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Irs Tax Forms

Irs tax forms Publication 575 - Main Content Table of Contents General InformationPension. Irs tax forms Annuity. Irs tax forms Qualified employee plan. Irs tax forms Qualified employee annuity. Irs tax forms Designated Roth account. Irs tax forms Tax-sheltered annuity plan. Irs tax forms Fixed-period annuities. Irs tax forms Annuities for a single life. Irs tax forms Joint and survivor annuities. Irs tax forms Variable annuities. Irs tax forms Disability pensions. Irs tax forms Variable Annuities Section 457 Deferred Compensation Plans Disability Pensions Insurance Premiums for Retired Public Safety Officers Railroad Retirement Benefits Withholding Tax and Estimated Tax Cost (Investment in the Contract)Foreign employment contributions while a nonresident alien. Irs tax forms Taxation of Periodic PaymentsPeriod of participation. Irs tax forms Fully Taxable Payments Partly Taxable Payments Taxation of Nonperiodic PaymentsFiguring the Taxable Amount Loans Treated as Distributions Transfers of Annuity Contracts Lump-Sum Distributions RolloversExceptions. Irs tax forms No tax withheld. Irs tax forms Partial rollovers. Irs tax forms Frozen deposits. Irs tax forms Reasonable period of time. Irs tax forms 20% Mandatory withholding. Irs tax forms How to report. Irs tax forms How to report. Irs tax forms Special rule for Roth IRAs and designated Roth accounts. Irs tax forms Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. Irs tax forms How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. Irs tax forms   Some of the terms used in this publication are defined in the following paragraphs. Irs tax forms Pension. Irs tax forms   A pension is generally a series of definitely determinable payments made to you after you retire from work. Irs tax forms Pension payments are made regularly and are based on such factors as years of service and prior compensation. Irs tax forms Annuity. Irs tax forms   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. Irs tax forms They can be either fixed (under which you receive a definite amount) or variable (not fixed). Irs tax forms You can buy the contract alone or with the help of your employer. Irs tax forms Qualified employee plan. Irs tax forms   A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries and that meets Internal Revenue Code requirements. Irs tax forms It qualifies for special tax benefits, such as tax deferral for employer contributions and capital gain treatment or the 10-year tax option for lump-sum distributions (if participants qualify). Irs tax forms To determine whether your plan is a qualified plan, check with your employer or the plan administrator. Irs tax forms Qualified employee annuity. Irs tax forms   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Irs tax forms Designated Roth account. Irs tax forms   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. Irs tax forms Elective deferrals that are designated as Roth contributions are included in your income. Irs tax forms However, qualified distributions (explained later) are not included in your income. Irs tax forms You should check with your plan administrator to determine if your plan will accept designated Roth contributions. Irs tax forms Tax-sheltered annuity plan. Irs tax forms   A tax-sheltered annuity plan (often referred to as a 403(b) plan or a tax-deferred annuity plan) is a retirement plan for employees of public schools and certain tax-exempt organizations. Irs tax forms Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. Irs tax forms Types of pensions and annuities. Irs tax forms   Pensions and annuities include the following types. Irs tax forms Fixed-period annuities. Irs tax forms   You receive definite amounts at regular intervals for a specified length of time. Irs tax forms Annuities for a single life. Irs tax forms   You receive definite amounts at regular intervals for life. Irs tax forms The payments end at death. Irs tax forms Joint and survivor annuities. Irs tax forms   The first annuitant receives a definite amount at regular intervals for life. Irs tax forms After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Irs tax forms The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Irs tax forms Variable annuities. Irs tax forms   You receive payments that may vary in amount for a specified length of time or for life. Irs tax forms The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds, cost-of-living indexes, or earnings from a mutual fund. Irs tax forms Disability pensions. Irs tax forms   You receive disability payments because you retired on disability and have not reached minimum retirement age. Irs tax forms More than one program. Irs tax forms   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. Irs tax forms If you participate in more than one program, you may have to treat each as a separate pension or annuity contract, depending upon the facts in each case. Irs tax forms Also, you may be considered to have received more than one pension or annuity. Irs tax forms Your former employer or the plan administrator should be able to tell you if you have more than one contract. Irs tax forms Example. Irs tax forms Your employer set up a noncontributory profit-sharing plan for its employees. Irs tax forms The plan provides that the amount held in the account of each participant will be paid when that participant retires. Irs tax forms Your employer also set up a contributory defined benefit pension plan for its employees providing for the payment of a lifetime pension to each participant after retirement. Irs tax forms The amount of any distribution from the profit-sharing plan depends on the contributions (including allocated forfeitures) made for the participant and the earnings from those contributions. Irs tax forms Under the pension plan, however, a formula determines the amount of the pension benefits. Irs tax forms The amount of contributions is the amount necessary to provide that pension. Irs tax forms Each plan is a separate program and a separate contract. Irs tax forms If you get benefits from these plans, you must account for each separately, even though the benefits from both may be included in the same check. Irs tax forms Distributions from a designated Roth account are treated separately from other distributions from the plan. Irs tax forms Qualified domestic relations order (QDRO). Irs tax forms   A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan. Irs tax forms The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant's benefits to be paid to each alternate payee. Irs tax forms A QDRO may not award an amount or form of benefit that is not available under the plan. Irs tax forms   A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if he or she were a plan participant. Irs tax forms The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. Irs tax forms The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. Irs tax forms The denominator is the present value of all benefits payable to the participant. Irs tax forms   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. Irs tax forms Variable Annuities The tax rules in this publication apply both to annuities that provide fixed payments and to annuities that provide payments that vary in amount based on investment results or other factors. Irs tax forms For example, they apply to commercial variable annuity contracts, whether bought by an employee retirement plan for its participants or bought directly from the issuer by an individual investor. Irs tax forms Under these contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. Irs tax forms The earnings are not taxed until distributed either in a withdrawal or in annuity payments. Irs tax forms The taxable part of a distribution is treated as ordinary income. Irs tax forms Net investment income tax. Irs tax forms   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). Irs tax forms For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. Irs tax forms For information on the tax treatment of a transfer or exchange of a variable annuity contract, see Transfers of Annuity Contracts under Taxation of Nonperiodic Payments, later. Irs tax forms Withdrawals. Irs tax forms   If you withdraw funds before your annuity starting date and your annuity is under a qualified retirement plan, a ratable part of the amount withdrawn is tax free. Irs tax forms The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. Irs tax forms   If your annuity is under a nonqualified plan (including a contract you bought directly from the issuer), the amount withdrawn is allocated first to earnings (the taxable part) and then to your cost (the tax-free part). Irs tax forms However, if you bought your annuity contract before August 14, 1982, a different allocation applies to the investment before that date and the earnings on that investment. Irs tax forms To the extent the amount withdrawn does not exceed that investment and earnings, it is allocated first to your cost (the tax-free part) and then to earnings (the taxable part). Irs tax forms   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. Irs tax forms   The amount you receive in a full surrender of your annuity contract at any time is tax free to the extent of any cost that you have not previously recovered tax free. Irs tax forms The rest is taxable. Irs tax forms   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. Irs tax forms If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. Irs tax forms Annuity payments. Irs tax forms   If you receive annuity payments under a variable annuity plan or contract, you recover your cost tax free under either the Simplified Method or the General Rule, as explained under Taxation of Periodic Payments , later. Irs tax forms For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. Irs tax forms For a variable annuity paid under a nonqualified plan (including a contract you bought directly from the issuer), you must use a special computation under the General Rule. Irs tax forms For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. Irs tax forms Death benefits. Irs tax forms    If you receive a single-sum distribution from a variable annuity contract because of the death of the owner or annuitant, the distribution is generally taxable only to the extent it is more than the unrecovered cost of the contract. Irs tax forms If you choose to receive an annuity, the payments are subject to tax as described above. Irs tax forms If the contract provides a joint and survivor annuity and the primary annuitant had received annuity payments before death, you figure the tax-free part of annuity payments you receive as the survivor in the same way the primary annuitant did. Irs tax forms See Survivors and Beneficiaries , later. Irs tax forms Section 457 Deferred Compensation Plans If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. Irs tax forms If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. Irs tax forms You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. Irs tax forms You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. Irs tax forms Your 457(b) plan may have a designated Roth account option. Irs tax forms If so, you may be able to roll over amounts to the designated Roth account or make contributions. Irs tax forms Elective deferrals to a designated Roth account are included in your income. Irs tax forms Qualified distributions (explained later) are not included in your income. Irs tax forms See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. Irs tax forms This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Irs tax forms For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. Irs tax forms Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. Irs tax forms Plans that are not eligible section 457 plans include the following: Bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plans. Irs tax forms Nonelective deferred compensation plans for nonemployees (independent contractors). Irs tax forms Deferred compensation plans maintained by churches. Irs tax forms Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. Irs tax forms An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. Irs tax forms Disability Pensions If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. Irs tax forms You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. Irs tax forms Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Irs tax forms You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Irs tax forms For information on this credit, see Publication 524. Irs tax forms Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Irs tax forms Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. Irs tax forms Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. Irs tax forms For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Irs tax forms Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. Irs tax forms The premiums can be for coverage for you, your spouse, or dependents. Irs tax forms The distribution must be made directly from the plan to the insurance provider. Irs tax forms You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Irs tax forms You can only make this election for amounts that would otherwise be included in your income. Irs tax forms The amount excluded from your income cannot be used to claim a medical expense deduction. Irs tax forms An eligible retirement plan is a governmental plan that is: a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan. Irs tax forms If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Irs tax forms The amount shown in box 2a of Form 1099-R does not reflect this exclusion. Irs tax forms Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Irs tax forms Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Irs tax forms Enter “PSO” next to the appropriate line on which you report the taxable amount. Irs tax forms If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line. Irs tax forms Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Irs tax forms These categories are treated differently for income tax purposes. Irs tax forms The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. Irs tax forms This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes like social security benefits. Irs tax forms If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2013, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien) from the U. Irs tax forms S. Irs tax forms Railroad Retirement Board (RRB). Irs tax forms For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Publication 915. Irs tax forms The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). Irs tax forms It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Irs tax forms Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. Irs tax forms This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. Irs tax forms (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. Irs tax forms ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Irs tax forms See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. Irs tax forms Form RRB-1099-R is used for U. Irs tax forms S. Irs tax forms citizens, resident aliens, and nonresident aliens. Irs tax forms Nonresident aliens. Irs tax forms   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Irs tax forms Nonresident aliens are subject to mandatory U. Irs tax forms S. Irs tax forms tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. Irs tax forms A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. Irs tax forms See Tax withholding next for more information. Irs tax forms   If you are a nonresident alien and your tax withholding rate changed or your country of legal residence changed during the year, you may receive more than one Form RRB-1042S or Form RRB-1099-R. Irs tax forms To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year. Irs tax forms For information on filing requirements for aliens, see Publication 519, U. Irs tax forms S. Irs tax forms Tax Guide for Aliens. Irs tax forms For information on tax treaties between the United States and other countries that may reduce or eliminate U. Irs tax forms S. Irs tax forms tax on your benefits, see Publication 901, U. Irs tax forms S. Irs tax forms Tax Treaties. Irs tax forms Tax withholding. Irs tax forms   To request or change your income tax withholding from SSEB payments, U. Irs tax forms S. Irs tax forms citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. Irs tax forms To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments. Irs tax forms If you are a nonresident alien or a U. Irs tax forms S. Irs tax forms citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U. Irs tax forms S. Irs tax forms tax withholding. Irs tax forms Nonresident U. Irs tax forms S. Irs tax forms citizens cannot elect to be exempt from withholding on payments delivered outside of the U. Irs tax forms S. Irs tax forms Help from the RRB. Irs tax forms   To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 1-877-772-5772 for the nearest field office) or U. Irs tax forms S. Irs tax forms consulate/Embassy if you reside outside the United States. Irs tax forms You can visit the RRB on the Internet at www. Irs tax forms rrb. Irs tax forms gov. Irs tax forms Form RRB-1099-R. Irs tax forms   The following discussion explains the items shown on Form RRB-1099-R. Irs tax forms The amounts shown on this form are before any deduction for: Federal income tax withholding, Medicare premiums, Legal process garnishment payments, Recovery of a prior year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit, or Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity. Irs tax forms   The amounts shown on this form are after any offset for: Social Security benefits, Age reduction, Public Service pensions or public disability benefits, Dual railroad retirement entitlement under another RRB claim number, Work deductions, Legal process partition deductions, Actuarial adjustment, Annuity waiver, or Recovery of a current-year overpayment of NSSEB, tier 2, VDB, or supplemental annuity benefits. Irs tax forms   The amounts shown on Form RRB-1099-R do not reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. Irs tax forms To determine if any of these rules apply to your benefits, see the discussions about them later. Irs tax forms   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. Irs tax forms Use distribution code “7” if you are asked for a distribution code. Irs tax forms Distribution codes are not shown on Form RRB-1099-R. Irs tax forms   There are three copies of this form. Irs tax forms Copy B is to be included with your income tax return if federal income tax is withheld. Irs tax forms Copy C is for your own records. Irs tax forms Copy 2 is filed with your state, city, or local income tax return, when required. Irs tax forms See the illustrated Copy B (Form RRB-1099-R) above. Irs tax forms       Each beneficiary will receive his or her own Form RRB-1099-R. Irs tax forms If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. Irs tax forms So that you get your form timely, make sure the RRB always has your current mailing address. Irs tax forms Please click here for the text description of the image. Irs tax forms Form RRB-1099-R Box 1—Claim Number and Payee Code. Irs tax forms   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. Irs tax forms This is the number under which the RRB paid your benefits. Irs tax forms Your payee code follows your claim number and is the last number in this box. Irs tax forms It is used by the RRB to identify you under your claim number. Irs tax forms In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. Irs tax forms Box 2—Recipient's Identification Number. Irs tax forms   This is the recipient's U. Irs tax forms S. Irs tax forms taxpayer identification number. Irs tax forms It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient. Irs tax forms If you are a resident or nonresident alien who must furnish a taxpayer identification number to the IRS and are not eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. Irs tax forms The Instructions for Form W-7 explain how and when to apply. Irs tax forms Box 3—Employee Contributions. Irs tax forms   This is the amount of taxes withheld from the railroad employee's earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. Irs tax forms This amount is the employee's cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). Irs tax forms (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. Irs tax forms ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. Irs tax forms It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. Irs tax forms If this amount has changed, the change is retroactive. Irs tax forms You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. Irs tax forms If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. Irs tax forms    If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount. Irs tax forms Box 4—Contributory Amount Paid. Irs tax forms   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. Irs tax forms (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Irs tax forms ) This amount is the total contributory pension paid in 2013. Irs tax forms It may be partly taxable and partly tax free or fully taxable. Irs tax forms If you determine you are eligible to compute a tax-free part as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost. Irs tax forms Box 5—Vested Dual Benefit. Irs tax forms   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. Irs tax forms It is fully taxable. Irs tax forms VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Irs tax forms Note. Irs tax forms The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. Irs tax forms Box 6—Supplemental Annuity. Irs tax forms   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. Irs tax forms It is fully taxable. Irs tax forms Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Irs tax forms Box 7—Total Gross Paid. Irs tax forms   This is the sum of boxes 4, 5, and 6. Irs tax forms The amount represents the total pension paid in 2013. Irs tax forms Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Irs tax forms Box 8—Repayments. Irs tax forms   This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2013 for years before 2013 or for unknown years. Irs tax forms The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. Irs tax forms It only includes repayments of benefits that were taxable to you. Irs tax forms This means it only includes repayments in 2013 of NSSEB benefits paid after 1985, tier 2 and VDB benefits paid after 1983, and supplemental annuity benefits paid in any year. Irs tax forms If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. Irs tax forms For more information about repayments, see Repayment of benefits received in an earlier year , later. Irs tax forms    You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment. Irs tax forms Box 9—Federal Income Tax Withheld. Irs tax forms   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. Irs tax forms Include this on your income tax return as tax withheld. Irs tax forms If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2013, you will receive more than one Form RRB-1099-R for 2013. Irs tax forms Determine the total amount of U. Irs tax forms S. Irs tax forms federal income tax withheld from your 2013 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2013 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive. Irs tax forms Box 10—Rate of Tax. Irs tax forms   If you are taxed as a U. Irs tax forms S. Irs tax forms citizen or resident alien, this box does not apply to you. Irs tax forms If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2013. Irs tax forms If you are a nonresident alien whose tax was withheld at more than one rate during 2013, you will receive a separate Form RRB-1099-R for each rate change during 2013. Irs tax forms Box 11—Country. Irs tax forms   If you are taxed as a U. Irs tax forms S. Irs tax forms citizen or resident alien, this box does not apply to you. Irs tax forms If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2013. Irs tax forms If you are a nonresident alien who was a resident of more than one country during 2013, you will receive a separate Form RRB-1099-R for each country of residence during 2013. Irs tax forms Box 12—Medicare Premium Total. Irs tax forms   This is for information purposes only. Irs tax forms The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. Irs tax forms Medicare premium refunds are not included in the Medicare total. Irs tax forms The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). Irs tax forms However, if Form RRB-1099 or Form RRB-1042S is not required for 2013, then this total will be shown on Form RRB-1099-R. Irs tax forms If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total will not be shown in this box. Irs tax forms Repayment of benefits received in an earlier year. Irs tax forms   If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it. Irs tax forms   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. Irs tax forms The 2%-of-adjusted-gross-income limit applies to this deduction. Irs tax forms You cannot take this deduction if you file Form 1040A. Irs tax forms    If you repaid more than $3,000 in 2013, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 28 or you can take a credit against your tax. Irs tax forms For more information, see Repayments in Publication 525. Irs tax forms Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. Irs tax forms However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. Irs tax forms (These are distributions, described later under Rollovers, that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Irs tax forms ) If you choose not to have tax withheld or if you do not have enough tax withheld, you may have to make estimated tax payments. Irs tax forms See Estimated tax , later. Irs tax forms The withholding rules apply to the taxable part of payments you receive from: An employer pension, annuity, profit-sharing, or stock bonus plan, Any other deferred compensation plan, A traditional individual retirement arrangement (IRA), or A commercial annuity. Irs tax forms For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. Irs tax forms There will be no withholding on any part of a distribution where it is reasonable to believe that it will not be includible in gross income. Irs tax forms Choosing no withholding. Irs tax forms   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. Irs tax forms You can make this choice on Form W-4P for periodic and nonperiodic payments. Irs tax forms This choice generally remains in effect until you revoke it. Irs tax forms   The payer will ignore your choice not to have tax withheld if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer, before the payment is made, that you gave an incorrect social security number. Irs tax forms   To choose not to have tax withheld, a U. Irs tax forms S. Irs tax forms citizen or resident alien must give the payer a home address in the United States or its possessions. Irs tax forms Without that address, the payer must withhold tax. Irs tax forms For example, the payer has to withhold tax if the recipient has provided a U. Irs tax forms S. Irs tax forms address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. Irs tax forms S. Irs tax forms home address. Irs tax forms   If you do not give the payer a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to the payer that you are not a U. Irs tax forms S. Irs tax forms citizen, a U. Irs tax forms S. Irs tax forms resident alien, or someone who left the country to avoid tax. Irs tax forms But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Irs tax forms This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. Irs tax forms For details, get Publication 519. Irs tax forms Periodic payments. Irs tax forms   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. Irs tax forms Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Irs tax forms You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). Irs tax forms If you do not, tax will be withheld as if you were married and claiming three withholding allowances. Irs tax forms   Tax will be withheld as if you were single and were claiming no withholding allowances if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer (before any payment is made) that you gave an incorrect social security number. Irs tax forms   You must file a new withholding certificate to change the amount of withholding. Irs tax forms Nonperiodic distributions. Irs tax forms    Unless you choose no withholding, the withholding rate for a nonperiodic distribution (a payment other than a periodic payment) that is not an eligible rollover distribution is 10% of the distribution. Irs tax forms You can also ask the payer to withhold an additional amount using Form W-4P. Irs tax forms The part of any loan treated as a distribution (except an offset amount to repay the loan), explained later, is subject to withholding under this rule. Irs tax forms Eligible rollover distribution. Irs tax forms    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. Irs tax forms You cannot choose not to have tax withheld from an eligible rollover distribution. Irs tax forms However, tax will not be withheld if you have the plan administrator pay the eligible rollover distribution directly to another qualified plan or an IRA in a direct rollover. Irs tax forms For more information about eligible rollover distributions, see Rollovers , later. Irs tax forms Estimated tax. Irs tax forms   Your estimated tax is the total of your expected income tax, self-employment tax, and certain other taxes for the year, minus your expected credits and withheld tax. Irs tax forms Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 return, or 100% of the tax shown on your 2013 return. Irs tax forms If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Irs tax forms For more information, get Publication 505, Tax Withholding and Estimated Tax. Irs tax forms In figuring your withholding or estimated tax, remember that a part of your monthly social security or equivalent tier 1 railroad retirement benefits may be taxable. Irs tax forms See Publication 915. Irs tax forms You can choose to have income tax withheld from those benefits. Irs tax forms Use Form W-4V to make this choice. Irs tax forms Cost (Investment in the Contract) Distributions from your pension or annuity plan may include amounts treated as a recovery of your cost (investment in the contract). Irs tax forms If any part of a distribution is treated as a recovery of your cost under the rules explained in this publication, that part is tax free. Irs tax forms Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. Irs tax forms In general, your cost is your net investment in the contract as of the annuity starting date (or the date of the distribution, if earlier). Irs tax forms To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. Irs tax forms This includes the amounts your employer contributed that were taxable to you when paid. Irs tax forms (However, see Foreign employment contributions , later. Irs tax forms ) It does not include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). Irs tax forms It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). Irs tax forms From this total cost you must subtract the following amounts. Irs tax forms Any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income and that you received by the later of the annuity starting date or the date on which you received your first payment. Irs tax forms Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). Irs tax forms If you must use the Simplified Method for your annuity payments, the tax-free part of any single-sum payment received in connection with the start of the annuity payments, regardless of when you received it. Irs tax forms (See Simplified Method , later, for information on its required use. Irs tax forms ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. Irs tax forms (See General Rule , later, for information on its use. Irs tax forms ) Your annuity contract has a refund feature if the annuity payments are for your life (or the lives of you and your survivor) and payments in the nature of a refund of the annuity's cost will be made to your beneficiary or estate if all annuitants die before a stated amount or a stated number of payments are made. Irs tax forms For more information, see Publication 939. Irs tax forms The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . Irs tax forms Form 1099-R. Irs tax forms If you began receiving periodic payments of a life annuity in 2013, the payer should show your total contributions to the plan in box 9b of your 2013 Form 1099-R. Irs tax forms Annuity starting date defined. Irs tax forms   Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. Irs tax forms Example. Irs tax forms On January 1, you completed all your payments required under an annuity contract providing for monthly payments starting on August 1 for the period beginning July 1. Irs tax forms The annuity starting date is July 1. Irs tax forms This is the date you use in figuring the cost of the contract and selecting the appropriate number from Table 1 for line 3 of the Simplified Method Worksheet. Irs tax forms Designated Roth accounts. Irs tax forms   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. Irs tax forms Your cost will also include any in-plan Roth rollovers you included in income. Irs tax forms Foreign employment contributions. Irs tax forms   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. Irs tax forms The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (not including the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) but only if the contributions would be excludible from your gross income had they been paid directly to you. Irs tax forms Foreign employment contributions while a nonresident alien. Irs tax forms   In determining your cost, special rules apply if you are a U. Irs tax forms S. Irs tax forms citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. Irs tax forms Your contributions and your employer's contributions are not included in your cost if the contribution: Was made based on compensation which was for services performed outside the United States while you were a nonresident alien, and Was not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if paid as cash compensation when the services were performed. Irs tax forms Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. Irs tax forms Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Irs tax forms These payments are also known as amounts received as an annuity. Irs tax forms If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. Irs tax forms In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. Irs tax forms The amount of each payment that is more than the part that represents your cost is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Irs tax forms Designated Roth accounts. Irs tax forms   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. Irs tax forms This applies to both your cost in the account and income earned on that account. Irs tax forms A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Irs tax forms   If the distribution is not a qualified distribution, the rules discussed in this section apply. Irs tax forms The designated Roth account is treated as a separate contract. Irs tax forms Period of participation. Irs tax forms   The 5-tax-year period of participation is the 5-tax-year period beginning with the first tax year for which the participant made a designated Roth contribution to the plan. Irs tax forms Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. Irs tax forms   However, if a direct rollover is made to the plan from a designated Roth account under another plan, the 5-tax-year period for the recipient plan begins with the first tax year for which the participant first had designated Roth contributions made to the other plan. Irs tax forms   Your 401(k), 403(b), or 457(b) plan may permit you to roll over amounts from those plans to a designated Roth account within the same plan. Irs tax forms This is known as an in-plan Roth rollover. Irs tax forms For more details, see In-plan Roth rollovers , later. Irs tax forms Fully Taxable Payments The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations applies to you (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Irs tax forms You did not pay anything or are not considered to have paid anything for your pension or annuity. Irs tax forms Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. Irs tax forms Your employer did not withhold contributions from your salary. Irs tax forms You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). Irs tax forms Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. Irs tax forms You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Irs tax forms Deductible voluntary employee contributions. Irs tax forms   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. Irs tax forms Accumulated deductible voluntary employee contributions include net earnings on the contributions. Irs tax forms If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. Irs tax forms Partly Taxable Payments If you have a cost to recover from your pension or annuity plan (see Cost (Investment in the Contract) , earlier), you can exclude part of each annuity payment from income as a recovery of your cost. Irs tax forms This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. Irs tax forms The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Irs tax forms You figure the tax-free part of the payment using one of the following methods. Irs tax forms Simplified Method. Irs tax forms You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). Irs tax forms You cannot use this method if your annuity is paid under a nonqualified plan. Irs tax forms General Rule. Irs tax forms You must use this method if your annuity is paid under a nonqualified plan. Irs tax forms You generally cannot use this method if your annuity is paid under a qualified plan. Irs tax forms You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. Irs tax forms If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. Irs tax forms Qualified plan annuity starting before November 19, 1996. Irs tax forms   If your annuity is paid under a qualified plan and your annuity starting date (defined earlier under Cost (Investment in the Contract) ) is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the Simplified Method or the General Rule. Irs tax forms If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. Irs tax forms If you used the Three-Year Rule (which was repealed for annuities starting after July 1, 1986), your annuity payments are generally now fully taxable. Irs tax forms Exclusion limit. Irs tax forms   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Irs tax forms Once your annuity starting date is determined, it does not change. Irs tax forms If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. Irs tax forms That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Irs tax forms Exclusion limited to cost. Irs tax forms   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. Irs tax forms Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Irs tax forms This deduction is not subject to the 2%-of-adjusted-gross-income limit. Irs tax forms Example 1. Irs tax forms Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. Irs tax forms The total cost of your annuity is $12,000. Irs tax forms Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). Irs tax forms After that, your annuity payments are generally fully taxable. Irs tax forms Example 2. Irs tax forms The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. Irs tax forms You have recovered tax free only $9,600 (8 × $1,200) of your cost. Irs tax forms An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. Irs tax forms Exclusion not limited to cost. Irs tax forms   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Irs tax forms If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. Irs tax forms The total exclusion may be more than your cost. Irs tax forms Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. Irs tax forms For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Irs tax forms For any other annuity, this number is the number of monthly annuity payments under the contract. Irs tax forms Who must use the Simplified Method. Irs tax forms   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. Irs tax forms You receive your pension or annuity payments from any of the following plans. Irs tax forms A qualified employee plan. Irs tax forms A qualified employee annuity. Irs tax forms A tax-sheltered annuity plan (403(b) plan). Irs tax forms On your annuity starting date, at least one of the following conditions applies to you. Irs tax forms You are under age 75. Irs tax forms You are entitled to less than 5 years of guaranteed payments. Irs tax forms Guaranteed payments. Irs tax forms   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. Irs tax forms If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. Irs tax forms Annuity starting before November 19, 1996. Irs tax forms   If your annuity starting date is after July 1, 1986, and before November 19, 1996, and you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Irs tax forms You could have chosen to use the Simplified Method if your annuity is payable for your life (or the lives of you and your survivor annuitant) and you met both of the conditions listed earlier under Who must use the Simplified Method . Irs tax forms Who cannot use the Simplified Method. Irs tax forms   You cannot use the Simplified Method if you receive your pension or annuity from a nonqualified plan or otherwise do not meet the conditions described in the preceding discussion. Irs tax forms See General Rule , later. Irs tax forms How to use the Simplified Method. Irs tax forms    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. Irs tax forms Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Irs tax forms   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Irs tax forms How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Irs tax forms For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. Irs tax forms    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. Irs tax forms Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Irs tax forms Single-life annuity. Irs tax forms   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. Irs tax forms Enter on line 3 the number shown for your age on your annuity starting date. Irs tax forms This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Irs tax forms Multiple-lives annuity. Irs tax forms   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. Irs tax forms Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Irs tax forms For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. Irs tax forms For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. Irs tax forms Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Irs tax forms   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Irs tax forms Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Irs tax forms This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Irs tax forms Fixed-period annuity. Irs tax forms   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. Irs tax forms Line 6. Irs tax forms   The amount on line 6 should include all amounts that could have been recovered in prior years. Irs tax forms If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Irs tax forms Example. Irs tax forms Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. Irs tax forms Bill's annuity starting date is January 1, 2013. Irs tax forms The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. Irs tax forms Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Irs tax forms Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. Irs tax forms Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. Irs tax forms Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of Worksheet A in completing line 3 of the worksheet. Irs tax forms His completed worksheet is shown later. Irs tax forms Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Irs tax forms Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Irs tax forms The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Irs tax forms If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. Irs tax forms This deduction is not subject to the 2%-of-adjusted-gross-income limit. Irs tax forms Worksheet A. Irs tax forms Simplified Method Worksheet for Bill Smith 1. Irs tax forms Enter the total pension or annuity payments received this year. Irs tax forms Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Irs tax forms $14,400 2. Irs tax forms Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. Irs tax forms * See Cost (Investment in the Contract) , earlier 2. Irs tax forms 31,000   Note. Irs tax forms If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Irs tax forms Otherwise, go to line 3. Irs tax forms     3. Irs tax forms Enter the appropriate number from Table 1 below. Irs tax forms But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. Irs tax forms 310 4. Irs tax forms Divide line 2 by the number on line 3 4. Irs tax forms 100 5. Irs tax forms Multiply line 4 by the number of months for which this year's payments were made. Irs tax forms If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Irs tax forms Otherwise, go to line 6 5. Irs tax forms 1,200 6. Irs tax forms Enter any amount previously recovered tax free in years after 1986. Irs tax forms This is the amount shown on line 10 of your worksheet for last year 6. Irs tax forms -0- 7. Irs tax forms Subtract line 6 from line 2 7. Irs tax forms 31,000 8. Irs tax forms Enter the smaller of line 5 or line 7 8. Irs tax forms 1,200 9. Irs tax forms Taxable amount for year. Irs tax forms Subtract line 8 from line 1. Irs tax forms Enter the result, but not less than zero. Irs tax forms Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Irs tax forms Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Irs tax forms If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers , earlier, before entering an amount on your tax return 9. Irs tax forms $13,200 10. Irs tax forms Was your annuity starting date before 1987? □ Yes. Irs tax forms STOP. Irs tax forms Do not complete the rest of this worksheet. Irs tax forms  ☑ No. Irs tax forms Add lines 6 and 8. Irs tax forms This is the amount you have recovered tax free through 2013. Irs tax forms You will need this number if you need to fill out this worksheet next year 10. Irs tax forms 1,200 11. Irs tax forms Balance of cost to be recovered. Irs tax forms Subtract line 10 from line 2. Irs tax forms If zero, you will not have to complete this worksheet next year. Irs tax forms The payments you receive next year will generally be fully taxable 11. Irs tax forms $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Irs tax forms           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. Irs tax forms . Irs tax forms . Irs tax forms BEFORE November 19, 1996, enter on line 3. Irs tax forms . Irs tax forms . Irs tax forms AFTER November 18, 1996, enter on line 3. Irs tax forms . Irs tax forms . Irs tax forms     55 or under 300 360     56-60 260 310     61-65 240 260     66-70 170 210     71 or older 120 160     Table 2 for Line 3 Above     IF the combined ages at  annuity starting date were. Irs tax forms . Irs tax forms . Irs tax forms THEN enter on line 3. Irs tax forms . Irs tax forms . Irs tax forms     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. Irs tax forms   If you and one or more other annuitants receive payments at the same time, you exclude from each annuity payment a pro rata share of the monthly tax-free amount. Irs tax forms Figure your share by taking the following steps. Irs tax forms Complete your worksheet through line 4 to figure the monthly tax-free amount. Irs tax forms Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. Irs tax forms Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. Irs tax forms The result is your share of the monthly tax-free amount. Irs tax forms   Replace the amount on line 4 of the worksheet with the result in (3) above. Irs tax forms Enter that amount on line 4 of your worksheet each year. Irs tax forms General Rule Under the General Rule, you determine the tax-free part of each annuity payment based on the ratio of the cost of the contract to the total expected return. Irs tax forms Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Irs tax forms To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. Irs tax forms Who must use the General Rule. Irs tax forms   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. Irs tax forms Annuity starting before November 19, 1996. Irs tax forms   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. Irs tax forms You also had to use it for any fixed-period annuity. Irs tax forms If you did not have to use the General Rule, you could have chosen to use it. Irs tax forms If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. Irs tax forms   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. Irs tax forms Who cannot use the General Rule. Irs tax forms   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. Irs tax forms See Simplified Method , earlier. Irs tax forms More information. Irs tax forms   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Irs tax forms Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. Irs tax forms Nonperiodic distributions are also known as amounts not received as an annuity. Irs tax forms They include all payments other than periodic payments and corrective distributions. Irs tax forms For example, the following items are treated as nonperiodic distributions. Irs tax forms Cash withdrawals. Irs tax forms Distributions of current earnings (dividends) on your investment. Irs tax forms However, do not include these distributions in your income to the extent the insurer keeps them to pay premiums or other consideration for the contract. Irs tax forms Certain loans. Irs tax forms See Loans Treated as Distributions , later. Irs tax forms The value of annuity contracts transferred without full and adequate consideration. Irs tax forms See Transfers of Annuity Contracts , later. Irs tax forms Corrective distributions of excess plan contributions. Irs tax forms   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. Irs tax forms To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Irs tax forms Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. Irs tax forms It is not subject to the allocation rules explained in the following discussion, it cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Irs tax forms    If your retirement plan made a corrective distribution of excess amounts (excess deferrals, excess contributions, or excess annual additions), your Form 1099-R should have the code “8,” “B,” “P,” or “E” in box 7. Irs tax forms   For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. Irs tax forms Figuring the Taxable Amount How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. Irs tax forms If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. Irs tax forms If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. Irs tax forms You may be able to roll over the taxable amount of a nonperiodic distribution from a qualified retirement plan into another qualified retirement plan or a traditional IRA tax free. Irs tax forms See Rollovers, later. Irs tax forms If you do not make a tax-free rollover and the distribution qualifies as a lump-sum distribution, you may be able to elect an optional method of figuring the tax on the taxable amount. Irs tax forms See Lump-Sum Distributions, later. Irs tax forms Annuity starting date. Irs tax forms   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. Irs tax forms Distributions of employer securities. Irs tax forms    If you receive a distribution of employer securities from a qualified retirement plan, you may be able to defer the tax on the net unrealized appreciation (NUA) in the securities. Irs tax forms The NUA is the net increase in the securities' value while they were in the trust. Irs tax forms This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. Irs tax forms   If the distribution is a lump-sum distribution, tax is deferred on all of the NUA unless you choose to include it in your income for the year of the distribution. Irs tax forms    A lump-sum distribution for this purpose is the distribution or payment of a plan participant's entire balance (within a single tax year) from all of the employer's qualified plans of one kind (pension, profit-sharing, or stock bonus plans), but only if paid: Because of the plan participant's death, After the participant reaches age 59½, Because the participant, if an employee, separates from service, or After the participant, if a self-employed individual, becomes totally and permanently disabled. Irs tax forms    If you choose to include NUA in your income for the year of the distribution and the participant was born before January 2, 1936, you may be able to figure the tax on the NUA using the optional methods described und
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The Irs Tax Forms

Irs tax forms 5. Irs tax forms   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. Irs tax forms Shared equity financing agreement. Irs tax forms Donation of use of the property. Irs tax forms Examples. Irs tax forms Days used for repairs and maintenance. Irs tax forms Days used as a main home before or after renting. Irs tax forms Reporting Income and DeductionsNot used as a home. Irs tax forms Used as a home but rented less than 15 days. Irs tax forms Used as a home and rented 15 days or more. Irs tax forms If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Irs tax forms In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Irs tax forms Only your rental expenses may deducted on Schedule E (Form 1040). Irs tax forms Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Irs tax forms You must also determine if the dwelling unit is considered a home. Irs tax forms The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Irs tax forms Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Irs tax forms There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Irs tax forms Dwelling unit. Irs tax forms   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Irs tax forms It also includes all structures or other property belonging to the dwelling unit. Irs tax forms A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Irs tax forms   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Irs tax forms Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Irs tax forms Example. Irs tax forms You rent a room in your home that is always available for short-term occupancy by paying customers. Irs tax forms You do not use the room yourself and you allow only paying customers to use the room. Irs tax forms This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Irs tax forms Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Irs tax forms When dividing your expenses, follow these rules. Irs tax forms Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Irs tax forms (This rule does not apply when determining whether you used the unit as a home. Irs tax forms ) Any day that the unit is available for rent but not actually rented is not a day of rental use. Irs tax forms Fair rental price. Irs tax forms   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Irs tax forms The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Irs tax forms   Ask yourself the following questions when comparing another property with yours. Irs tax forms Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. Irs tax forms Example. Irs tax forms Your beach cottage was available for rent from June 1 through August 31 (92 days). Irs tax forms Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. Irs tax forms The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Irs tax forms Your family also used the cottage during the last 2 weeks of May (14 days). Irs tax forms The cottage was not used at all before May 17 or after August 31. Irs tax forms You figure the part of the cottage expenses to treat as rental expenses as follows. Irs tax forms The cottage was used for rental a total of 85 days (92 − 7). Irs tax forms The days it was available for rent but not rented (7 days) are not days of rental use. Irs tax forms The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Irs tax forms You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Irs tax forms The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Irs tax forms Your rental expenses are 85/99 (86%) of the cottage expenses. Irs tax forms Note. Irs tax forms When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Irs tax forms Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Irs tax forms Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Irs tax forms If you have a net loss, you may not be able to deduct all of the rental expenses. Irs tax forms See Dwelling Unit Used as a Home, next. Irs tax forms Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Irs tax forms You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Irs tax forms See What is a day of personal use , later. Irs tax forms If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. Irs tax forms Instead, count it as a day of personal use in applying both (1) and (2) above. Irs tax forms What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Irs tax forms You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Irs tax forms However, see Days used as a main home before or after renting , later. Irs tax forms A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Irs tax forms Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Irs tax forms ), and lineal descendants (children, grandchildren, etc. Irs tax forms ). Irs tax forms Anyone under an arrangement that lets you use some other dwelling unit. Irs tax forms Anyone at less than a fair rental price. Irs tax forms Main home. Irs tax forms   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Irs tax forms Shared equity financing agreement. Irs tax forms   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Irs tax forms Donation of use of the property. Irs tax forms   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Irs tax forms Examples. Irs tax forms   The following examples show how to determine if you have days of personal use. Irs tax forms Example 1. Irs tax forms You and your neighbor are co-owners of a condominium at the beach. Irs tax forms Last year, you rented the unit to vacationers whenever possible. Irs tax forms The unit was not used as a main home by anyone. Irs tax forms Your neighbor used the unit for 2 weeks last year; you did not use it at all. Irs tax forms Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Irs tax forms Example 2. Irs tax forms You and your neighbors are co-owners of a house under a shared equity financing agreement. Irs tax forms Your neighbors live in the house and pay you a fair rental price. Irs tax forms Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Irs tax forms This is because your neighbors rent the house as their main home under a shared equity financing agreement. Irs tax forms Example 3. Irs tax forms You own a rental property that you rent to your son. Irs tax forms Your son does not own any interest in this property. Irs tax forms He uses it as his main home and pays you a fair rental price. Irs tax forms Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Irs tax forms Example 4. Irs tax forms You rent your beach house to Rosa. Irs tax forms Rosa rents her cabin in the mountains to you. Irs tax forms You each pay a fair rental price. Irs tax forms You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. Irs tax forms Example 5. Irs tax forms You rent an apartment to your mother at less than a fair rental price. Irs tax forms You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. Irs tax forms Days used for repairs and maintenance. Irs tax forms   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Irs tax forms Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Irs tax forms Example. Irs tax forms Corey owns a cabin in the mountains that he rents for most of the year. Irs tax forms He spends a week at the cabin with family members. Irs tax forms Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Irs tax forms Corey's family members, however, work substantially full time on the cabin each day during the week. Irs tax forms The main purpose of being at the cabin that week is to do maintenance work. Irs tax forms Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. Irs tax forms Days used as a main home before or after renting. Irs tax forms   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Irs tax forms Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Irs tax forms You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Irs tax forms However, this special rule does not apply when dividing expenses between rental and personal use. Irs tax forms See Property Changed to Rental Use in chapter 4. Irs tax forms Example 1. Irs tax forms On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. Irs tax forms You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). Irs tax forms On June 1, 2013, you moved back into your old house. Irs tax forms The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. Irs tax forms Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. Irs tax forms Example 2. Irs tax forms On January 31, you moved out of the condominium where you had lived for 3 years. Irs tax forms You offered it for rent at a fair rental price beginning on February 1. Irs tax forms You were unable to rent it until April. Irs tax forms On September 15, you sold the condominium. Irs tax forms The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. Irs tax forms Examples. Irs tax forms   The following examples show how to determine whether you used your rental property as a home. Irs tax forms Example 1. Irs tax forms You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Irs tax forms You rented the basement apartment at a fair rental price to college students during the regular school year. Irs tax forms You rented to them on a 9-month lease (273 days). Irs tax forms You figured 10% of the total days rented to others at a fair rental price is 27 days. Irs tax forms During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Irs tax forms Your basement apartment was used as a home because you used it for personal purposes for 30 days. Irs tax forms Rent-free use by your brothers is considered personal use. Irs tax forms Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Irs tax forms Example 2. Irs tax forms You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Irs tax forms Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Irs tax forms You figured 10% of the total days rented to others at a fair rental price is 3 days. Irs tax forms The room was used as a home because you used it for personal purposes for 21 days. Irs tax forms That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Irs tax forms Example 3. Irs tax forms You own a condominium apartment in a resort area. Irs tax forms You rented it at a fair rental price for a total of 170 days during the year. Irs tax forms For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Irs tax forms Your family actually used the apartment for 10 of those days. Irs tax forms Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. Irs tax forms You figured 10% of the total days rented to others at a fair rental price is 16 days. Irs tax forms Your family also used the apartment for 7 other days during the year. Irs tax forms You used the apartment as a home because you used it for personal purposes for 17 days. Irs tax forms That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Irs tax forms Minimal rental use. Irs tax forms   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Irs tax forms See Used as a home but rented less than 15 days, later, for more information. Irs tax forms Limit on deductions. Irs tax forms   Renting a dwelling unit that is considered a home is not a passive activity. Irs tax forms Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Irs tax forms The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Irs tax forms Any expenses carried forward to the next year will be subject to any limits that apply for that year. Irs tax forms This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Irs tax forms   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. Irs tax forms Reporting Income and Deductions Property not used for personal purposes. Irs tax forms   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. Irs tax forms Property used for personal purposes. Irs tax forms   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Irs tax forms Not used as a home. Irs tax forms   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Irs tax forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Irs tax forms The expenses for personal use are not deductible as rental expenses. Irs tax forms   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. Irs tax forms Used as a home but rented less than 15 days. Irs tax forms   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Irs tax forms You are not required to report the rental income and rental expenses from this activity. Irs tax forms The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Irs tax forms See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Irs tax forms Used as a home and rented 15 days or more. Irs tax forms   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Irs tax forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Irs tax forms The expenses for personal use are not deductible as rental expenses. Irs tax forms   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Irs tax forms You do not need to use Worksheet 5-1. Irs tax forms   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Irs tax forms To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. Irs tax forms Worksheet 5-1. Irs tax forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Irs tax forms Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Irs tax forms ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Irs tax forms Rental Use Percentage A. Irs tax forms Total days available for rent at fair rental price A. Irs tax forms       B. Irs tax forms Total days available for rent (line A) but not rented B. Irs tax forms       C. Irs tax forms Total days of rental use. Irs tax forms Subtract line B from line A C. Irs tax forms       D. Irs tax forms Total days of personal use (including days rented at less than fair rental price) D. Irs tax forms       E. Irs tax forms Total days of rental and personal use. Irs tax forms Add lines C and D E. Irs tax forms       F. Irs tax forms Percentage of expenses allowed for rental. Irs tax forms Divide line C by line E     F. Irs tax forms . Irs tax forms PART II. Irs tax forms Allowable Rental Expenses 1. Irs tax forms Enter rents received 1. Irs tax forms   2a. Irs tax forms Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Irs tax forms       b. Irs tax forms Enter the rental portion of real estate taxes b. Irs tax forms       c. Irs tax forms Enter the rental portion of deductible casualty and theft losses (see instructions) c. Irs tax forms       d. Irs tax forms Enter direct rental expenses (see instructions) d. Irs tax forms       e. Irs tax forms Fully deductible rental expenses. Irs tax forms Add lines 2a–2d. Irs tax forms Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Irs tax forms   3. Irs tax forms Subtract line 2e from line 1. Irs tax forms If zero or less, enter -0- 3. Irs tax forms   4a. Irs tax forms Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Irs tax forms       b. Irs tax forms Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Irs tax forms       c. Irs tax forms Carryover of operating expenses from 2012 worksheet c. Irs tax forms       d. Irs tax forms Add lines 4a–4c d. Irs tax forms       e. Irs tax forms Allowable expenses. Irs tax forms Enter the smaller of line 3 or line 4d (see instructions) 4e. Irs tax forms   5. Irs tax forms Subtract line 4e from line 3. Irs tax forms If zero or less, enter -0- 5. Irs tax forms   6a. Irs tax forms Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Irs tax forms       b. Irs tax forms Enter the rental portion of depreciation of the dwelling unit b. Irs tax forms       c. Irs tax forms Carryover of excess casualty losses and depreciation from 2012 worksheet c. Irs tax forms       d. Irs tax forms Add lines 6a–6c d. Irs tax forms       e. Irs tax forms Allowable excess casualty and theft losses and depreciation. Irs tax forms Enter the smaller of  line 5 or line 6d (see instructions) 6e. Irs tax forms   PART III. Irs tax forms Carryover of Unallowed Expenses to Next Year 7a. Irs tax forms Operating expenses to be carried over to next year. Irs tax forms Subtract line 4e from line 4d 7a. Irs tax forms   b. Irs tax forms Excess casualty and theft losses and depreciation to be carried over to next year. Irs tax forms  Subtract line 6e from line 6d b. Irs tax forms   Worksheet 5-1 Instructions. Irs tax forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Irs tax forms Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Irs tax forms Line 2a. Irs tax forms Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Irs tax forms Do not include interest on a loan that did not benefit the dwelling unit. Irs tax forms For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Irs tax forms Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Irs tax forms Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Irs tax forms   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Irs tax forms See the Schedule A instructions. Irs tax forms However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Irs tax forms See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Irs tax forms Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Irs tax forms   Note. Irs tax forms Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Irs tax forms Instead, figure the personal portion on a separate Schedule A. Irs tax forms If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Irs tax forms           Line 2c. Irs tax forms Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Irs tax forms To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Irs tax forms If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Irs tax forms On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Irs tax forms Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Irs tax forms   Note. Irs tax forms Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Irs tax forms Instead, figure the personal portion on a separate Form 4684. Irs tax forms           Line 2d. Irs tax forms Enter the total of your rental expenses that are directly related only to the rental activity. Irs tax forms These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Irs tax forms Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Irs tax forms           Line 2e. Irs tax forms You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Irs tax forms Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Irs tax forms           Line 4b. Irs tax forms On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Irs tax forms If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Irs tax forms Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). Irs tax forms           Line 4e. Irs tax forms You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Irs tax forms *           Line 6a. Irs tax forms To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Irs tax forms   A. Irs tax forms Enter the amount from Form 4684, line 10       B. Irs tax forms Enter the rental portion of line A       C. Irs tax forms Enter the amount from line 2c of this worksheet       D. Irs tax forms Subtract line C from line B. Irs tax forms Enter the result here and on line 6a of this worksheet               Line 6e. Irs tax forms You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Irs tax forms * *Allocating the limited deduction. Irs tax forms If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Irs tax forms Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Irs tax forms Prev  Up  Next   Home   More Online Publications