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Irs Gov Form1040ez

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Irs Gov Form1040ez

Irs gov form1040ez Publication 929 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Irs gov form1040ez Tax questions. Irs gov form1040ez Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 929, such as legislation enacted after this publication was published, go to www. Irs gov form1040ez irs. Irs gov form1040ez gov/pub929. Irs gov form1040ez Reminders Social security number (SSN). Irs gov form1040ez  Dependents who are required to file a tax return must have an SSN. Irs gov form1040ez To apply for an SSN, file Form SS-5 with the Social Security Administration. Irs gov form1040ez You can go to the website www. Irs gov form1040ez socialsecurity. Irs gov form1040ez gov for more information. Irs gov form1040ez Individual taxpayer identification number (ITIN). Irs gov form1040ez  The IRS will issue an ITIN to a nonresident or resident alien who does not have and is not eligible to get an SSN. Irs gov form1040ez To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Irs gov form1040ez It takes 6-10 weeks to get an ITIN. Irs gov form1040ez The ITIN is entered wherever an SSN is requested on a tax return. Irs gov form1040ez If you are a nonresident alien applying for an ITIN to file a tax return, you generally must attach your original, completed return to Form W-7 to get an ITIN. Irs gov form1040ez See the Form W-7 instructions for more information. Irs gov form1040ez An ITIN is for tax use only. Irs gov form1040ez It does not entitle you to social security benefits or change your employment or immigration status under U. Irs gov form1040ez S. Irs gov form1040ez law. Irs gov form1040ez Effective January 1, 2013, ITINs will expire after 5 years. Irs gov form1040ez Taxpayers who still need an ITIN after the end of the expiration period must reapply for a number. Irs gov form1040ez Photographs of missing children. Irs gov form1040ez  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs gov form1040ez Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs gov form1040ez You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Irs gov form1040ez Introduction Part 1 of this publication explains the filing requirements and other tax information for individuals who can be claimed as a dependent on another person's tax return. Irs gov form1040ez  Part 2 explains how to report and figure the tax on unearned income of certain children (whether or not they can be claimed as dependents). Irs gov form1040ez Definitions. Irs gov form1040ez   Many of the terms used in this publication, such as “dependent,” “earned income,” and “unearned income,” are defined in the Glossary at the back of this publication. Irs gov form1040ez Comments and suggestions. Irs gov form1040ez   We welcome your comments about this publication and your suggestions for future editions. Irs gov form1040ez   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs gov form1040ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs gov form1040ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs gov form1040ez   You can send your comments from www. Irs gov form1040ez irs. Irs gov form1040ez gov/formspubs/. Irs gov form1040ez Click on “More Information” and then on “Comment on Tax Forms and Publications. Irs gov form1040ez ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Irs gov form1040ez Ordering forms and publications. Irs gov form1040ez   Visit www. Irs gov form1040ez irs. Irs gov form1040ez gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Irs gov form1040ez Internal Revenue Service 1201 N. Irs gov form1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs gov form1040ez   If you have a tax question, check the information available on IRS. Irs gov form1040ez gov or call 1-800-829-1040. Irs gov form1040ez We cannot answer tax questions sent to either of the above addresses. Irs gov form1040ez Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 550 Investment Income and Expenses Form (and Instructions) W-4 Employee's Withholding Allowance Certificate 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Irs gov form1040ez Prev  Up  Next   Home   More Online Publications
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The Irs Gov Form1040ez

Irs gov form1040ez 5. Irs gov form1040ez   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Irs gov form1040ez Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Reminder Foreign income. Irs gov form1040ez   If you are a U. Irs gov form1040ez S. Irs gov form1040ez citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U. Irs gov form1040ez S. Irs gov form1040ez law. Irs gov form1040ez This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. Irs gov form1040ez This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). Irs gov form1040ez If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. Irs gov form1040ez For details, see Publication 54, Tax Guide for U. Irs gov form1040ez S. Irs gov form1040ez Citizens and Resident Aliens Abroad. Irs gov form1040ez Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. Irs gov form1040ez The following topics are included. Irs gov form1040ez Bonuses and awards. Irs gov form1040ez Special rules for certain employees. Irs gov form1040ez Sickness and injury benefits. Irs gov form1040ez The chapter explains what income is included in the employee's gross income and what is not included. Irs gov form1040ez Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income Employee Compensation This section discusses various types of employee compensation including fringe benefits, retirement plan contributions, stock options, and restricted property. Irs gov form1040ez Form W-2. Irs gov form1040ez    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. Irs gov form1040ez Include your pay on line 7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ, even if you do not receive a Form W-2. Irs gov form1040ez   If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Irs gov form1040ez These wages must be included on line 7 of Form 1040. Irs gov form1040ez See Form 8919 for more information. Irs gov form1040ez Childcare providers. Irs gov form1040ez    If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Irs gov form1040ez If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Irs gov form1040ez You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Irs gov form1040ez Babysitting. Irs gov form1040ez   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Irs gov form1040ez Miscellaneous Compensation This section discusses different types of employee compensation. Irs gov form1040ez Advance commissions and other earnings. Irs gov form1040ez   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Irs gov form1040ez    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Irs gov form1040ez If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), or you may be able to take a credit for that year. Irs gov form1040ez See Repayments in chapter 12. Irs gov form1040ez Allowances and reimbursements. Irs gov form1040ez    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. Irs gov form1040ez If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Irs gov form1040ez Back pay awards. Irs gov form1040ez    Include in income amounts you are awarded in a settlement or judgment for back pay. Irs gov form1040ez These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Irs gov form1040ez They should be reported to you by your employer on Form W-2. Irs gov form1040ez Bonuses and awards. Irs gov form1040ez   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Irs gov form1040ez These include prizes such as vacation trips for meeting sales goals. Irs gov form1040ez If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Irs gov form1040ez However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Irs gov form1040ez Employee achievement award. Irs gov form1040ez   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Irs gov form1040ez However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Irs gov form1040ez Your employer can tell you whether your award is a qualified plan award. Irs gov form1040ez Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Irs gov form1040ez   However, the exclusion does not apply to the following awards: A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Irs gov form1040ez A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Irs gov form1040ez Example. Irs gov form1040ez Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Irs gov form1040ez Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Irs gov form1040ez However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income. Irs gov form1040ez Differential wage payments. Irs gov form1040ez   This is any payment made to you by an employer for any period during which you are, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages you would have received from the employer during that period. Irs gov form1040ez These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Irs gov form1040ez The payments are reported as wages on Form W-2. Irs gov form1040ez Government cost-of-living allowances. Irs gov form1040ez   Most payments received by U. Irs gov form1040ez S. Irs gov form1040ez Government civilian employees for working abroad are taxable. Irs gov form1040ez However, certain cost-of-living allowances are tax free. Irs gov form1040ez Publication 516, U. Irs gov form1040ez S. Irs gov form1040ez Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Irs gov form1040ez Nonqualified deferred compensation plans. Irs gov form1040ez   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Irs gov form1040ez This amount is shown on Form W-2, box 12, using code Y. Irs gov form1040ez This amount is not included in your income. Irs gov form1040ez   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Irs gov form1040ez This amount is included in your wages shown on Form W-2, box 1. Irs gov form1040ez It is also shown on Form W-2, box 12, using code Z. Irs gov form1040ez Note received for services. Irs gov form1040ez    If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Irs gov form1040ez When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Irs gov form1040ez Do not include that part again in your income. Irs gov form1040ez Include the rest of the payment in your income in the year of payment. Irs gov form1040ez   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Irs gov form1040ez Severance pay. Irs gov form1040ez   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Irs gov form1040ez Accrued leave payment. Irs gov form1040ez    If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Irs gov form1040ez   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Irs gov form1040ez You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Irs gov form1040ez Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on the return and the wages on your Forms W-2. Irs gov form1040ez Outplacement services. Irs gov form1040ez   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Irs gov form1040ez    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Irs gov form1040ez Sick pay. Irs gov form1040ez   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Irs gov form1040ez In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. Irs gov form1040ez A state sickness or disability fund. Irs gov form1040ez An association of employers or employees. Irs gov form1040ez An insurance company, if your employer paid for the plan. Irs gov form1040ez However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Irs gov form1040ez For more information, see Publication 525. Irs gov form1040ez Social security and Medicare taxes paid by employer. Irs gov form1040ez   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Irs gov form1040ez The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Irs gov form1040ez However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Irs gov form1040ez Stock appreciation rights. Irs gov form1040ez   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Irs gov form1040ez When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Irs gov form1040ez You include the cash payment in your income in the year you use the right. Irs gov form1040ez Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Irs gov form1040ez Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Irs gov form1040ez Accounting period. Irs gov form1040ez   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Irs gov form1040ez Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Irs gov form1040ez The general rule: benefits are reported for a full calendar year (January 1–December 31). Irs gov form1040ez The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Irs gov form1040ez For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Irs gov form1040ez  Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Irs gov form1040ez   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Irs gov form1040ez Form W-2. Irs gov form1040ez   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Irs gov form1040ez Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Irs gov form1040ez However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Irs gov form1040ez Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Irs gov form1040ez Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . Irs gov form1040ez For information on the items covered in this section, other than Long-term care coverage, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Irs gov form1040ez Long-term care coverage. Irs gov form1040ez    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Irs gov form1040ez However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Irs gov form1040ez This amount will be reported as wages in box 1 of your Form W-2. Irs gov form1040ez   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. Irs gov form1040ez Archer MSA contributions. Irs gov form1040ez    Contributions by your employer to your Archer MSA generally are not included in your income. Irs gov form1040ez Their total will be reported in box 12 of Form W-2 with code R. Irs gov form1040ez You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Irs gov form1040ez File the form with your return. Irs gov form1040ez Health flexible spending arrangement (health FSA). Irs gov form1040ez   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Irs gov form1040ez Note. Irs gov form1040ez Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Irs gov form1040ez The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Irs gov form1040ez For more information, see Notice 2012-40, 2012-26 I. Irs gov form1040ez R. Irs gov form1040ez B. Irs gov form1040ez 1046, available at www. Irs gov form1040ez irs. Irs gov form1040ez gov/irb/2012-26 IRB/ar09. Irs gov form1040ez html. Irs gov form1040ez Health reimbursement arrangement (HRA). Irs gov form1040ez   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Irs gov form1040ez Health savings accounts (HSA). Irs gov form1040ez   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Irs gov form1040ez Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Irs gov form1040ez Contributions made by your employer are not included in your income. Irs gov form1040ez Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Irs gov form1040ez Distributions not used for qualified medical expenses are included in your income. Irs gov form1040ez See Publication 969 for the requirements of an HSA. Irs gov form1040ez   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Irs gov form1040ez The contributions are treated as a distribution of money and are not included in the partner's gross income. Irs gov form1040ez Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Irs gov form1040ez In both situations, the partner can deduct the contribution made to the partner's HSA. Irs gov form1040ez   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Irs gov form1040ez The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Irs gov form1040ez Qualified HSA funding distribution. Irs gov form1040ez   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Irs gov form1040ez See Publication 590 for the requirements for these qualified HSA funding distributions. Irs gov form1040ez Failure to maintain eligibility. Irs gov form1040ez   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Irs gov form1040ez If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Irs gov form1040ez This income is also subject to an additional 10% tax. Irs gov form1040ez Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Irs gov form1040ez See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Irs gov form1040ez Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Irs gov form1040ez They also are included as social security and Medicare wages in boxes 3 and 5. Irs gov form1040ez However, they are not included as wages in box 1. Irs gov form1040ez To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Irs gov form1040ez File the form with your return. Irs gov form1040ez De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Irs gov form1040ez In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Irs gov form1040ez Holiday gifts. Irs gov form1040ez   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Irs gov form1040ez However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Irs gov form1040ez Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Irs gov form1040ez For more information, see Publication 970, Tax Benefits for Education. Irs gov form1040ez Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Irs gov form1040ez However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Irs gov form1040ez For exceptions, see Entire cost excluded , and Entire cost taxed , later. Irs gov form1040ez If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Irs gov form1040ez Also, it is shown separately in box 12 with code C. Irs gov form1040ez Group-term life insurance. Irs gov form1040ez   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Irs gov form1040ez Permanent benefits. Irs gov form1040ez   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Irs gov form1040ez Your employer should be able to tell you the amount to include in your income. Irs gov form1040ez Accidental death benefits. Irs gov form1040ez   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Irs gov form1040ez Former employer. Irs gov form1040ez   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Irs gov form1040ez Also, it is shown separately in box 12 with code C. Irs gov form1040ez Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Irs gov form1040ez You must pay these taxes with your income tax return. Irs gov form1040ez Include them on line 60, Form 1040, and follow the instructions for line 60. Irs gov form1040ez For more information, see the Instructions for Form 1040. Irs gov form1040ez Two or more employers. Irs gov form1040ez   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Irs gov form1040ez If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Irs gov form1040ez You must figure how much to include in your income. Irs gov form1040ez Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Irs gov form1040ez Figuring the taxable cost. Irs gov form1040ez   Use the following worksheet to figure the amount to include in your income. Irs gov form1040ez     Worksheet 5-1. Irs gov form1040ez Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Irs gov form1040ez Enter the total amount of your insurance coverage from your employer(s) 1. Irs gov form1040ez   2. Irs gov form1040ez Limit on exclusion for employer-provided group-term life insurance coverage 2. Irs gov form1040ez 50,000 3. Irs gov form1040ez Subtract line 2 from line 1 3. Irs gov form1040ez   4. Irs gov form1040ez Divide line 3 by $1,000. Irs gov form1040ez Figure to the nearest tenth 4. Irs gov form1040ez   5. Irs gov form1040ez Go to Table 5-1. Irs gov form1040ez Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Irs gov form1040ez   6. Irs gov form1040ez Multiply line 4 by line 5 6. Irs gov form1040ez   7. Irs gov form1040ez Enter the number of full months of coverage at this cost. Irs gov form1040ez 7. Irs gov form1040ez   8. Irs gov form1040ez Multiply line 6 by line 7 8. Irs gov form1040ez   9. Irs gov form1040ez Enter the premiums you paid per month 9. Irs gov form1040ez       10. Irs gov form1040ez Enter the number of months you paid the premiums 10. Irs gov form1040ez       11. Irs gov form1040ez Multiply line 9 by line 10. Irs gov form1040ez 11. Irs gov form1040ez   12. Irs gov form1040ez Subtract line 11 from line 8. Irs gov form1040ez Include this amount in your income as wages 12. Irs gov form1040ez      Table 5-1. Irs gov form1040ez Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. Irs gov form1040ez 05 25 through 29 . Irs gov form1040ez 06 30 through 34 . Irs gov form1040ez 08 35 through 39 . Irs gov form1040ez 09 40 through 44 . Irs gov form1040ez 10 45 through 49 . Irs gov form1040ez 15 50 through 54 . Irs gov form1040ez 23 55 through 59 . Irs gov form1040ez 43 60 through 64 . Irs gov form1040ez 66 65 through 69 1. Irs gov form1040ez 27 70 and older 2. Irs gov form1040ez 06 Example. Irs gov form1040ez You are 51 years old and work for employers A and B. Irs gov form1040ez Both employers provide group-term life insurance coverage for you for the entire year. Irs gov form1040ez Your coverage is $35,000 with employer A and $45,000 with employer B. Irs gov form1040ez You pay premiums of $4. Irs gov form1040ez 15 a month under the employer B group plan. Irs gov form1040ez You figure the amount to include in your income as shown in Worksheet 5-1. Irs gov form1040ez Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. Irs gov form1040ez Worksheet 5-1. Irs gov form1040ez Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. Irs gov form1040ez Enter the total amount of your insurance coverage from your employer(s) 1. Irs gov form1040ez 80,000 2. Irs gov form1040ez Limit on exclusion for employer-provided group-term life insurance coverage 2. Irs gov form1040ez 50,000 3. Irs gov form1040ez Subtract line 2 from line 1 3. Irs gov form1040ez 30,000 4. Irs gov form1040ez Divide line 3 by $1,000. Irs gov form1040ez Figure to the nearest tenth 4. Irs gov form1040ez 30. Irs gov form1040ez 0 5. Irs gov form1040ez Go to Table 5-1. Irs gov form1040ez Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Irs gov form1040ez . Irs gov form1040ez 23 6. Irs gov form1040ez Multiply line 4 by line 5 6. Irs gov form1040ez 6. Irs gov form1040ez 90 7. Irs gov form1040ez Enter the number of full months of coverage at this cost. Irs gov form1040ez 7. Irs gov form1040ez 12 8. Irs gov form1040ez Multiply line 6 by line 7 8. Irs gov form1040ez 82. Irs gov form1040ez 80 9. Irs gov form1040ez Enter the premiums you paid per month 9. Irs gov form1040ez 4. Irs gov form1040ez 15     10. Irs gov form1040ez Enter the number of months you paid the premiums 10. Irs gov form1040ez 12     11. Irs gov form1040ez Multiply line 9 by line 10. Irs gov form1040ez 11. Irs gov form1040ez 49. Irs gov form1040ez 80 12. Irs gov form1040ez Subtract line 11 from line 8. Irs gov form1040ez Include this amount in your income as wages 12. Irs gov form1040ez 33. Irs gov form1040ez 00 Entire cost excluded. Irs gov form1040ez   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Irs gov form1040ez You are permanently and totally disabled and have ended your employment. Irs gov form1040ez Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Irs gov form1040ez A charitable organization (defined in chapter 24) to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Irs gov form1040ez (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Irs gov form1040ez ) The plan existed on January 1, 1984, and You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Irs gov form1040ez Entire cost taxed. Irs gov form1040ez   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply: The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Irs gov form1040ez You are a key employee and your employer's plan discriminates in favor of key employees. Irs gov form1040ez Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Irs gov form1040ez Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Irs gov form1040ez You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Irs gov form1040ez Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Irs gov form1040ez A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Irs gov form1040ez Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Irs gov form1040ez However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Irs gov form1040ez Exclusion limit. Irs gov form1040ez   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Irs gov form1040ez   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Irs gov form1040ez   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Irs gov form1040ez   If the benefits have a value that is more than these limits, the excess must be included in your income. Irs gov form1040ez You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Irs gov form1040ez Commuter highway vehicle. Irs gov form1040ez   This is a highway vehicle that seats at least six adults (not including the driver). Irs gov form1040ez At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Irs gov form1040ez Transit pass. Irs gov form1040ez   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Irs gov form1040ez Qualified parking. Irs gov form1040ez   This is parking provided to an employee at or near the employer's place of business. Irs gov form1040ez It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Irs gov form1040ez It does not include parking at or near the employee's home. Irs gov form1040ez Qualified bicycle commuting. Irs gov form1040ez   This is reimbursement based on the number of qualified bicycle commuting months for the year. Irs gov form1040ez A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Irs gov form1040ez The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Irs gov form1040ez Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Irs gov form1040ez (Your employer can tell you whether your retirement plan is qualified. Irs gov form1040ez ) However, the cost of life insurance coverage included in the plan may have to be included. Irs gov form1040ez See Group-Term Life Insurance , earlier, under Fringe Benefits. Irs gov form1040ez If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Irs gov form1040ez However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Irs gov form1040ez For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. Irs gov form1040ez S. Irs gov form1040ez Civil Service Retirement Benefits, if you are a federal employee or retiree). Irs gov form1040ez Elective deferrals. Irs gov form1040ez   If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Irs gov form1040ez The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Irs gov form1040ez An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Irs gov form1040ez However, it is included in wages subject to social security and Medicare taxes. Irs gov form1040ez   Elective deferrals include elective contributions to the following retirement plans. Irs gov form1040ez Cash or deferred arrangements (section 401(k) plans). Irs gov form1040ez The Thrift Savings Plan for federal employees. Irs gov form1040ez Salary reduction simplified employee pension plans (SARSEP). Irs gov form1040ez Savings incentive match plans for employees (SIMPLE plans). Irs gov form1040ez Tax-sheltered annuity plans (403(b) plans). Irs gov form1040ez Section 501(c)(18)(D) plans. Irs gov form1040ez Section 457 plans. Irs gov form1040ez Qualified automatic contribution arrangements. Irs gov form1040ez   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Irs gov form1040ez You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Irs gov form1040ez The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Irs gov form1040ez   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Irs gov form1040ez Overall limit on deferrals. Irs gov form1040ez   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3) and (5) above. Irs gov form1040ez The limit for SIMPLE plans is $12,000. Irs gov form1040ez The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. Irs gov form1040ez The limit for section 457 plans is the lesser of your includible compensation or $17,500. Irs gov form1040ez Amounts deferred under specific plan limits are part of the overall limit on deferrals. Irs gov form1040ez Designated Roth contributions. Irs gov form1040ez   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Irs gov form1040ez Designated Roth contributions are treated as elective deferrals, except that they are included in income. Irs gov form1040ez Excess deferrals. Irs gov form1040ez   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Irs gov form1040ez However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Irs gov form1040ez   If you set aside more than the limit, the excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution. Irs gov form1040ez See Publication 525 for a discussion of the tax treatment of excess deferrals. Irs gov form1040ez Catch-up contributions. Irs gov form1040ez   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. Irs gov form1040ez Stock Options If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you usually will have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. Irs gov form1040ez However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. Irs gov form1040ez Your employer can tell you which kind of option you hold. Irs gov form1040ez For more information, see Publication 525. Irs gov form1040ez Restricted Property In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. Irs gov form1040ez However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. Irs gov form1040ez (You can choose to include the value of the property in your income in the year it is transferred to you. Irs gov form1040ez ) For more information, see Restricted Property in Publication 525. Irs gov form1040ez Dividends received on restricted stock. Irs gov form1040ez   Dividends you receive on restricted stock are treated as compensation and not as dividend income. Irs gov form1040ez Your employer should include these payments on your Form W-2. Irs gov form1040ez Stock you chose to include in income. Irs gov form1040ez   Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. Irs gov form1040ez Report them on your return as dividends. Irs gov form1040ez For a discussion of dividends, see chapter 8. Irs gov form1040ez    For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525. Irs gov form1040ez Special Rules for Certain Employees This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers. Irs gov form1040ez Clergy Generally, if you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Irs gov form1040ez , in addition to your salary. Irs gov form1040ez If the offering is made to the religious institution, it is not taxable to you. Irs gov form1040ez If you are a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. Irs gov form1040ez However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Irs gov form1040ez See chapter 24. Irs gov form1040ez Pension. Irs gov form1040ez    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. Irs gov form1040ez It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Irs gov form1040ez Housing. Irs gov form1040ez    Special rules for housing apply to members of the clergy. Irs gov form1040ez Under these rules, you do not include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. Irs gov form1040ez However, the exclusion cannot be more than the reasonable pay for your service. Irs gov form1040ez If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. Irs gov form1040ez The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. Irs gov form1040ez However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you are subject to the self-employment tax. Irs gov form1040ez For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Irs gov form1040ez Members of Religious Orders If you are a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order. Irs gov form1040ez Services performed for the order. Irs gov form1040ez   If you are performing the services as an agent of the order in the exercise of duties required by the order, do not include in your income the amounts turned over to the order. Irs gov form1040ez   If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. Irs gov form1040ez Any wages you earn as an agent of an order that you turn over to the order are not included in your income. Irs gov form1040ez Example. Irs gov form1040ez You are a member of a church order and have taken a vow of poverty. Irs gov form1040ez You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. Irs gov form1040ez You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. Irs gov form1040ez However, you remain under the general direction and control of the order. Irs gov form1040ez You are considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order are not included in your income. Irs gov form1040ez Services performed outside the order. Irs gov form1040ez   If you are directed to work outside the order, your services are not an exercise of duties required by the order unless they meet both of the following requirements: They are the kind of services that are ordinarily the duties of members of the order. Irs gov form1040ez They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. Irs gov form1040ez If you are an employee of a third party, the services you perform for the third party will not be considered directed or required of you by the order. Irs gov form1040ez Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. Irs gov form1040ez Example. Irs gov form1040ez Mark Brown is a member of a religious order and has taken a vow of poverty. Irs gov form1040ez He renounces all claims to his earnings and turns over his earnings to the order. Irs gov form1040ez Mark is a schoolteacher. Irs gov form1040ez He was instructed by the superiors of the order to get a job with a private tax-exempt school. Irs gov form1040ez Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. Irs gov form1040ez Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. Irs gov form1040ez The wages Mark earns working for the school are included in his income. Irs gov form1040ez Foreign Employer Special rules apply if you work for a foreign employer. Irs gov form1040ez U. Irs gov form1040ez S. Irs gov form1040ez citizen. Irs gov form1040ez   If you are a U. Irs gov form1040ez S. Irs gov form1040ez citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income. Irs gov form1040ez Social security and Medicare taxes. Irs gov form1040ez   You are exempt from social security and Medicare employee taxes if you are employed in the United States by an international organization or a foreign government. Irs gov form1040ez However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. Irs gov form1040ez This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. Irs gov form1040ez Employees of international organizations or foreign governments. Irs gov form1040ez   Your compensation for official services to an international organization is exempt from federal income tax if you are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Irs gov form1040ez   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. Irs gov form1040ez You are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Irs gov form1040ez Your work is like the work done by employees of the United States in foreign countries. Irs gov form1040ez The foreign government gives an equal exemption to employees of the United States in its country. Irs gov form1040ez Waiver of alien status. Irs gov form1040ez   If you are an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. Irs gov form1040ez See Foreign Employer in Publication 525. Irs gov form1040ez Employment abroad. Irs gov form1040ez   For information on the tax treatment of income earned abroad, see Publication 54. Irs gov form1040ez Military Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. Irs gov form1040ez Allowances generally are not taxed. Irs gov form1040ez For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. Irs gov form1040ez Differential wage payments. Irs gov form1040ez   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. Irs gov form1040ez These wages are subject to income tax withholding and are reported on a Form W-2. Irs gov form1040ez See the discussion under Miscellaneous Compensation , earlier. Irs gov form1040ez Military retirement pay. Irs gov form1040ez   If your retirement pay is based on age or length of service, it is taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Irs gov form1040ez Do not include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan. Irs gov form1040ez   For more detailed discussion of survivor annuities, see chapter 10. Irs gov form1040ez Disability. Irs gov form1040ez   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. Irs gov form1040ez Veterans' benefits. Irs gov form1040ez   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). Irs gov form1040ez The following amounts paid to veterans or their families are not taxable. Irs gov form1040ez Education, training, and subsistence allowances. Irs gov form1040ez Disability compensation and pension payments for disabilities paid either to veterans or their families. Irs gov form1040ez Grants for homes designed for wheelchair living. Irs gov form1040ez Grants for motor vehicles for veterans who lost their sight or the use of their limbs. Irs gov form1040ez Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. Irs gov form1040ez Interest on insurance dividends you leave on deposit with the VA. Irs gov form1040ez Benefits under a dependent-care assistance program. Irs gov form1040ez The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. Irs gov form1040ez Payments made under the compensated work therapy program. Irs gov form1040ez Any bonus payment by a state or political subdivision because of service in a combat zone. Irs gov form1040ez Volunteers The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions. Irs gov form1040ez Peace Corps. Irs gov form1040ez   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. Irs gov form1040ez Taxable allowances. Irs gov form1040ez   The following allowances must be included in your income and reported as wages: Allowances paid to your spouse and minor children while you are a volunteer leader training in the United States. Irs gov form1040ez Living allowances designated by the Director of the Peace Corps as basic compensation. Irs gov form1040ez These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Irs gov form1040ez Leave allowances. Irs gov form1040ez Readjustment allowances or termination payments. Irs gov form1040ez These are considered received by you when credited to your account. Irs gov form1040ez Example. Irs gov form1040ez Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Irs gov form1040ez Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Irs gov form1040ez Volunteers in Service to America (VISTA). Irs gov form1040ez   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. Irs gov form1040ez National Senior Services Corps programs. Irs gov form1040ez   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. Irs gov form1040ez Retired Senior Volunteer Program (RSVP). Irs gov form1040ez Foster Grandparent Program. Irs gov form1040ez Senior Companion Program. Irs gov form1040ez Service Corps of Retired Executives (SCORE). Irs gov form1040ez   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. Irs gov form1040ez Volunteer tax counseling. Irs gov form1040ez   Do not include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE). Irs gov form1040ez   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. Irs gov form1040ez See chapter 24. Irs gov form1040ez Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. Irs gov form1040ez In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Irs gov form1040ez If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Irs gov form1040ez However, certain payments may not be taxable to you. Irs gov form1040ez Your employer should be able to give you specific details about your pension plan and tell you the amount you paid for your disability pension. Irs gov form1040ez In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. Irs gov form1040ez Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. Irs gov form1040ez Cost paid by you. Irs gov form1040ez   If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Irs gov form1040ez If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Irs gov form1040ez See Reimbursement in a later year in chapter 21. Irs gov form1040ez Cafeteria plans. Irs gov form1040ez   In most cases, if you are covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums was not included in your income, you are not considered to have paid the premiums and you must include any benefits you receive in your income. Irs gov form1040ez If the amount of the premiums was included in your income, you are considered to have paid the premiums, and any benefits you receive are not taxable. Irs gov form1040ez Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Irs gov form1040ez You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. Irs gov form1040ez Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Irs gov form1040ez You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Irs gov form1040ez For information on this credit and the definition of permanent and total disability, see chapter 33. Irs gov form1040ez Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Irs gov form1040ez Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Irs gov form1040ez The rules for reporting pensions are explained in How To Report in chapter 10. Irs gov form1040ez For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. Irs gov form1040ez Retirement and profit-sharing plans. Irs gov form1040ez   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Irs gov form1040ez The payments must be reported as a pension or annuity. Irs gov form1040ez For more information on pensions, see chapter 10. Irs gov form1040ez Accrued leave payment. Irs gov form1040ez   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Irs gov form1040ez The payment is not a disability payment. Irs gov form1040ez Include it in your income in the tax year you receive it. Irs gov form1040ez Military and Government Disability Pensions Certain military and government disability pensions are not taxable. Irs gov form1040ez Service-connected disability. Irs gov form1040ez   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services. Irs gov form1040ez The armed forces of any country. Irs gov form1040ez The National Oceanic and Atmospheric Administration. Irs gov form1040ez The Public Health Service. Irs gov form1040ez The Foreign Service. Irs gov form1040ez Conditions for exclusion. Irs gov form1040ez   Do not include the disability payments in your income if any of the following conditions apply. Irs gov form1040ez You were entitled to receive a disability payment before September 25, 1975. Irs gov form1040ez You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975. Irs gov form1040ez You receive the disability payments for a combat-related injury. Irs gov form1040ez This is a personal injury or sickness that Results directly from armed conflict, Takes place while you are engaged in extra-hazardous service, Takes place under conditions simulating war, including training exercises such as maneuvers, or Is caused by an instrumentality of war. Irs gov form1040ez You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Irs gov form1040ez Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. Irs gov form1040ez Pension based on years of service. Irs gov form1040ez   If you receive a disability pension based on years of service, in most cases you must include it in your income. Irs gov form1040ez However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. Irs gov form1040ez You must include the rest of your pension in your income. Irs gov form1040ez Retroactive VA determination. Irs gov form1040ez   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. Irs gov form1040ez You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. Irs gov form1040ez You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. Irs gov form1040ez The letter must show the amount withheld and the effective date of the benefit. Irs gov form1040ez   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. Irs gov form1040ez However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA. Irs gov form1040ez Special statute of limitations. Irs gov form1040ez   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. Irs gov form1040ez However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. Irs gov form1040ez This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination. Irs gov form1040ez Example. Irs gov form1040ez You retired in 2007 and receive a pension based on your years of service. Irs gov form1040ez On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. Irs gov form1040ez Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. Irs gov form1040ez However, under the special limitation period, you can also file a claim for 2009 as long as you file the claim by August 1, 2014. Irs gov form1040ez You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. Irs gov form1040ez Terrorist attack or military action. Irs gov form1040ez   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. Irs gov form1040ez Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Irs gov form1040ez Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. Irs gov form1040ez To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. Irs gov form1040ez A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. Irs gov form1040ez The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits, and In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Irs gov form1040ez Qualified long-term care services. Irs gov form1040ez   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance and personal care services, and Required by a chronically ill individual and provided pursuant to a plan of care as prescribed by a licensed health care practitioner. Irs gov form1040ez Chronically ill individual. Irs gov form1040ez   A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. Irs gov form1040ez Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Irs gov form1040ez An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Irs gov form1040ez Limit on exclusion. Irs gov form1040ez   You generally can exclude from gross income up to $320 a day for 2013. Irs gov form1040ez See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. Irs gov form1040ez Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Irs gov form1040ez The exemption also applies to your survivors. Irs gov form1040ez The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Irs gov form1040ez If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Irs gov form1040ez For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Irs gov form1040ez Return to work. Irs gov form1040ez    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Irs gov form1040ez Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Irs gov form1040ez Railroad sick pay. Irs gov form1040ez    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. Irs gov form1040ez However, do not include them in your income if they are for an on-the-job injury. Irs gov form1040ez   If you received income because of a disability, see Disability Pensions , earlier. Irs gov form1040ez Federal Employees' Compensation Act (FECA). Irs gov form1040ez   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Irs gov form1040ez However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Irs gov form1040ez Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. Irs gov form1040ez Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Irs gov form1040ez    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Irs gov form1040ez For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. Irs gov form1040ez    You can deduct the amount you spend to buy back sick leave for an earlier year to be eligible for nontaxable FECA benefits for that period. Irs gov form1040ez It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). Irs gov form1040ez If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. Irs gov form1040ez Do not deduct it separately. Irs gov form1040ez Other compensation. Irs gov form1040ez   Many other amounts you receive as compensation for sickness or injury are not taxable. Irs gov form1040ez These include the following amounts. Irs gov form1040ez Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. Irs gov form1040ez Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Irs gov form1040ez Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Irs gov form1040ez Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Irs gov form1040ez This compensation must be based only on the injury and not on the period of your absence from work. Irs gov form1040ez These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Irs gov form1040ez Reimbursement for medical care. Irs gov form1040ez    A reimbursement for medical care is generally not taxable. Irs gov form1040ez However, it may reduce your medical expense deduction. Irs gov form1040ez For more information, see chapter 21. Irs gov form1040ez Prev  Up  Next   Home   More Online Publications