Free federal and free state tax filing Indoor tanning services. Free federal and free state tax filing Application for Recognition of ExemptionPolitical activity. Free federal and free state tax filing Private delivery service. Free federal and free state tax filing Amendments to organizing documents required. Free federal and free state tax filing How to show reasonable action and good faith. Free federal and free state tax filing Not acting reasonably and in good faith. Free federal and free state tax filing Prejudicing the interest of the Government. Free federal and free state tax filing Procedure for requesting extension. Free federal and free state tax filing More information. Free federal and free state tax filing Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. Free federal and free state tax filing Grass roots expenditures. Free federal and free state tax filing Lobbying nontaxable amount. Free federal and free state tax filing Grass roots nontaxable amount. Free federal and free state tax filing Organization that no longer qualifies. Free federal and free state tax filing Tax on organization. Free federal and free state tax filing Tax on managers. Free federal and free state tax filing Taxes on organizations. Free federal and free state tax filing Taxes on managers. Free federal and free state tax filing Political expenditures. Free federal and free state tax filing Correction of expenditure. Free federal and free state tax filing Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. Free federal and free state tax filing Religious. Free federal and free state tax filing Charitable. Free federal and free state tax filing Scientific. Free federal and free state tax filing Testing for public safety. Free federal and free state tax filing Literary. Free federal and free state tax filing Educational. Free federal and free state tax filing Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). Free federal and free state tax filing The prevention of cruelty to children or animals. Free federal and free state tax filing To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Free federal and free state tax filing A trust is a fund or foundation and will qualify. Free federal and free state tax filing However, an individual or a partnership will not qualify. Free federal and free state tax filing Examples. Free federal and free state tax filing   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. Free federal and free state tax filing Child care organizations. Free federal and free state tax filing   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. Free federal and free state tax filing Instrumentalities. Free federal and free state tax filing   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Free federal and free state tax filing Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Free federal and free state tax filing However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Free federal and free state tax filing A state or municipality itself does not qualify for exemption. Free federal and free state tax filing Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. Free federal and free state tax filing Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. Free federal and free state tax filing Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. Free federal and free state tax filing Fundraising events. Free federal and free state tax filing   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. Free federal and free state tax filing This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. Free federal and free state tax filing   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. Free federal and free state tax filing If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. Free federal and free state tax filing You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. Free federal and free state tax filing See Disclosure of Quid Pro Quo Contributions in chapter 2. Free federal and free state tax filing Exemption application not filed. Free federal and free state tax filing   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Free federal and free state tax filing Separate fund—contributions that are deductible. Free federal and free state tax filing   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Free federal and free state tax filing   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. Free federal and free state tax filing A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. Free federal and free state tax filing Personal benefit contracts. Free federal and free state tax filing   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. Free federal and free state tax filing   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. Free federal and free state tax filing Certain annuity contracts. Free federal and free state tax filing   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). Free federal and free state tax filing Certain contracts held by a charitable remainder trust. Free federal and free state tax filing   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. Free federal and free state tax filing Excise tax. Free federal and free state tax filing   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. Free federal and free state tax filing The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Free federal and free state tax filing Excise Taxes. Free federal and free state tax filing   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Free federal and free state tax filing Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. Free federal and free state tax filing Indoor tanning services. Free federal and free state tax filing   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Free federal and free state tax filing For more information, go to IRS. Free federal and free state tax filing gov and select Affordable Care Act Tax Provisions. Free federal and free state tax filing Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. Free federal and free state tax filing For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. Free federal and free state tax filing See the organization headings that follow for specific information your organization may need to provide. Free federal and free state tax filing Form 1023. Free federal and free state tax filing   Your organization must file its application for recognition of exemption on Form 1023. Free federal and free state tax filing See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Free federal and free state tax filing Some organizations are not required to file Form 1023. Free federal and free state tax filing See Organizations Not Required To File Form 1023, later. Free federal and free state tax filing    Additional information to help you complete your application can be found online. Free federal and free state tax filing Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. Free federal and free state tax filing See Exemption Requirements - Section 501(c)(3) Organizations. Free federal and free state tax filing   Form 1023 and accompanying statements must show that all of the following are true. Free federal and free state tax filing The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Free federal and free state tax filing ) specified in the introduction to this chapter. Free federal and free state tax filing No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Free federal and free state tax filing You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. Free federal and free state tax filing The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. Free federal and free state tax filing See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Free federal and free state tax filing Political activity. Free federal and free state tax filing   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). Free federal and free state tax filing Such participation or intervention includes the publishing or distributing of statements. Free federal and free state tax filing   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Free federal and free state tax filing Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. Free federal and free state tax filing Effective date of exemption. Free federal and free state tax filing   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. Free federal and free state tax filing These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. Free federal and free state tax filing If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. Free federal and free state tax filing Otherwise, exemption will be recognized only from the date of receipt. Free federal and free state tax filing The date of receipt is the date of the U. Free federal and free state tax filing S. Free federal and free state tax filing postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. Free federal and free state tax filing Private delivery service. Free federal and free state tax filing   If a private delivery service designated by the IRS, rather than the U. Free federal and free state tax filing S. Free federal and free state tax filing Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Free federal and free state tax filing The following private delivery services have been designated by the IRS. Free federal and free state tax filing DHL Express (DHL): DHL “Same Day” Service. Free federal and free state tax filing Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Free federal and free state tax filing United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Free federal and free state tax filing M. Free federal and free state tax filing , UPS Worldwide Express Plus, and UPS Worldwide Express. Free federal and free state tax filing Amendments to organizing documents required. Free federal and free state tax filing   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. Free federal and free state tax filing If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. Free federal and free state tax filing Extensions of time for filing. Free federal and free state tax filing   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Free federal and free state tax filing Automatic 12-month extension. Free federal and free state tax filing Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. Free federal and free state tax filing To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Free federal and free state tax filing 9100-2. Free federal and free state tax filing ” Discretionary extensions. Free federal and free state tax filing An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. Free federal and free state tax filing How to show reasonable action and good faith. Free federal and free state tax filing   An organization acted reasonably and showed good faith if at least one of the following is true. Free federal and free state tax filing The organization requests relief before its failure to file is discovered by the IRS. Free federal and free state tax filing The organization failed to file because of intervening events beyond its control. Free federal and free state tax filing The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. Free federal and free state tax filing The organization reasonably relied upon the written advice of the IRS. Free federal and free state tax filing The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Free federal and free state tax filing An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. Free federal and free state tax filing Not acting reasonably and in good faith. Free federal and free state tax filing   An organization has not acted reasonably and in good faith under the following circumstances. Free federal and free state tax filing It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. Free federal and free state tax filing It was informed of the requirement to file and related tax consequences, but chose not to file. Free federal and free state tax filing It uses hindsight in requesting relief. Free federal and free state tax filing The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. Free federal and free state tax filing Prejudicing the interest of the Government. Free federal and free state tax filing   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. Free federal and free state tax filing Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. Free federal and free state tax filing The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. Free federal and free state tax filing The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. Free federal and free state tax filing Procedure for requesting extension. Free federal and free state tax filing   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Free federal and free state tax filing A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Free federal and free state tax filing Any documents relevant to the application. Free federal and free state tax filing An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Free federal and free state tax filing If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. Free federal and free state tax filing This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Free federal and free state tax filing ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. Free federal and free state tax filing This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Free federal and free state tax filing The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Free federal and free state tax filing These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Free federal and free state tax filing ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. Free federal and free state tax filing The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. Free federal and free state tax filing The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Free federal and free state tax filing   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Free federal and free state tax filing Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Free federal and free state tax filing More information. Free federal and free state tax filing   For more information about these procedures, see Regulations sections 301. Free federal and free state tax filing 9100-1, 301. Free federal and free state tax filing 9100-2, 301. Free federal and free state tax filing 9100-3, Revenue Procedure 2013-4, section 6. Free federal and free state tax filing 04, 2013-1 I. Free federal and free state tax filing R. Free federal and free state tax filing B. Free federal and free state tax filing 126, and Revenue Procedure 2013-8, 2013-1 I. Free federal and free state tax filing R. Free federal and free state tax filing B. Free federal and free state tax filing 237. Free federal and free state tax filing See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Free federal and free state tax filing Notification from the IRS. Free federal and free state tax filing   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Free federal and free state tax filing Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Free federal and free state tax filing These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. Free federal and free state tax filing Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Free federal and free state tax filing These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Free federal and free state tax filing Filing Form 1023 to establish exemption. Free federal and free state tax filing   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. Free federal and free state tax filing By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Free federal and free state tax filing A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Free federal and free state tax filing Private foundations. Free federal and free state tax filing   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. Free federal and free state tax filing Gross receipts test. Free federal and free state tax filing   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. Free federal and free state tax filing   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. Free federal and free state tax filing For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. Free federal and free state tax filing The organization must file Form 1023 within 90 days after the end of its second tax year. Free federal and free state tax filing   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. Free federal and free state tax filing However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. Free federal and free state tax filing Example. Free federal and free state tax filing   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Free federal and free state tax filing It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Free federal and free state tax filing It did not file a Form 1023. Free federal and free state tax filing The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. Free federal and free state tax filing Therefore, it did not have to file Form 1023 and is exempt for those years. Free federal and free state tax filing However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Free federal and free state tax filing Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Free federal and free state tax filing If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. Free federal and free state tax filing The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Free federal and free state tax filing   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Free federal and free state tax filing See the procedures for this extension discussed earlier. Free federal and free state tax filing Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Free federal and free state tax filing This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Free federal and free state tax filing Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. Free federal and free state tax filing These conditions for exemption are referred to as the organizational test. Free federal and free state tax filing Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Free federal and free state tax filing Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). Free federal and free state tax filing The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. Free federal and free state tax filing Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Free federal and free state tax filing Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Free federal and free state tax filing In interpreting an organization's articles, the law of the state where the organization was created is controlling. Free federal and free state tax filing If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. Free federal and free state tax filing The following are examples illustrating the organizational test. Free federal and free state tax filing Example 1. Free federal and free state tax filing Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Free federal and free state tax filing These articles appropriately limit the organization's purposes. Free federal and free state tax filing The organization meets the organizational test. Free federal and free state tax filing Example 2. Free federal and free state tax filing An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Free federal and free state tax filing The organization will not be properly limited as to its purposes since all research is not scientific. Free federal and free state tax filing The organization does not meet the organizational test. Free federal and free state tax filing Example 3. Free federal and free state tax filing An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). Free federal and free state tax filing The organization meets the organizational test. Free federal and free state tax filing Example 4. Free federal and free state tax filing If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. Free federal and free state tax filing Example 5. Free federal and free state tax filing If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. Free federal and free state tax filing On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. Free federal and free state tax filing Example 6. Free federal and free state tax filing If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. Free federal and free state tax filing Such purposes are vague and may be accomplished other than in an exempt manner. Free federal and free state tax filing Example 7. Free federal and free state tax filing A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Free federal and free state tax filing A hospital may or may not be exempt depending on the manner in which it is operated. Free federal and free state tax filing Example 8. Free federal and free state tax filing An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. Free federal and free state tax filing Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Free federal and free state tax filing This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. Free federal and free state tax filing If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Free federal and free state tax filing Dedication. Free federal and free state tax filing   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. Free federal and free state tax filing Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. Free federal and free state tax filing Distribution. Free federal and free state tax filing   Revenue Procedure 82-2, 1982-1 C. Free federal and free state tax filing B. Free federal and free state tax filing 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. Free federal and free state tax filing The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Free federal and free state tax filing   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. Free federal and free state tax filing Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. Free federal and free state tax filing Sample articles of organization. Free federal and free state tax filing   See sample articles of organization in the Appendix in the back of this publication. Free federal and free state tax filing Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. Free federal and free state tax filing In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. Free federal and free state tax filing You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Free federal and free state tax filing If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. Free federal and free state tax filing See also Private Schools , discussed later. Free federal and free state tax filing Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. Free federal and free state tax filing Advocacy of a position. Free federal and free state tax filing   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. Free federal and free state tax filing The mere presentation of unsupported opinion is not educational. Free federal and free state tax filing Method not educational. Free federal and free state tax filing   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). Free federal and free state tax filing The following factors may indicate that the method is not educational. Free federal and free state tax filing The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Free federal and free state tax filing The facts that purport to support the viewpoint are distorted. Free federal and free state tax filing The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. Free federal and free state tax filing The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. Free federal and free state tax filing   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. Free federal and free state tax filing Qualifying organizations. Free federal and free state tax filing   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. Free federal and free state tax filing College book stores, cafeterias, restaurants, etc. Free federal and free state tax filing   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. Free federal and free state tax filing Alumni association. Free federal and free state tax filing   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. Free federal and free state tax filing If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . Free federal and free state tax filing Athletic organization. Free federal and free state tax filing   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. Free federal and free state tax filing If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Free federal and free state tax filing Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. Free federal and free state tax filing If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Free federal and free state tax filing Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. Free federal and free state tax filing The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Free federal and free state tax filing (This information also must be projected, so far as may be feasible, for the next academic year. Free federal and free state tax filing ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Free federal and free state tax filing A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Free federal and free state tax filing A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. Free federal and free state tax filing The public school district and county in which the school is located. Free federal and free state tax filing How to determine racial composition. Free federal and free state tax filing   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. Free federal and free state tax filing Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Free federal and free state tax filing The identity of individual students or members of the faculty and administrative staff should not be included with this information. Free federal and free state tax filing   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. Free federal and free state tax filing Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. Free federal and free state tax filing Also, the school must circulate information that clearly states the school's admission policies. Free federal and free state tax filing A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. Free federal and free state tax filing The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Free federal and free state tax filing The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. Free federal and free state tax filing Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Free federal and free state tax filing A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. Free federal and free state tax filing A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Free federal and free state tax filing Policy statement. Free federal and free state tax filing   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Free federal and free state tax filing Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. Free federal and free state tax filing Publicity requirement. Free federal and free state tax filing   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Free federal and free state tax filing Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. Free federal and free state tax filing To satisfy this requirement, the school must use one of the following two methods. Free federal and free state tax filing Method one. Free federal and free state tax filing   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. Free federal and free state tax filing Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Free federal and free state tax filing When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. Free federal and free state tax filing If this method is used, the notice must meet the following printing requirements. Free federal and free state tax filing It must appear in a section of the newspaper likely to be read by prospective students and their families. Free federal and free state tax filing It must occupy at least 3 column inches. Free federal and free state tax filing It must have its title printed in at least 12 point bold face type. Free federal and free state tax filing It must have the remaining text printed in at least 8 point type. Free federal and free state tax filing The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. Free federal and free state tax filing It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Free federal and free state tax filing   Method two. Free federal and free state tax filing   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. Free federal and free state tax filing If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. Free federal and free state tax filing In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. Free federal and free state tax filing The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. Free federal and free state tax filing Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Free federal and free state tax filing Exceptions. Free federal and free state tax filing   The publicity requirements will not apply in the following situations. Free federal and free state tax filing First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. Free federal and free state tax filing These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. Free federal and free state tax filing If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. Free federal and free state tax filing Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . Free federal and free state tax filing   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. Free federal and free state tax filing The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. Free federal and free state tax filing   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. Free federal and free state tax filing Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. Free federal and free state tax filing   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. Free federal and free state tax filing The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Free federal and free state tax filing In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Free federal and free state tax filing Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. Free federal and free state tax filing Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. Free federal and free state tax filing Facilities and programs. Free federal and free state tax filing   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Free federal and free state tax filing Scholarship and loan programs. Free federal and free state tax filing   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Free federal and free state tax filing This must be known throughout the general community being served by the school and should be referred to in its publicity. Free federal and free state tax filing Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. Free federal and free state tax filing Certification. Free federal and free state tax filing   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. Free federal and free state tax filing   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Free federal and free state tax filing Recordkeeping requirements. Free federal and free state tax filing With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. Free federal and free state tax filing Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Free federal and free state tax filing Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Free federal and free state tax filing Copies of all materials used by or on behalf of the school to solicit contributions. Free federal and free state tax filing Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Free federal and free state tax filing (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. Free federal and free state tax filing ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. Free federal and free state tax filing However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. Free federal and free state tax filing The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. Free federal and free state tax filing Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Free federal and free state tax filing Exceptions. Free federal and free state tax filing   The school does not have to independently maintain these records for IRS use if both of the following are true. Free federal and free state tax filing Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. Free federal and free state tax filing The school maintains copies of these reports from which this information is readily obtainable. Free federal and free state tax filing If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. Free federal and free state tax filing Failure to maintain records. Free federal and free state tax filing   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. Free federal and free state tax filing Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. Free federal and free state tax filing However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. Free federal and free state tax filing Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). Free federal and free state tax filing Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. Free federal and free state tax filing Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. Free federal and free state tax filing Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. Free federal and free state tax filing The rest of this section contains a description of the information to be provided by certain specific organizations. Free federal and free state tax filing This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Free federal and free state tax filing Each of the following organizations must submit the information described. Free federal and free state tax filing Charitable organization supporting education. Free federal and free state tax filing   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. Free federal and free state tax filing Scholarships. Free federal and free state tax filing   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Free federal and free state tax filing Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Free federal and free state tax filing How and by whom the recipients are or will be selected. Free federal and free state tax filing If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Free federal and free state tax filing If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. Free federal and free state tax filing A copy of the scholarship application form and any brochures or literature describing the scholarship program. Free federal and free state tax filing Hospital. Free federal and free state tax filing   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Free federal and free state tax filing   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Free federal and free state tax filing You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. Free federal and free state tax filing Submit also an appraisal showing the fair rental value of the rented space. Free federal and free state tax filing Clinic. Free federal and free state tax filing   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. Free federal and free state tax filing Home for the aged. Free federal and free state tax filing   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Free federal and free state tax filing Community nursing bureau. Free federal and free state tax filing   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. Free federal and free state tax filing Organization providing loans. Free federal and free state tax filing   If you make, or will make, loans for charitable and educational purposes, submit the following information. Free federal and free state tax filing An explanation of the circumstances under which such loans are, or will be, made. Free federal and free state tax filing Criteria for selection, including the rules of eligibility. Free federal and free state tax filing How and by whom the recipients are or will be selected. Free federal and free state tax filing Manner of repayment of the loan. Free federal and free state tax filing Security required, if any. Free federal and free state tax filing Interest charged, if any, and when payable. Free federal and free state tax filing Copies in duplicate of the loan application and any brochures or literature describing the loan program. Free federal and free state tax filing Public-interest law firms. Free federal and free state tax filing   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. Free federal and free state tax filing How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Free federal and free state tax filing Whether the organization will accept fees for its services. Free federal and free state tax filing A description of the cases litigated or to be litigated and how they benefit the public generally. Free federal and free state tax filing Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. Free federal and free state tax filing Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. Free federal and free state tax filing Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. Free federal and free state tax filing Acceptance of attorneys' fees. Free federal and free state tax filing   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. Free federal and free state tax filing Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Free federal and free state tax filing   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. Free federal and free state tax filing All fee awards must be paid to the organization and not to its individual staff attorneys. Free federal and free state tax filing Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Free federal and free state tax filing Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. Free federal and free state tax filing   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. Free federal and free state tax filing   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. Free federal and free state tax filing Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Free federal and free state tax filing That the particular religious beliefs of the organization are truly and sincerely held. Free federal and free state tax filing That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Free federal and free state tax filing Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. Free federal and free state tax filing If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. Free federal and free state tax filing Churches. Free federal and free state tax filing   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. Free federal and free state tax filing In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. Free federal and free state tax filing   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Free federal and free state tax filing Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Free federal and free state tax filing The IRS considers the facts and circumstances of each organization applying for church status. Free federal and free state tax filing Convention or association of churches. Free federal and free state tax filing   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. Free federal and free state tax filing Integrated auxiliaries. Free federal and free state tax filing   An organization is an integrated auxiliary of a church if all the following are true. Free federal and free state tax filing The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Free federal and free state tax filing It is affiliated with a church or a convention or association of churches. Free federal and free state tax filing It is internally supported. Free federal and free state tax filing An organization is internally supported unless both of the following are true. Free federal and free state tax filing It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). Free federal and free state tax filing It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. Free federal and free state tax filing Special rule. Free federal and free state tax filing   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. Free federal and free state tax filing   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. Free federal and free state tax filing   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. Free federal and free state tax filing Scientific Organizations You must show that your organization's research will be carried on in the public interest. Free federal and free state tax filing Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. Free federal and free state tax filing Aiding in the scientific education of college or university students. Free federal and free state tax filing Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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The Free Federal And Free State Tax Filing

Free federal and free state tax filing Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. Free federal and free state tax filing Exemption from withholding. Free federal and free state tax filing How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 may be taxable, compare the base amount (explained later) for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Free federal and free state tax filing When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Free federal and free state tax filing Children's benefits. Free federal and free state tax filing   The rules in this publication apply to benefits received by children. Free federal and free state tax filing See Who is taxed , later. Free federal and free state tax filing The SSA issues Form SSA-1099 and Form SSA-1042S. Free federal and free state tax filing The RRB issues Form RRB-1099 and Form RRB-1042S. Free federal and free state tax filing These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. Free federal and free state tax filing You may receive more than one of these forms for the same tax year. Free federal and free state tax filing See the Appendix at the end of this publication for more information. Free federal and free state tax filing Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. Free federal and free state tax filing The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. Free federal and free state tax filing A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. Free federal and free state tax filing You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. Free federal and free state tax filing Figuring total income. Free federal and free state tax filing   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. Free federal and free state tax filing If the total is more than your base amount, part of your benefits may be taxable. Free federal and free state tax filing   If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Free federal and free state tax filing Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Free federal and free state tax filing If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Free federal and free state tax filing If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Free federal and free state tax filing Base amount. Free federal and free state tax filing   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Free federal and free state tax filing Worksheet A. Free federal and free state tax filing   You can use Worksheet A to figure the amount of income to compare with your base amount. Free federal and free state tax filing This is a quick way to check whether some of your benefits may be taxable. Free federal and free state tax filing     Worksheet A. Free federal and free state tax filing A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Free federal and free state tax filing Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Free federal and free state tax filing (If you received more than one form, combine the amounts from box 5 and enter the total. Free federal and free state tax filing ) A. Free federal and free state tax filing   Note. Free federal and free state tax filing If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Free federal and free state tax filing B. Free federal and free state tax filing Enter one-half of the amount on line A B. Free federal and free state tax filing   C. Free federal and free state tax filing Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Free federal and free state tax filing   D. Free federal and free state tax filing Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Free federal and free state tax filing   E. Free federal and free state tax filing Add lines B, C, and D E. Free federal and free state tax filing   Note. Free federal and free state tax filing Compare the amount on line E to your base amount for your filing status. Free federal and free state tax filing If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Free federal and free state tax filing If the amount on line E is more than your base amount, some of your benefits may be taxable. Free federal and free state tax filing You need to complete Worksheet 1, shown later. Free federal and free state tax filing If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Free federal and free state tax filing   Example. Free federal and free state tax filing You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Free federal and free state tax filing In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Free federal and free state tax filing Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Free federal and free state tax filing You also received a taxable pension of $22,800 and interest income of $500. Free federal and free state tax filing You did not have any tax-exempt interest income. Free federal and free state tax filing Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. Free federal and free state tax filing   Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Free federal and free state tax filing     Filled-in Worksheet A. Free federal and free state tax filing A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Free federal and free state tax filing Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Free federal and free state tax filing (If you received more than one form, combine the amounts from box 5 and enter the total. Free federal and free state tax filing ) A. Free federal and free state tax filing $11,000 Note. Free federal and free state tax filing If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Free federal and free state tax filing B. Free federal and free state tax filing Enter one-half of the amount on line A B. Free federal and free state tax filing 5,500 C. Free federal and free state tax filing Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Free federal and free state tax filing 23,300 D. Free federal and free state tax filing Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Free federal and free state tax filing -0- E. Free federal and free state tax filing Add lines B, C, and D E. Free federal and free state tax filing $28,800 Note. Free federal and free state tax filing Compare the amount on line E to your base amount for your filing status. Free federal and free state tax filing If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Free federal and free state tax filing If the amount on line E is more than your base amount, some of your benefits may be taxable. Free federal and free state tax filing You need to complete Worksheet 1, shown later. Free federal and free state tax filing If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Free federal and free state tax filing   Who is taxed. Free federal and free state tax filing   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Free federal and free state tax filing For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Free federal and free state tax filing One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Free federal and free state tax filing Repayment of benefits. Free federal and free state tax filing   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Free federal and free state tax filing It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Free federal and free state tax filing If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Free federal and free state tax filing   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Free federal and free state tax filing Your repayments are shown in box 4. Free federal and free state tax filing The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Free federal and free state tax filing Use the amount in box 5 to figure whether any of your benefits are taxable. Free federal and free state tax filing Example. Free federal and free state tax filing In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. Free federal and free state tax filing In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. Free federal and free state tax filing During 2013, you repaid $500 to SSA. Free federal and free state tax filing The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). Free federal and free state tax filing The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). Free federal and free state tax filing Tax withholding and estimated tax. Free federal and free state tax filing   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Free federal and free state tax filing If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. Free federal and free state tax filing   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Free federal and free state tax filing For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Free federal and free state tax filing U. Free federal and free state tax filing S. Free federal and free state tax filing citizens residing abroad. Free federal and free state tax filing   U. Free federal and free state tax filing S. Free federal and free state tax filing citizens who are residents of the following countries are exempt from U. Free federal and free state tax filing S. Free federal and free state tax filing tax on their benefits. Free federal and free state tax filing Canada. Free federal and free state tax filing Egypt. Free federal and free state tax filing Germany. Free federal and free state tax filing Ireland. Free federal and free state tax filing Israel. Free federal and free state tax filing Italy. Free federal and free state tax filing (You must also be a citizen of Italy for the exemption to apply. Free federal and free state tax filing ) Romania. Free federal and free state tax filing United Kingdom. Free federal and free state tax filing   The SSA will not withhold U. Free federal and free state tax filing S. Free federal and free state tax filing tax from your benefits if you are a U. Free federal and free state tax filing S. Free federal and free state tax filing citizen. Free federal and free state tax filing   The RRB will withhold U. Free federal and free state tax filing S. Free federal and free state tax filing tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. Free federal and free state tax filing If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. Free federal and free state tax filing Contact the RRB to get this form. Free federal and free state tax filing Lawful permanent residents. Free federal and free state tax filing   For U. Free federal and free state tax filing S. Free federal and free state tax filing income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Free federal and free state tax filing Social security benefits paid to a green card holder are not subject to 30% withholding. Free federal and free state tax filing If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Free federal and free state tax filing SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Free federal and free state tax filing If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Free federal and free state tax filing You must also attach the following information to your Form 1040 or 1040A: A copy of the Form SSA-1042S, Social Security Benefit Statement, A copy of the “green card,” and A signed declaration that includes the following statements:    “The SSA should not have withheld federal income tax from my social security benefits because I am a U. Free federal and free state tax filing S. Free federal and free state tax filing lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Free federal and free state tax filing I am filing a U. Free federal and free state tax filing S. Free federal and free state tax filing income tax return for the tax year as a resident alien reporting all of my worldwide income. Free federal and free state tax filing I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. Free federal and free state tax filing ” Nonresident aliens. Free federal and free state tax filing   A nonresident alien is an individual who is not a citizen or resident of the United States. Free federal and free state tax filing If you are a nonresident alien, the rules discussed in this publication do not apply to you. Free federal and free state tax filing Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. Free federal and free state tax filing You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. Free federal and free state tax filing These forms will also show the tax rate and the amount of tax withheld from your benefits. Free federal and free state tax filing   Under tax treaties with the following countries, residents of these countries are exempt from U. Free federal and free state tax filing S. Free federal and free state tax filing tax on their benefits. Free federal and free state tax filing Canada. Free federal and free state tax filing Egypt. Free federal and free state tax filing Germany. Free federal and free state tax filing Ireland. Free federal and free state tax filing Israel. Free federal and free state tax filing Italy. Free federal and free state tax filing Japan. Free federal and free state tax filing Romania. Free federal and free state tax filing United Kingdom. Free federal and free state tax filing   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. Free federal and free state tax filing S. Free federal and free state tax filing tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. Free federal and free state tax filing   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. Free federal and free state tax filing   For more information on whether you are a nonresident alien, see Publication 519, U. Free federal and free state tax filing S. Free federal and free state tax filing Tax Guide for Aliens. Free federal and free state tax filing Exemption from withholding. Free federal and free state tax filing   If your social security benefits are exempt from tax because you are a resident of one of the treaty countries listed, the SSA will not withhold U. Free federal and free state tax filing S. Free federal and free state tax filing tax from your benefits. Free federal and free state tax filing   If your railroad retirement benefits are exempt from tax because you are a resident of one of the treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. Free federal and free state tax filing Contact the RRB to get this form. Free federal and free state tax filing Canadian or German social security benefits paid to U. Free federal and free state tax filing S. Free federal and free state tax filing residents. Free federal and free state tax filing   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. Free federal and free state tax filing S. Free federal and free state tax filing residents are treated for U. Free federal and free state tax filing S. Free federal and free state tax filing income tax purposes as if they were paid under the social security legislation of the United States. Free federal and free state tax filing If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. Free federal and free state tax filing How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Free federal and free state tax filing You cannot use Form 1040EZ. Free federal and free state tax filing Reporting on Form 1040. Free federal and free state tax filing   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Free federal and free state tax filing Reporting on Form 1040A. Free federal and free state tax filing   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Free federal and free state tax filing Benefits not taxable. Free federal and free state tax filing   If you are filing Form 1040EZ, do not report any benefits on your tax return. Free federal and free state tax filing If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Free federal and free state tax filing Generally, the higher that total amount, the greater the taxable part of your benefits. Free federal and free state tax filing Maximum taxable part. Free federal and free state tax filing   Generally, up to 50% of your benefits will be taxable. Free federal and free state tax filing However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Free federal and free state tax filing The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Free federal and free state tax filing You are married filing separately and lived with your spouse at any time during 2013. Free federal and free state tax filing Which worksheet to use. Free federal and free state tax filing   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Free federal and free state tax filing You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. Free federal and free state tax filing You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Free federal and free state tax filing In this situation you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Free federal and free state tax filing Situation (1) does not apply and you take an exclusion for interest from qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Free federal and free state tax filing In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. Free federal and free state tax filing You received a lump-sum payment for an earlier year. Free federal and free state tax filing In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. Free federal and free state tax filing See Lump-Sum Election , later. Free federal and free state tax filing Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. Free federal and free state tax filing Filled-in Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing $5,980         2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 2,990     3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing 28,990     4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing -0-     5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing -0-     6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 31,980     7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing -0-     8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 31,980     9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing 25,000       Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing 6,980     11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing 9,000     12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing -0-     13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing 6,980     14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing 3,490     15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing 2,990     16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing -0-     17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing 2,990     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing 5,083     19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing $2,990       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Example 1. Free federal and free state tax filing George White is single and files Form 1040 for 2013. Free federal and free state tax filing In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. Free federal and free state tax filing He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. Free federal and free state tax filing   To figure his taxable benefits, George completes Worksheet 1, shown below. Free federal and free state tax filing On line 20a of his Form 1040, George enters his net benefits of $5,980. Free federal and free state tax filing On line 20b, he enters his taxable benefits of $2,990. Free federal and free state tax filing Example 2. Free federal and free state tax filing Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Free federal and free state tax filing Ray is retired and received a fully taxable pension of $15,500. Free federal and free state tax filing He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Free federal and free state tax filing Alice worked during the year and had wages of $14,000. Free federal and free state tax filing She made a deductible payment to her IRA account of $1,000. Free federal and free state tax filing Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Free federal and free state tax filing They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Free federal and free state tax filing They find none of Ray's social security benefits are taxable. Free federal and free state tax filing On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Free federal and free state tax filing Filled-in Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing $5,600         2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 2,800     3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing 29,750     4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing -0-     5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing -0-     6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 32,550     7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing 1,000     8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 31,550     9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing 32,000       Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing       11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing       12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing       13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing       14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing       15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing       16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing       17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing       18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing       19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Example 3. Free federal and free state tax filing Joe and Betty Johnson file a joint return on Form 1040 for 2013. Free federal and free state tax filing Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Free federal and free state tax filing Joe's Form RRB-1099 shows $10,000 in box 5. Free federal and free state tax filing Betty is a retired government worker and received a fully taxable pension of $38,000. Free federal and free state tax filing They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bond. Free federal and free state tax filing The savings bond interest qualified for the exclusion. Free federal and free state tax filing They figure their taxable benefits by completing Worksheet 1 below. Free federal and free state tax filing Because they have qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Free federal and free state tax filing On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Free federal and free state tax filing More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Free federal and free state tax filing (See Maximum taxable part under How Much Is Taxable earlier. Free federal and free state tax filing ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Free federal and free state tax filing Filled-in Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing $10,000         2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 5,000     3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing 40,500     4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing -0-     5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing -0-     6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 45,500     7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing -0-     8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 45,500     9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing 32,000       Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing 13,500     11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing 12,000     12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing 1,500     13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing 12,000     14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing 6,000     15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing 5,000     16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing 1,275     17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing 6,275     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing 8,500     19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing $6,275       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Filled-in Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing $4,000         2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 2,000     3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing 8,000     4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing -0-     5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing -0-     6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 10,000     7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing -0-     8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 10,000     9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing         Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing       11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing       12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing       13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing       14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing       15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing       16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing       17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing 8,500     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing 3,400     19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing $3,400       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Example 4. Free federal and free state tax filing Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. Free federal and free state tax filing Bill earned $8,000 during 2013. Free federal and free state tax filing The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). Free federal and free state tax filing Bill figures his taxable benefits by completing Worksheet 1 below. Free federal and free state tax filing He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. Free federal and free state tax filing See How Much Is Taxable earlier. Free federal and free state tax filing Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. Free federal and free state tax filing Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Free federal and free state tax filing This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Free federal and free state tax filing No part of the lump-sum death benefit is subject to tax. Free federal and free state tax filing Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Free federal and free state tax filing However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Free federal and free state tax filing You can elect this method if it lowers your taxable benefits. Free federal and free state tax filing Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. Free federal and free state tax filing Then you subtract any taxable benefits for that year that you previously reported. Free federal and free state tax filing The remainder is the taxable part of the lump-sum payment. Free federal and free state tax filing Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). Free federal and free state tax filing Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Free federal and free state tax filing Do not file an amended return for the earlier year. Free federal and free state tax filing Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. Free federal and free state tax filing Complete Worksheet 1 in this publication. Free federal and free state tax filing Complete Worksheet 2 and Worksheet 3 as appropriate. Free federal and free state tax filing Use Worksheet 2 if your lump-sum payment was for a year after 1993. Free federal and free state tax filing Use Worksheet 3 if it was for 1993 or an earlier year. Free federal and free state tax filing Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. Free federal and free state tax filing Complete Worksheet 4. Free federal and free state tax filing Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. Free federal and free state tax filing If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. Free federal and free state tax filing Making the election. Free federal and free state tax filing   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. Free federal and free state tax filing Do not attach the completed worksheets to your return. Free federal and free state tax filing Keep them with your records. Free federal and free state tax filing    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. Free federal and free state tax filing Lump-sum payment reported on Form SSA-1099 or RRB-1099. Free federal and free state tax filing   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. Free federal and free state tax filing That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. Free federal and free state tax filing The form will also show the year (or years) the payment is for. Free federal and free state tax filing However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. Free federal and free state tax filing You must contact the RRB for a breakdown by year for any amount shown in box 9. Free federal and free state tax filing Example Jane Jackson is single. Free federal and free state tax filing In 2012 she applied for social security disability benefits but was told she was ineligible. Free federal and free state tax filing She appealed the decision and won. Free federal and free state tax filing In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. Free federal and free state tax filing Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. Free federal and free state tax filing Jane's other income for 2012 and 2013 is as follows. Free federal and free state tax filing   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. Free federal and free state tax filing She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. Free federal and free state tax filing Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. Free federal and free state tax filing She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. Free federal and free state tax filing She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. Free federal and free state tax filing After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. Free federal and free state tax filing Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. Free federal and free state tax filing To do this, she prints “LSE” to the left of Form 1040, line 20a. Free federal and free state tax filing She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. Free federal and free state tax filing Jane's filled-in worksheets (1, 2, and 4) follow. Free federal and free state tax filing Jane Jackson's Filled-in Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing $11,000         2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 5,500     3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing 25,500     4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing -0-     5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing -0-     6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 31,000     7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing -0-     8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 31,000     9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing 25,000       Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing 6,000     11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing 9,000     12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing -0-     13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing 6,000     14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing 3,000     15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing 3,000     16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing -0-     17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing 3,000     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing 9,350     19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing $3,000       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Jane Jackson's Filled-in Worksheet 2. Free federal and free state tax filing Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Free federal and free state tax filing $2,000           Note. Free federal and free state tax filing If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Free federal and free state tax filing Otherwise, go on to line 2. Free federal and free state tax filing             2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 1,000   3. Free federal and free state tax filing Enter your adjusted gross income for the earlier year 3. Free federal and free state tax filing 23,000   4. Free federal and free state tax filing Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Free federal and free state tax filing -0-   5. Free federal and free state tax filing Enter any tax-exempt interest received in the earlier year 5. Free federal and free state tax filing -0-   6. Free federal and free state tax filing Add lines 2 through 5 6. Free federal and free state tax filing 24,000   7. Free federal and free state tax filing Enter your taxable benefits for the earlier year that you previously reported 7. Free federal and free state tax filing -0-   8. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 24,000   9. Free federal and free state tax filing If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Free federal and free state tax filing 25,000     Note. Free federal and free state tax filing If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 8 more than the amount on line 9?       No. Free federal and free state tax filing Skip lines 10 through 20 and enter -0- on line 21. Free federal and free state tax filing       Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing     11. Free federal and free state tax filing Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Free federal and free state tax filing     12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing     13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing     14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing     15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing     16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing     17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing     19. Free federal and free state tax filing Refigured taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18 19. Free federal and free state tax filing     20. Free federal and free state tax filing Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Free federal and free state tax filing     21. Free federal and free state tax filing Additional taxable benefits. Free federal and free state tax filing Subtract line 20 from line 19. Free federal and free state tax filing Also enter this amount on Worksheet 4, line 20 21. Free federal and free state tax filing -0-     Do not file an amended return for this earlier year. Free federal and free state tax filing Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Free federal and free state tax filing   Jane Jackson's Filled-in Worksheet 4. Free federal and free state tax filing Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)     Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. Free federal and free state tax filing $9,000         Note. Free federal and free state tax filing If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. Free federal and free state tax filing Otherwise, go on to line 2. Free federal and free state tax filing           2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing 4,500   3. Free federal and free state tax filing Enter the amount from Worksheet 1, line 3 3. Free federal and free state tax filing 25,500   4. Free federal and free state tax filing Enter the amount from Worksheet 1, line 4 4. Free federal and free state tax filing -0-   5. Free federal and free state tax filing Enter the amount from Worksheet 1, line 5 5. Free federal and free state tax filing -0-   6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing 30,000   7. Free federal and free state tax filing Enter the amount from Worksheet 1, line 7 7. Free federal and free state tax filing -0-   8. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing 30,000   9. Free federal and free state tax filing Enter the amount from Worksheet 1, line 9. Free federal and free state tax filing But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then, go to line 18 9. Free federal and free state tax filing 25,000   10. Free federal and free state tax filing Is the amount on line 8 more than the amount on line 9? No. Free federal and free state tax filing Skip lines 10 through 18, enter -0- on line 19, and go to line 20. Free federal and free state tax filing  Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing 5,000   11. Free federal and free state tax filing Enter the amount from Worksheet 1, line 11 11. Free federal and free state tax filing 9,000   12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing -0-   13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing 5,000   14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing 2,500   15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing 2,500   16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing -0-   17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing 2,500   18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing 7,650   19. Free federal and free state tax filing Enter the smaller of line 17 or line 18 19. Free federal and free state tax filing 2,500   20. Free federal and free state tax filing Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. Free federal and free state tax filing -0-   21. Free federal and free state tax filing Taxable benefits under lump-sum election method. Free federal and free state tax filing Add lines 19 and 20 21. Free federal and free state tax filing $2,500   Next. Free federal and free state tax filing Is line 21 above smaller than Worksheet 1, line 19? No. Free federal and free state tax filing Do not use this method to figure your taxable benefits. Free federal and free state tax filing Follow the instructions on Worksheet 1 to report your benefits. Free federal and free state tax filing  Yes. Free federal and free state tax filing You can elect to report your taxable benefits under this method. Free federal and free state tax filing To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. Free federal and free state tax filing Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Free federal and free state tax filing Disability payments. Free federal and free state tax filing   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Free federal and free state tax filing If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Free federal and free state tax filing If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Free federal and free state tax filing Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits , later. Free federal and free state tax filing Legal expenses. Free federal and free state tax filing   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Free federal and free state tax filing   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Free federal and free state tax filing Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Free federal and free state tax filing If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Free federal and free state tax filing Do not use Worksheet 1 in this case. Free federal and free state tax filing If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Free federal and free state tax filing If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Free federal and free state tax filing Joint return. Free federal and free state tax filing   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Free federal and free state tax filing You do this to get your net benefits when figuring if your combined benefits are taxable. Free federal and free state tax filing Example. Free federal and free state tax filing John and Mary file a joint return for 2013. Free federal and free state tax filing John received Form SSA-1099 showing $3,000 in box 5. Free federal and free state tax filing Mary also received Form SSA-1099 and the amount in box 5 was ($500). Free federal and free state tax filing John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Free federal and free state tax filing Repayment of benefits received in an earlier year. Free federal and free state tax filing   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Free federal and free state tax filing Deduction $3,000 or less. Free federal and free state tax filing   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Free federal and free state tax filing Claim it on Schedule A (Form 1040), line 23. Free federal and free state tax filing Deduction more than $3,000. Free federal and free state tax filing   If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Free federal and free state tax filing Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. Free federal and free state tax filing For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Free federal and free state tax filing Then refigure the tax for that year. Free federal and free state tax filing Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Free federal and free state tax filing Subtract the result in (c) from the result in (a). Free federal and free state tax filing   Compare the tax figured in methods (1) and (2). Free federal and free state tax filing Your tax for 2013 is the smaller of the two amounts. Free federal and free state tax filing If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Free federal and free state tax filing If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Free federal and free state tax filing Check box d and enter “I. Free federal and free state tax filing R. Free federal and free state tax filing C. Free federal and free state tax filing 1341” in the space next to that box. Free federal and free state tax filing If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Free federal and free state tax filing Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). Free federal and free state tax filing Worksheet 1. Free federal and free state tax filing Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free federal and free state tax filing Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free federal and free state tax filing None of your benefits are taxable for 2013. Free federal and free state tax filing For more information, see Repayments More Than Gross Benefits . Free federal and free state tax filing If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free federal and free state tax filing S. Free federal and free state tax filing Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free federal and free state tax filing Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free federal and free state tax filing 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free federal and free state tax filing Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Free federal and free state tax filing           2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing       3. Free federal and free state tax filing Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. Free federal and free state tax filing       4. Free federal and free state tax filing Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Free federal and free state tax filing       5. Free federal and free state tax filing Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. Free federal and free state tax filing       6. Free federal and free state tax filing Combine lines 2, 3, 4, and 5 6. Free federal and free state tax filing       7. Free federal and free state tax filing Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free federal and free state tax filing  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Free federal and free state tax filing       8. Free federal and free state tax filing Is the amount on line 7 less than the amount on line 6?             No. Free federal and free state tax filing None of your social security benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing       9. Free federal and free state tax filing If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. Free federal and free state tax filing         Note. Free federal and free state tax filing If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 9 less than the amount on line 8?             No. Free federal and free state tax filing None of your benefits are taxable. Free federal and free state tax filing Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free federal and free state tax filing If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free federal and free state tax filing             Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing       11. Free federal and free state tax filing Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. Free federal and free state tax filing       12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing       13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing       14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing       15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing       16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing       17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing       18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing       19. Free federal and free state tax filing Taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18. Free federal and free state tax filing Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Free federal and free state tax filing         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. Free federal and free state tax filing         Worksheet 2. Free federal and free state tax filing Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Free federal and free state tax filing             Note. Free federal and free state tax filing If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Free federal and free state tax filing Otherwise, go on to line 2. Free federal and free state tax filing             2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing     3. Free federal and free state tax filing Enter your adjusted gross income for the earlier year 3. Free federal and free state tax filing     4. Free federal and free state tax filing Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Free federal and free state tax filing     5. Free federal and free state tax filing Enter any tax-exempt interest received in the earlier year 5. Free federal and free state tax filing     6. Free federal and free state tax filing Add lines 2 through 5 6. Free federal and free state tax filing     7. Free federal and free state tax filing Enter your taxable benefits for the earlier year that you previously reported 7. Free federal and free state tax filing     8. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing     9. Free federal and free state tax filing If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Free federal and free state tax filing       Note. Free federal and free state tax filing If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Free federal and free state tax filing 85) and enter the result on line 17. Free federal and free state tax filing Then go to line 18. Free federal and free state tax filing         10. Free federal and free state tax filing Is the amount on line 8 more than the amount on line 9?       No. Free federal and free state tax filing Skip lines 10 through 20 and enter -0- on line 21. Free federal and free state tax filing       Yes. Free federal and free state tax filing Subtract line 9 from line 8 10. Free federal and free state tax filing     11. Free federal and free state tax filing Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Free federal and free state tax filing     12. Free federal and free state tax filing Subtract line 11 from line 10. Free federal and free state tax filing If zero or less, enter -0- 12. Free federal and free state tax filing     13. Free federal and free state tax filing Enter the smaller of line 10 or line 11 13. Free federal and free state tax filing     14. Free federal and free state tax filing Enter one-half of line 13 14. Free federal and free state tax filing     15. Free federal and free state tax filing Enter the smaller of line 2 or line 14 15. Free federal and free state tax filing     16. Free federal and free state tax filing Multiply line 12 by 85% (. Free federal and free state tax filing 85). Free federal and free state tax filing If line 12 is zero, enter -0- 16. Free federal and free state tax filing     17. Free federal and free state tax filing Add lines 15 and 16 17. Free federal and free state tax filing     18. Free federal and free state tax filing Multiply line 1 by 85% (. Free federal and free state tax filing 85) 18. Free federal and free state tax filing     19. Free federal and free state tax filing Refigured taxable benefits. Free federal and free state tax filing Enter the smaller of line 17 or line 18 19. Free federal and free state tax filing     20. Free federal and free state tax filing Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Free federal and free state tax filing     21. Free federal and free state tax filing Additional taxable benefits. Free federal and free state tax filing Subtract line 20 from line 19. Free federal and free state tax filing Also enter this amount on Worksheet 4, line 20 21. Free federal and free state tax filing       Do not file an amended return for this earlier year. Free federal and free state tax filing Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Free federal and free state tax filing   Worksheet 3. Free federal and free state tax filing Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. Free federal and free state tax filing Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. Free federal and free state tax filing           Note. Free federal and free state tax filing If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. Free federal and free state tax filing Otherwise, go on to line 2. Free federal and free state tax filing           2. Free federal and free state tax filing Enter one-half of line 1 2. Free federal and free state tax filing     3. Free federal and free state tax filing Enter your adjusted gross income for the earlier year 3. Free federal and free state tax filing     4. Free federal and free state tax filing Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. Free federal and free state tax filing S. Free federal and free state tax filing savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. Free federal and free state tax filing     5. Free federal and free state tax filing Enter any tax-exempt interest received in the earlier year 5. Free federal and free state tax filing     6. Free federal and free state tax filing Add lines 2 through 5 6. Free federal and free state tax filing     7. Free federal and free state tax filing Enter your taxable benefits for the earlier year that you previously reported 7. Free federal and free state tax filing     8. Free federal and free state tax filing Subtract line 7 from line 6 8. Free federal and free state tax filing     9. Free federal and free state tax filing Enter $25,000 ($32,000 if married filing jointly for the earlier year; $-0- if married filing separately for the earlier year and you lived with your spouse at any time during the earlier year) 9. Free federal and free state tax filing     10. Free federal and free state tax filing Is the amount on line 8 more than the amount on line 9? No. Free federal and free state tax filing Skip lines 10 through 13 and enter -0- on line 14. Free federal and free state tax filing  Yes. Free federal and free state tax filing Subtract line 9 from line 8. Free federal and free state tax filing 10. Free federal and free state tax filing     11. Free federal and free state tax filing Enter one-half of line 10 11. Free federal and free state tax filing     12. Free federal and free state tax filing Refigured taxable benefits. Free federal and free state tax filing Enter the smaller of line 2 or line 11 12. Free federal and free state tax filing     13. Free federal and free state tax filing Enter your taxable benefits for the earlier year (or as refigured due to a previous