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Need To File A 2011 Tax Return

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Need To File A 2011 Tax Return

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

Need to file a 2011 tax return Part Six -   Figuring Your Taxes and Credits The eight chapters in this part explain how to figure your tax and how to figure the tax of certain children who have more than $2,000 of unearned income. Need to file a 2011 tax return They also discuss tax credits that, unlike deductions, are subtracted directly from your tax and reduce your tax dollar for dollar. Need to file a 2011 tax return Chapter 36 discusses the earned income credit. Need to file a 2011 tax return Chapter 37 discusses a wide variety of other credits, such as the adoption credit. Need to file a 2011 tax return Table of Contents 30. Need to file a 2011 tax return   How To Figure Your TaxIntroduction Figuring Your Tax Alternative Minimum Tax (AMT) Tax Figured by IRSFiling the Return 31. Need to file a 2011 tax return   Tax on Unearned Income of Certain ChildrenWhat's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. Need to file a 2011 tax return Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Need to file a 2011 tax return Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Need to file a 2011 tax return Figuring the Child's Tax (Form 8615, Part III) 32. Need to file a 2011 tax return   Child and Dependent Care CreditReminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Need to file a 2011 tax return Employment Taxes for Household Employers 33. Need to file a 2011 tax return   Credit for the Elderly or the DisabledIntroduction Useful Items - You may want to see: Are You Eligible for the Credit?Qualified Individual Income Limits How to Claim the CreditCredit Figured for You Credit Figured by You 34. Need to file a 2011 tax return   Child Tax CreditIntroduction Useful Items - You may want to see: Qualifying Child Amount of CreditLimits on the Credit Claiming the Credit Additional Child Tax Credit Completing Schedule 8812 (Form 1040A or 1040)Part I Parts II–IV 35. Need to file a 2011 tax return   Education CreditsIntroduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses 36. Need to file a 2011 tax return   Earned Income Credit (EIC)What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. Need to file a 2011 tax return Rules for EveryoneRule 1. Need to file a 2011 tax return Your AGI Must Be Less Than: Rule 2. Need to file a 2011 tax return You Must Have a Valid Social Security Number (SSN) Rule 3. Need to file a 2011 tax return Your Filing Status Cannot Be Married Filing Separately Rule 4. Need to file a 2011 tax return You Must Be a U. Need to file a 2011 tax return S. Need to file a 2011 tax return Citizen or Resident Alien All Year Rule 5. Need to file a 2011 tax return You Cannot File Form 2555 or Form 2555-EZ Rule 6. Need to file a 2011 tax return Your Investment Income Must Be $3,300 or Less Rule 7. Need to file a 2011 tax return You Must Have Earned Income Part B. Need to file a 2011 tax return Rules If You Have a Qualifying ChildRule 8. Need to file a 2011 tax return Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. Need to file a 2011 tax return Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. Need to file a 2011 tax return You Cannot Be a Qualifying Child of Another Taxpayer Part C. Need to file a 2011 tax return Rules If You Do Not Have a Qualifying ChildRule 11. Need to file a 2011 tax return You Must Be at Least Age 25 but Under Age 65 Rule 12. Need to file a 2011 tax return You Cannot Be the Dependent of Another Person Rule 13. Need to file a 2011 tax return You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. Need to file a 2011 tax return You Must Have Lived in the United States More Than Half of the Year Part D. Need to file a 2011 tax return Figuring and Claiming the EICRule 15. Need to file a 2011 tax return Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. Need to file a 2011 tax return John and Janet Smith (Form 1040A) Example 2. Need to file a 2011 tax return Kelly Green (Form 1040EZ) 37. Need to file a 2011 tax return   Other CreditsWhat's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Prev  Up  Next   Home   More Online Publications