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Free tax preparation services Index A Actividades Pasivas , Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos Adopción, hijo de, Hijo adoptivo. Free tax preparation services Anexos C, Empleado estatutario. Free tax preparation services , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Free tax preparation services C-EZ, Empleado estatutario. Free tax preparation services , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Free tax preparation services EIC, Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Free tax preparation services , Anexo EIC SE, Miembro del clero. Free tax preparation services , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Free tax preparation services Anualidades, Cálculo del ingreso del trabajo. Free tax preparation services Asignación básica para el sustento (BAS), Paga militar no tributable. Free tax preparation services Asignación básica para la vivienda (BAH), Paga militar no tributable. Free tax preparation services Asistente EITC , ¿Hay Ayuda Disponible en Internet? Ayuda tributaria (see Impuestos, ayuda con) B Beneficios a los veteranos, Ingresos que no se Consideran Ingresos del Trabajo Beneficios de bienestar social, Ingresos que no se Consideran Ingresos del Trabajo Beneficios de la jubilación ferroviaria, Ingresos que no se Consideran Ingresos del Trabajo Beneficios del Seguro Social, Ingresos que no se Consideran Ingresos del Trabajo Beneficios por desempleo, Ingresos que no se Consideran Ingresos del Trabajo Beneficios por Incapacidad, Beneficios por Incapacidad Beneficios sindicales por huelga, Beneficios sindicales por huelga. Free tax preparation services Bienes gananciales, Bienes gananciales. Free tax preparation services , Bienes gananciales. Free tax preparation services C Casado que presenta una declaración conjunta, Requisito 1 —Límites del ingreso bruto ajustado (AGI, por sus siglas en inglés), Requisito de Declaración Conjunta Casado, hijo, Hijo casado. Free tax preparation services Clero, Miembro del clero. Free tax preparation services Cómo calcular usted mismo el EIC , Cómo Calcular Usted Mismo el EIC Compensación del Seguro Social, Ingresos que no se Consideran Ingresos del Trabajo Crianza, hijo de, Hijo de crianza. Free tax preparation services D Denegación del EIC , Capítulo 5 —Denegación del EIC Divorciados, requisito especial para padres, Requisito especial para padres divorciados o separados (o que viven aparte). Free tax preparation services E Ejemplos detallados, Capítulo 6 —Ejemplos Detallados El IRS le calculará el Crédito (EIC), El IRS le Calculará el Crédito (EIC) Empleado de una iglesia, Empleados de una iglesia. Free tax preparation services Empleado estatutario, Empleado estatutario. Free tax preparation services , Empleados estatutarios. Free tax preparation services Escuela, Definición de escuela. Free tax preparation services Estado civil Cabeza de familia, Requisito 3 —Su estado civil para efectos de la declaración no puede ser casado que presenta la declaración por separado Casado que presenta la declaración por separado, Requisito 3 —Su estado civil para efectos de la declaración no puede ser casado que presenta la declaración por separado Estados Unidos, Estados Unidos. Free tax preparation services , Estados Unidos. Free tax preparation services Estudiante, Definición de estudiante. Free tax preparation services Extranjero no residente, Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año F Formularios 1040, ¿Necesito esta Publicación?, Ingreso bruto ajustado (AGI). Free tax preparation services , Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Free tax preparation services , Beneficios por Incapacidad 1040A, Ingreso bruto ajustado (AGI). Free tax preparation services , Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Free tax preparation services , Beneficios por Incapacidad 1040EZ, Ingreso bruto ajustado (AGI). Free tax preparation services , Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Free tax preparation services 1040X, Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Free tax preparation services 2555, Requisito 5 —No puede presentar el Formulario 2555 ni el Formulario 2555-EZ 2555–EZ, Requisito 5 —No puede presentar el Formulario 2555 ni el Formulario 2555-EZ 4029, Formulario 4361 ó 4029 Aprobado 4361, Formulario 4361 ó 4029 Aprobado 4797, ¿Necesito esta Publicación? 4868, Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Free tax preparation services 4868(SP), Si no tiene un número de Seguro Social (SSN). Free tax preparation services , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Free tax preparation services 8332, Requisito especial para padres divorciados o separados (o que viven aparte). Free tax preparation services 8814, ¿Necesito esta Publicación?, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos 8862(SP), Capítulo 5 —Denegación del EIC , Formulario 8862(SP) Fraude, Excepción 2. Free tax preparation services , ¿Se le ha Prohibido Reclamar el Crédito por Ingreso del Trabajo por Cierto Número de Años? Fuerzas Armadas, Opción de incluir la paga no tributable por combate. Free tax preparation services , Paga militar no tributable. Free tax preparation services , Servicio activo prolongado. Free tax preparation services H Hijo Hijo adoptivo, Hijo adoptivo. Free tax preparation services Hijo casado, Hijo casado. Free tax preparation services Hijo de crianza, Hijo de crianza. Free tax preparation services Hijo secuestrado, Hijo secuestrado. Free tax preparation services Nacimiento o fallecimiento de, Nacimiento o fallecimiento de un hijo. Free tax preparation services Hijo calificado, ¿Hay que Tener un Hijo para Tener Derecho al Crédito por Ingreso del Trabajo (EIC)?, Requisito 1 —Límites del ingreso bruto ajustado (AGI, por sus siglas en inglés), Capítulo 2 —Requisitos que Tiene que Cumplir si Tiene un Hijo Calificado, Requisito 8 —Su hijo tiene que cumplir los requisitos de parentesco, edad, residencia y declaración conjunta Estados Unidos, Requisito de Residencia Hogar, Requisito de Residencia Requisito de Declaración Conjunta, Declaraciones conjuntas. Free tax preparation services Requisito de Edad, Requisito de Edad Requisito de Parentesco, Requisito de Parentesco Requisito de Residencia, Requisito de Residencia Total y permanentemente incapacitado, Total y permanentemente incapacitado. Free tax preparation services Hogar Albergues para personas sin hogar, Albergues para personas sin hogar. Free tax preparation services Estados Unidos, Estados Unidos. Free tax preparation services Militar, Personal militar destacado fuera de los Estados Unidos. Free tax preparation services , Personal militar destacado fuera de los Estados Unidos. Free tax preparation services Hoja de Trabajo 2, Hoja de Trabajo 2: Hoja de Trabajo para la Línea 4 de la Hoja de Trabajo 1 I Impuestos, ayuda con, Cómo Obtener Ayuda con los Impuestos Información TTY/TDD , Teléfono. Free tax preparation services Ingreso del trabajo, Ingresos del Trabajo Empleado estatutario, Ingreso del Trabajo, Empleado estatutario. Free tax preparation services Trabajo por cuenta propia, Ingreso del Trabajo Ingresos de dividendos, Ingresos que no se Consideran Ingresos del Trabajo Ingresos de inversiones, Qué Hay de Nuevo para el año 2013, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos Ingresos netos del trabajo por cuenta propia, Ingresos netos del trabajo por cuenta propia. Free tax preparation services , Ingresos netos del trabajo por cuenta propia de $400 o más. Free tax preparation services Ingresos que no se Consideran Ingresos de Trabajo, Ingresos que no se Consideran Ingresos del Trabajo Intereses, Ingresos que no se Consideran Ingresos del Trabajo Internet, ayuda por Asistente EITC , ¿Hay Ayuda Disponible en Internet? M Miembro del clero, Miembro del clero. Free tax preparation services Militar Fuera de los Estados Unidos, Personal militar destacado fuera de los Estados Unidos. Free tax preparation services , Personal militar destacado fuera de los Estados Unidos. Free tax preparation services Paga no tributable, Paga militar no tributable. Free tax preparation services Paga no tributable por combate, Opción de incluir la paga no tributable por combate. Free tax preparation services , Paga no tributable por combate. Free tax preparation services Paga por combate, Opción de incluir la paga no tributable por combate. Free tax preparation services , Paga militar no tributable. Free tax preparation services Ministro, Vivienda de un ministro de una orden religiosa. Free tax preparation services N Número de identificación del contribuyente en proceso de adopción (ATIN), Hijo casado. Free tax preparation services Número de identificación del contribuyente individual (ITIN), Otro número de identificación del contribuyente. Free tax preparation services , Hijo casado. Free tax preparation services Número de Seguro Social (SSN), Requisito 2 —Tiene que tener un número de Seguro Social (SSN) válido, Hijo casado. Free tax preparation services P Padres, divorciados o separados, Requisito especial para padres divorciados o separados (o que viven aparte). Free tax preparation services Pagos de bienestar socia a cambio de actividades laborales, Pagos de bienestar social a cambio de actividades laborales. Free tax preparation services Pareja doméstica, Pareja o sociedad doméstica en Nevada, Washington y California. Free tax preparation services Pensión alimenticia, Ingresos que no se Consideran Ingresos del Trabajo Pensiones, Cálculo del ingreso del trabajo. Free tax preparation services Personas que trabajan por cuenta propia, Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Free tax preparation services Propinas, sueldos y salarios, Salarios, sueldos y propinas. Free tax preparation services Publicaciones (see Impuestos, ayuda con) R Recluso, Ingresos recibidos como recluso en una institución penal. Free tax preparation services , Cálculo del ingreso del trabajo. Free tax preparation services Recordatorios, Recordatorios Reglas del desempate, Reglas del desempate. Free tax preparation services , Cómo aplicar el Requisito 9 a padres divorciados o separados (o que viven aparte). Free tax preparation services Requisito de Declaración Conjunta (see Hijo calificado) Requisito de Edad (see Hijo calificado) Requisito de Parentesco (see Hijo calificado) Requisito de Residencia (see Hijo calificado) Requisito especial para padres divorciados o separados, Requisito especial para padres divorciados o separados (o que viven aparte). Free tax preparation services S Salarios, sueldos y propinas, Salarios, sueldos y propinas. Free tax preparation services Secuestro, hijo, Hijo secuestrado. Free tax preparation services Separados, requisito especial para padres, Requisito especial para padres divorciados o separados (o que viven aparte). Free tax preparation services Servicio activo prolongado, Servicio activo prolongado. Free tax preparation services Servicio del Defensor del Contribuyente, El Servicio del Defensor del Contribuyente está aquí para ayudarlo a usted. Free tax preparation services Servicios gratis de impuestos, Ayuda gratuita con la preparación de su declaración de impuestos. Free tax preparation services Sin Hogar, albergues para personas, Albergues para personas sin hogar. Free tax preparation services T Tabla del Crédito por Ingreso del Trabajo (EIC) , EIC Table Total y permanentemente incapacitado, Total y permanentemente incapacitado. Free tax preparation services V Veteranos, beneficios, Ingresos que no se Consideran Ingresos del Trabajo Prev  Up     Home   More Online Publications
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Free tax preparation services 3. Free tax preparation services   Limit on Annual Additions Table of Contents Ministers and church employees. Free tax preparation services Includible Compensation for Your Most Recent Year of ServiceMost Recent Year of Service Includible Compensation The first component of MAC is the limit on annual additions. Free tax preparation services This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. Free tax preparation services The limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or 100% of your includible compensation for your most recent year of service. Free tax preparation services More than one 403(b) account. Free tax preparation services If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts on your behalf by your employer. Free tax preparation services Ministers and church employees. Free tax preparation services   If you are a minister or a church employee, you may be able to increase your limit on annual additions or use different rules when figuring your limit on annual additions. Free tax preparation services For more information, see chapter 5. Free tax preparation services Participation in a qualified plan. Free tax preparation services If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Free tax preparation services You can use Part I of Worksheet 1 in chapter 9 to figure your limit on annual additions. Free tax preparation services Includible Compensation for Your Most Recent Year of Service Definition. Free tax preparation services   Generally, includible compensation for your most recent year of service is the amount of taxable wages and benefits you received from the employer that maintained a 403(b) account for your benefit during your most recent year of service. Free tax preparation services When figuring your includible compensation for your most recent year of service, keep in mind that your most recent year of service may not be the same as your employer's most recent annual work period. Free tax preparation services This can happen if your tax year is not the same as your employer's annual work period. Free tax preparation services When figuring includible compensation for your most recent year of service, do not mix compensation or service of one employer with compensation or service of another employer. Free tax preparation services Most Recent Year of Service Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf. Free tax preparation services Tax year different from employer's annual work period. Free tax preparation services   If your tax year is not the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods. Free tax preparation services Example. Free tax preparation services A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). Free tax preparation services To figure her includible compensation for 2013, the professor's most recent year of service is her service from January through May 2013 and from October through December 2013. Free tax preparation services Figuring Your Most Recent Year of Service To figure your most recent year of service, begin by determining what is a full year of service for your position. Free tax preparation services A full year of service is equal to full-time employment for your employer's annual work period. Free tax preparation services After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year. Free tax preparation services Part-time or employed only part of the year. Free tax preparation services   If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. Free tax preparation services To determine your most recent year of service, add the following periods of service: Your service during the year for which you are figuring the limit on annual additions, and Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer. Free tax preparation services Example. Free tax preparation services You were employed on a full-time basis from July through December 2011 (1/2 year of service), July through December 2012 (1/2 year of service), and October through December 2013 (1/4 year of service). Free tax preparation services Your most recent year of service for computing your limit on annual additions for 2013 is the total of your service during 2013 (1/4 year of service), your service during 2012 (1/2 year of service), and your service during the months October through December 2011 (1/4 year of service). Free tax preparation services Not yet employed for 1 year. Free tax preparation services   If, at the close of the year, you have not yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service. Free tax preparation services Includible Compensation After identifying your most recent year of service, the next step is to identify the includible compensation associated with that full year of service. Free tax preparation services Includible compensation is not the same as income included on your tax return. Free tax preparation services Compensation is a combination of income and benefits received in exchange for services provided to your employer. Free tax preparation services Generally, includible compensation is the amount of income and benefits: Received from the employer who maintains your 403(b) account, and Must be included in your income. Free tax preparation services Includible compensation includes the following amounts. Free tax preparation services Elective deferrals (employer's contributions made on your behalf under a salary reduction agreement). Free tax preparation services Amounts contributed or deferred by your employer under a section 125 cafeteria plan. Free tax preparation services Amounts contributed or deferred, at the election of the employee, under an eligible section 457 nonqualified deferred compensation plan (state or local government or tax-exempt organization plan). Free tax preparation services  Note. Free tax preparation services For information about treating elective deferrals under section 457 plans as Roth contributions, see Publication 575. Free tax preparation services Wages, salaries, and fees for personal services earned with the employer maintaining your 403(b) account. Free tax preparation services Income otherwise excluded under the foreign earned income exclusion. Free tax preparation services Pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan. Free tax preparation services Includible compensation does not include the following items. Free tax preparation services Your employer's contributions to your 403(b) account. Free tax preparation services Compensation earned while your employer was not an eligible employer. Free tax preparation services Your employer's contributions to a qualified plan that: Are on your behalf, and Are excludable from income. Free tax preparation services The cost of incidental life insurance. Free tax preparation services See Cost of Incidental Life Insurance, later. Free tax preparation services If you are a church employee or a foreign missionary, figure includible compensation using the rules explained in chapter 5. Free tax preparation services Contributions after retirement. Free tax preparation services   Nonelective contributions may be made for an employee for up to 5 years after retirement. Free tax preparation services These contributions would be based on includible compensation for the last year of service before retirement. Free tax preparation services Cost of Incidental Life Insurance Includible compensation does not include the cost of incidental life insurance. Free tax preparation services If all of your 403(b) accounts invest only in mutual funds, then you have no incidental life insurance. Free tax preparation services If you have an annuity contract, a portion of the cost of that contract may be for incidental life insurance. Free tax preparation services If so, the cost of the insurance is taxable to you in the year contributed and is considered part of your basis when distributed. Free tax preparation services Your employer will include the cost of your insurance as taxable wages in box 1 of Form W-2. Free tax preparation services Not all annuity contracts include life insurance. Free tax preparation services Contact your plan administrator to determine if your contract includes incidental life insurance. Free tax preparation services If it does, you will need to figure the cost of life insurance each year the policy is in effect. Free tax preparation services Figuring the cost of incidental life insurance. Free tax preparation services If you have determined that part of the cost of your annuity contract is for an incidental life insurance premium, you will need to determine the amount of the premium and subtract it from your includible compensation. Free tax preparation services To determine the amount of the life insurance premiums, you will need to know the following information. Free tax preparation services The value of your life insurance contract, which is the amount payable upon your death. Free tax preparation services The cash value of your life insurance contract at the end of the tax year. Free tax preparation services Your age on your birthday nearest the beginning of the policy year. Free tax preparation services Your current life insurance protection under an ordinary retirement income life insurance policy, which is the amount payable upon your death minus the cash value of the contract at the end of the year. Free tax preparation services You can use Worksheet A, in chapter 9, to determine the cost of your incidental life insurance. Free tax preparation services Example. Free tax preparation services Your new contract provides that your beneficiary will receive $10,000 if you should die before retirement. Free tax preparation services Your cash value in the contract at the end of the first year is zero. Free tax preparation services Your current life insurance protection for the first year is $10,000 ($10,000 − 0). Free tax preparation services The cash value in the contract at the end of year two is $1,000, and the current life insurance protection for the second year is $9,000 ($10,000 – $1,000). Free tax preparation services The 1-year cost of the protection can be calculated by using Figure 3-1, Table of One-Year Term Premiums for $1,000 Life Insurance Protection . Free tax preparation services The premium rate is determined based on your age on your birthday nearest the beginning of the policy year. Free tax preparation services Figure 3-1. Free tax preparation services Table of One-Year Term Premiums for $1,000 Life Insurance Protection Age Cost   Age Cost   Age Cost 0 $0. Free tax preparation services 70   35 $0. Free tax preparation services 99   70 $20. Free tax preparation services 62 1 0. Free tax preparation services 41   36 1. Free tax preparation services 01   71 22. Free tax preparation services 72 2 0. Free tax preparation services 27   37 1. Free tax preparation services 04   72 25. Free tax preparation services 07 3 0. Free tax preparation services 19   38 1. Free tax preparation services 06   73 27. Free tax preparation services 57 4 0. Free tax preparation services 13   39 1. Free tax preparation services 07   74 30. Free tax preparation services 18 5 0. Free tax preparation services 13   40 1. Free tax preparation services 10   75 33. Free tax preparation services 05 6 0. Free tax preparation services 14   41 1. Free tax preparation services 13   76 36. Free tax preparation services 33 7 0. Free tax preparation services 15   42 1. Free tax preparation services 20   77 40. Free tax preparation services 17 8 0. Free tax preparation services 16   43 1. Free tax preparation services 29   78 44. Free tax preparation services 33 9 0. Free tax preparation services 16   44 1. Free tax preparation services 40   79 49. Free tax preparation services 23 10 0. Free tax preparation services 16   45 1. Free tax preparation services 53   80 54. Free tax preparation services 56 11 0. Free tax preparation services 19   46 1. Free tax preparation services 67   81 60. Free tax preparation services 51 12 0. Free tax preparation services 24   47 1. Free tax preparation services 83   82 66. Free tax preparation services 74 13 0. Free tax preparation services 28   48 1. Free tax preparation services 98   83 73. Free tax preparation services 07 14 0. Free tax preparation services 33   49 2. Free tax preparation services 13   84 80. Free tax preparation services 35 15 0. Free tax preparation services 38   50 2. Free tax preparation services 30   85 88. Free tax preparation services 76 16 0. Free tax preparation services 52   51 2. Free tax preparation services 52   86 99. Free tax preparation services 16 17 0. Free tax preparation services 57   52 2. Free tax preparation services 81   87 110. Free tax preparation services 40 18 0. Free tax preparation services 59   53 3. Free tax preparation services 20   88 121. Free tax preparation services 85 19 0. Free tax preparation services 61   54 3. Free tax preparation services 65   89 133. Free tax preparation services 40 20 0. Free tax preparation services 62   55 4. Free tax preparation services 15   90 144. Free tax preparation services 30 21 0. Free tax preparation services 62   56 4. Free tax preparation services 68   91 155. Free tax preparation services 80 22 0. Free tax preparation services 64   57 5. Free tax preparation services 20   92 168. Free tax preparation services 75 23 0. Free tax preparation services 66   58 5. Free tax preparation services 66   93 186. Free tax preparation services 44 24 0. Free tax preparation services 68   59 6. Free tax preparation services 06   94 206. Free tax preparation services 70 25 0. Free tax preparation services 71   60 6. Free tax preparation services 51   95 228. Free tax preparation services 35 26 0. Free tax preparation services 73   61 7. Free tax preparation services 11   96 250. Free tax preparation services 01 27 0. Free tax preparation services 76   62 7. Free tax preparation services 96   97 265. Free tax preparation services 09 28 0. Free tax preparation services 80   63 9. Free tax preparation services 08   98 270. Free tax preparation services 11 29 0. Free tax preparation services 83   64 10. Free tax preparation services 41   99 281. Free tax preparation services 05 30 0. Free tax preparation services 87   65 11. Free tax preparation services 90       31 0. Free tax preparation services 90   66 13. Free tax preparation services 51       32 0. Free tax preparation services 93   67 15. Free tax preparation services 20       33 0. Free tax preparation services 96   68 16. Free tax preparation services 92       34 0. Free tax preparation services 98   69 18. Free tax preparation services 70                       If the current published premium rates per $1,000 of insurance protection charged by an insurer for individual 1-year term life insurance premiums available to all standard risks are lower than those in the preceding table, you can use the lower rates for figuring the cost of insurance in connection with individual policies issued by the same insurer. Free tax preparation services Example 1. Free tax preparation services Lynne Green, age 44, and her employer enter into a 403(b) plan that will provide her with a $500 a month annuity upon retirement at age 65. Free tax preparation services The agreement also provides that if she should die before retirement, her beneficiary will receive the greater of $20,000 or the cash surrender value in the life insurance contract. Free tax preparation services Using the facts presented we can determine the cost of Lynne's life insurance protection as shown in Table 3-1. Free tax preparation services Lynne's employer has included $28 for the cost of the life insurance protection in her current year's income. Free tax preparation services When figuring her includible compensation for this year, Lynne will subtract $28. Free tax preparation services Table 3-1. Free tax preparation services Worksheet A. Free tax preparation services Cost of Incidental Life Insurance Note. Free tax preparation services Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Free tax preparation services This amount will be used to figure includible compensation for your most recent year of service. Free tax preparation services 1. Free tax preparation services Enter the value of the contract (amount payable upon your death) 1. Free tax preparation services $20,000. Free tax preparation services 00 2. Free tax preparation services Enter the cash value in the contract at the end of the year 2. Free tax preparation services 0. Free tax preparation services 00 3. Free tax preparation services Subtract line 2 from line 1. Free tax preparation services This is the value of your current life insurance protection 3. Free tax preparation services $20,000. Free tax preparation services 00 4. Free tax preparation services Enter your age on your birthday nearest the beginning of the policy year 4. Free tax preparation services 44 5. Free tax preparation services Enter the 1-year term premium for $1,000 of life insurance based on your age. Free tax preparation services (From Figure 3-1) 5. Free tax preparation services $1. Free tax preparation services 40 6. Free tax preparation services Divide line 3 by $1,000 6. Free tax preparation services 20 7. Free tax preparation services Multiply line 6 by line 5. Free tax preparation services This is the cost of your incidental life insurance 7. Free tax preparation services $28. Free tax preparation services 00 Example 2. Free tax preparation services Lynne's cash value in the contract at the end of the second year is $1,000. Free tax preparation services In year two, the cost of Lynne's life insurance is calculated as shown in Table 3-2. Free tax preparation services In year two, Lynne's employer will include $29. Free tax preparation services 07 in her current year's income. Free tax preparation services Lynne will subtract this amount when figuring her includible compensation. Free tax preparation services Table 3-2. Free tax preparation services Worksheet A. Free tax preparation services Cost of Incidental Life Insurance Note. Free tax preparation services Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Free tax preparation services This amount will be used to figure includible compensation for your most recent year of service. Free tax preparation services 1. Free tax preparation services Enter the value of the contract (amount payable upon your death) 1. Free tax preparation services $20,000. Free tax preparation services 00 2. Free tax preparation services Enter the cash value in the contract at the end of the year 2. Free tax preparation services $1,000. Free tax preparation services 00 3. Free tax preparation services Subtract line 2 from line 1. Free tax preparation services This is the value of your current life insurance protection 3. Free tax preparation services $19,000. Free tax preparation services 00 4. Free tax preparation services Enter your age on your birthday nearest the beginning of the policy year 4. Free tax preparation services 45 5. Free tax preparation services Enter the 1-year term premium for $1,000 of life insurance based on your age. Free tax preparation services (From Figure 3-1) 5. Free tax preparation services $1. Free tax preparation services 53 6. Free tax preparation services Divide line 3 by $1,000 6. Free tax preparation services 19 7. Free tax preparation services Multiply line 6 by line 5. Free tax preparation services This is the cost of your incidental life insurance 7. Free tax preparation services $29. Free tax preparation services 07 Figuring Includible Compensation for Your Most Recent Year of Service You can use Worksheet B in chapter 9 to determine your includible compensation for your most recent year of service. Free tax preparation services Example. Free tax preparation services Floyd has been periodically working full-time for a local hospital since September 2011. Free tax preparation services He needs to figure his limit on annual additions for 2014. Free tax preparation services The hospital's normal annual work period for employees in Floyd's general type of work runs from January to December. Free tax preparation services During the periods that Floyd was employed with the hospital, the hospital has always been eligible to provide a 403(b) plan to employees. Free tax preparation services Additionally, the hospital has never provided the employees with a 457 deferred compensation plan, a transportation fringe benefit plan, or a cafeteria plan. Free tax preparation services Floyd has never worked abroad and there is no life insurance provided under the plan. Free tax preparation services Table 3-3 shows the service Floyd provided to his employer, his compensation for the periods worked, his elective deferrals, and his taxable wages. Free tax preparation services Table 3-3. Free tax preparation services Floyd's Compensation Note. Free tax preparation services This table shows information Floyd will use to figure includible compensation for his most recent year of service. Free tax preparation services   Year Years of Service Taxable Wages Elective Deferrals 2014 6/12 of  a year $42,000 $2,000 2013 4/12 of  a year $16,000 $1,650 2012 4/12 of  a year $16,000 $1,650 Before Floyd can figure his limit on annual additions, he must figure includible compensation for his most recent year of service. Free tax preparation services Because Floyd is not planning to work the entire 2014 year, his most recent year of service will include the time he is planning to work in 2014 plus time he worked in the preceding 3 years until the time he worked for the hospital totals 1 year. Free tax preparation services If the total time he worked is less than 1 year, Floyd will treat it as if it were 1 year. Free tax preparation services He figures his most recent year of service shown in the following list. Free tax preparation services Time he will work in 2014 is 6/12 of a year. Free tax preparation services Time worked in 2013 is 4/12 of a year. Free tax preparation services All of this time will be used to determine Floyd's most recent year of service. Free tax preparation services Time worked in 2012 is 4/12 of a year. Free tax preparation services Floyd only needs 2 months of the 4 months he worked in 2012 to have enough time to total 1 full year. Free tax preparation services Because he needs only one-half of the actual time he worked, Floyd will use only one-half of his income earned during that period to calculate wages that will be used in figuring his includible compensation. Free tax preparation services Using the information provided in Table 3-3, wages for Floyd's most recent year of service are $66,000 ($42,000 + $16,000 + $8,000). Free tax preparation services His includible compensation for his most recent year of service is figured as shown in Table 3-4. Free tax preparation services After figuring his includible compensation, Floyd determines his limit on annual additions for 2014 to be $52,000, the lesser of his includible compensation, $70,475 (Table 3-4), and the maximum amount of $52,000. Free tax preparation services Table 3-4. Free tax preparation services Worksheet B. Free tax preparation services Includible Compensation for Your Most Recent Year of Service1 Note. Free tax preparation services Use this worksheet to figure includible compensation for your most recent year of service. Free tax preparation services 1. Free tax preparation services Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Free tax preparation services $66,000 2. Free tax preparation services Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Free tax preparation services 4,4753 3. Free tax preparation services Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Free tax preparation services -0- 4. Free tax preparation services Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government, or of a tax-exempt organization) for your most recent year of service 4. Free tax preparation services -0- 5. Free tax preparation services Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Free tax preparation services -0- 6. Free tax preparation services Enter your foreign earned income exclusion for your most recent year of service 6. Free tax preparation services -0- 7. Free tax preparation services Add lines 1, 2, 3, 4, 5, and 6 7. Free tax preparation services 70,475 8. Free tax preparation services Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Free tax preparation services -0- 9. Free tax preparation services Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Free tax preparation services -0- 10. Free tax preparation services Add lines 8 and 9 10. Free tax preparation services -0- 11. Free tax preparation services Subtract line 10 from line 7. Free tax preparation services This is your includible compensation for your most recent year of service 11. Free tax preparation services 70,475 1Use estimated amounts if figuring includible compensation before the end of the year. Free tax preparation services 2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Free tax preparation services  3$4,475 ($2,000 + $1,650 + $825). Free tax preparation services Prev  Up  Next   Home   More Online Publications