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Free Online State Income Tax Filing

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Free Online State Income Tax Filing

Free online state income tax filing 2. Free online state income tax filing   Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. Free online state income tax filing Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. Free online state income tax filing S. Free online state income tax filing or foreign source income. Free online state income tax filing This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. Free online state income tax filing S. Free online state income tax filing Virgin Islands (USVI). Free online state income tax filing Generally, the same rules that apply for determining U. Free online state income tax filing S. Free online state income tax filing source income also apply for determining possession source income. Free online state income tax filing However, there are some important exceptions to these rules. Free online state income tax filing Both the general rules and the exceptions are discussed in this chapter. Free online state income tax filing U. Free online state income tax filing S. Free online state income tax filing income rule. Free online state income tax filing   This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. Free online state income tax filing Table 2-1 shows the general rules for determining whether income is from sources within the United States. Free online state income tax filing Table 2-1. Free online state income tax filing General Rules for Determining U. Free online state income tax filing S. Free online state income tax filing Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Free online state income tax filing Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. Free online state income tax filing For more information, see Regulations section 1. Free online state income tax filing 863-1(b). Free online state income tax filing Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. Free online state income tax filing Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. Free online state income tax filing Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. Free online state income tax filing It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. Free online state income tax filing Services performed wholly within a relevant possession. Free online state income tax filing   Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. Free online state income tax filing However, there is an exception for income earned as a member of the U. Free online state income tax filing S. Free online state income tax filing Armed Forces or a civilian spouse. Free online state income tax filing U. Free online state income tax filing S. Free online state income tax filing Armed Forces. Free online state income tax filing   If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. Free online state income tax filing However, if you are not a bona fide resident of a possession, your military service pay will be income from the  United States even if you perform services in a possession. Free online state income tax filing Civilian spouse of active duty member of the U. Free online state income tax filing S. Free online state income tax filing Armed Forces. Free online state income tax filing   If you are a bona fide resident of a U. Free online state income tax filing S. Free online state income tax filing possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. Free online state income tax filing Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. Free online state income tax filing S. Free online state income tax filing possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. Free online state income tax filing Services performed partly inside and partly outside a relevant possession. Free online state income tax filing   If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. Free online state income tax filing Compensation (other than certain fringe benefits) is sourced on a time basis. Free online state income tax filing Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Free online state income tax filing   Or, you may be permitted to use an alternative basis to determine the source of compensation. Free online state income tax filing See Alternative basis , later. Free online state income tax filing   If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Free online state income tax filing In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Free online state income tax filing Time basis. Free online state income tax filing   Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). Free online state income tax filing Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed  services in the relevant  possession during the year     Total number of days you  performed services during the year           You can use a unit of time less than a day in the above fraction, if appropriate. Free online state income tax filing The time period for which the income is made does not have to be a year. Free online state income tax filing Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Free online state income tax filing Example. Free online state income tax filing In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. Free online state income tax filing Your Puerto Rico source income is $60,000, figured as follows. Free online state income tax filing       180 days 240 days × $80,000 = $60,000                 Multi-year compensation. Free online state income tax filing   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Free online state income tax filing Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. Free online state income tax filing You determine the period to which the income is attributable based on the facts and circumstances of your case. Free online state income tax filing For more information on multi-year compensation, see Treasury Decision (T. Free online state income tax filing D. Free online state income tax filing ) 9212 and Regulations section 1. Free online state income tax filing 861-4, 2005-35 I. Free online state income tax filing R. Free online state income tax filing B. Free online state income tax filing 429, available at www. Free online state income tax filing irs. Free online state income tax filing gov/irb/2005-35_IRB/ar14. Free online state income tax filing html. Free online state income tax filing Certain fringe benefits sourced on a geographical basis. Free online state income tax filing   If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. Free online state income tax filing Housing. Free online state income tax filing Education. Free online state income tax filing Local transportation. Free online state income tax filing Tax reimbursement. Free online state income tax filing Hazardous or hardship duty pay. Free online state income tax filing Moving expense reimbursement. Free online state income tax filing For information on determining the source of the fringe benefits listed above, see Regulations section 1. Free online state income tax filing 861-4. Free online state income tax filing Alternative basis. Free online state income tax filing   You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. Free online state income tax filing If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. Free online state income tax filing De minimis exception. Free online state income tax filing   There is an exception to the rule for determining the source of income earned in a possession. Free online state income tax filing Generally, you will not have income from a possession if during a tax year you: Are a U. Free online state income tax filing S. Free online state income tax filing citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. Free online state income tax filing This exception began with income earned during your 2008 tax year. Free online state income tax filing Pensions. Free online state income tax filing   Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. Free online state income tax filing The contribution portion is sourced according to where services were performed that earned the pension. Free online state income tax filing The investment earnings portion is sourced according to the location of the pension trust. Free online state income tax filing Example. Free online state income tax filing You are a U. Free online state income tax filing S. Free online state income tax filing citizen who worked in Puerto Rico for a U. Free online state income tax filing S. Free online state income tax filing company. Free online state income tax filing All services were performed in Puerto Rico. Free online state income tax filing Upon retirement you remained in Puerto Rico and began receiving your pension from the U. Free online state income tax filing S. Free online state income tax filing pension trust of your employer. Free online state income tax filing Distributions from the U. Free online state income tax filing S. Free online state income tax filing pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. Free online state income tax filing S. Free online state income tax filing source income. Free online state income tax filing Investment Income This category includes such income as interest, dividends, rents, and royalties. Free online state income tax filing Interest income. Free online state income tax filing   The source of interest income is generally determined by the residence of the payer. Free online state income tax filing Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. Free online state income tax filing   However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. Free online state income tax filing See Regulations section 1. Free online state income tax filing 937-2(i) for more information. Free online state income tax filing Dividends. Free online state income tax filing   Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. Free online state income tax filing There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. Free online state income tax filing For more information, see Regulations section 1. Free online state income tax filing 937-2(g). Free online state income tax filing Rental income. Free online state income tax filing   Rents from property located in a relevant possession are treated as income from sources within that possession. Free online state income tax filing Royalties. Free online state income tax filing   Royalties from natural resources located in a relevant possession are considered income from sources within that possession. Free online state income tax filing   Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. Free online state income tax filing Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. Free online state income tax filing The most common situations are discussed below. Free online state income tax filing Real property. Free online state income tax filing   Real property includes land and buildings, and generally anything built on, growing on, or attached to land. Free online state income tax filing The location of the property generally determines the source of income from the sale. Free online state income tax filing For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. Free online state income tax filing If, however, the home you sold was located in the United States, the gain is U. Free online state income tax filing S. Free online state income tax filing source income. Free online state income tax filing Personal property. Free online state income tax filing   The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. Free online state income tax filing Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. Free online state income tax filing If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. Free online state income tax filing   This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. Free online state income tax filing The rules applying to sales of inventory are discussed below. Free online state income tax filing For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. Free online state income tax filing Inventory. Free online state income tax filing   Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Free online state income tax filing The source of income from the sale of inventory depends on whether the inventory was purchased or produced. Free online state income tax filing Purchased. Free online state income tax filing   Income from the sale of inventory that you purchased is sourced where you sell the property. Free online state income tax filing Generally, this is where title to the property passes to the buyer. Free online state income tax filing Produced. Free online state income tax filing   Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. Free online state income tax filing For information on making the allocation, see Regulations section 1. Free online state income tax filing 863-3(f). Free online state income tax filing Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. Free online state income tax filing S. Free online state income tax filing citizen or resident alien prior to becoming a bona fide resident of a possession. Free online state income tax filing You are subject to these special rules if you meet both of the following conditions. Free online state income tax filing For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. Free online state income tax filing For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). Free online state income tax filing If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. Free online state income tax filing Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. Free online state income tax filing S. Free online state income tax filing tax return. Free online state income tax filing (See chapter 3 for additional filing information. Free online state income tax filing ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. Free online state income tax filing These rules apply to dispositions after April 11, 2005. Free online state income tax filing For details, see Regulations section 1. Free online state income tax filing 937-2(f)(1) and Examples 1 and 2 of section 1. Free online state income tax filing 937-2(k). Free online state income tax filing Example 1. Free online state income tax filing In 2007, Cheryl Jones, a U. Free online state income tax filing S. Free online state income tax filing citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. Free online state income tax filing S. Free online state income tax filing corporation listed on the New York Stock Exchange. Free online state income tax filing On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. Free online state income tax filing Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. Free online state income tax filing On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. Free online state income tax filing On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. Free online state income tax filing Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. Free online state income tax filing The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. Free online state income tax filing This existing special rule applies if you are a U. Free online state income tax filing S. Free online state income tax filing citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. Free online state income tax filing S. Free online state income tax filing assets during the 10-year period beginning when you became a bona fide resident. Free online state income tax filing The gain is U. Free online state income tax filing S. Free online state income tax filing source income that generally is subject to U. Free online state income tax filing S. Free online state income tax filing tax if the property is either (1) located in the United States; (2) stock issued by a U. Free online state income tax filing S. Free online state income tax filing corporation or a debt obligation of a U. Free online state income tax filing S. Free online state income tax filing person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). Free online state income tax filing See chapter 3 for filing information. Free online state income tax filing Special election. Free online state income tax filing   For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. Free online state income tax filing Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. Free online state income tax filing This election overrides both of the special rules discussed earlier. Free online state income tax filing   There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. Free online state income tax filing Marketable securities. Free online state income tax filing   Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. Free online state income tax filing Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. Free online state income tax filing S. Free online state income tax filing holding periods. Free online state income tax filing   Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. Free online state income tax filing The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. Free online state income tax filing This is your gain (or loss) that is treated as being from sources within the relevant possession. Free online state income tax filing If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. Free online state income tax filing Example 2. Free online state income tax filing Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. Free online state income tax filing S. Free online state income tax filing and possession holding periods. Free online state income tax filing Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. Free online state income tax filing Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). Free online state income tax filing By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free online state income tax filing Other personal property. Free online state income tax filing   For personal property other than marketable securities, use a time-based allocation. Free online state income tax filing Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. Free online state income tax filing      Number of days in the  possession holding period     Total number of days  in your holding period         The result is your gain (or loss) that is treated as being from sources within the relevant possession. Free online state income tax filing Example 3. Free online state income tax filing In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. Free online state income tax filing On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. Free online state income tax filing On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. Free online state income tax filing She had owned the interest for a total of 1,720 days. Free online state income tax filing Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. Free online state income tax filing The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). Free online state income tax filing By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free online state income tax filing Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. Free online state income tax filing Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. Free online state income tax filing These rules do not apply to amounts paid as salary or other compensation for services. Free online state income tax filing See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. Free online state income tax filing Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. Free online state income tax filing These circumstances are listed below. Free online state income tax filing You have an office or other fixed place of business in the relevant possession to which the income can be attributed. Free online state income tax filing That office or place of business is a material factor in producing the income. Free online state income tax filing The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Free online state income tax filing An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Free online state income tax filing The three kinds of income from sources outside the relevant possession to which these rules apply are the following. Free online state income tax filing Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. Free online state income tax filing Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the relevant possession. Free online state income tax filing Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. Free online state income tax filing Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Free online state income tax filing Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. Free online state income tax filing Example. Free online state income tax filing Marcy Jackson is a bona fide resident of American Samoa. Free online state income tax filing Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. Free online state income tax filing A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. Free online state income tax filing Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. Free online state income tax filing The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. Free online state income tax filing However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. Free online state income tax filing Prev  Up  Next   Home   More Online Publications
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Contact My Local Office in Washington

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Bellevue

520 112th Ave. N.E.
Bellevue, WA 98004

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(425) 456-9637
Bellingham

114 W. Magnolia
Bellingham, WA 98225

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(360) 752-4361
Everett

3020 Rucker Ave.
Everett, WA 98201 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(425) 304-1656
Olympia 

319 7th Avenue SE
Olympia, WA 98501

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(360) 570-5410
Richland  825 Jadwin Ave.
Richland, WA 99352 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(509) 376-0705
Seattle 

915 Second Ave.
Seattle, WA 98174 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(206) 220-6015
Silverdale  9657 Levin Rd.
Silverdale, WA 98383 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.) 

 

Services Provided

(360) 698-5861
Spokane 

920 W. Riverside 
Spokane, WA 99201 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

                                                                                                 
Services Provided

(509) 353-0508

Tacoma 

1201 Pacific Ave.
Tacoma, WA 98402 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(253) 428-3518

Vancouver 

500 W. 12th St.
Vancouver, WA 98660 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:45 p.m. - 1:45 p.m.)

 

Services Provided

(360) 905-1181
Yakima 

107 S. 7th Ave.
Yakima, WA 98902 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(509) 454-5675

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call 206-220-6037 in the Seattle area or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see  Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
915 Second Avenue, MS W180
Seattle, WA 98174-0041

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Free Online State Income Tax Filing

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