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Pa Ez Form

Pa ez form 2. Pa ez form   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. Pa ez form 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. Pa ez form Deduction may depend on your type of business. Pa ez form Exception for events that benefit charitable organizations. Pa ez form Food and beverages in skybox seats. Pa ez form What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. Pa ez form You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Pa ez form The rules and definitions are summarized in Table 2-1 . Pa ez form You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. Pa ez form Directly-related test. Pa ez form Associated test. Pa ez form Both of these tests are explained later. Pa ez form An ordinary expense is one that is common and accepted in your trade or business. Pa ez form A necessary expense is one that is helpful and appropriate for your business. Pa ez form An expense does not have to be required to be considered necessary. Pa ez form The amount you can deduct for entertainment expenses may be limited. Pa ez form Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Pa ez form This limit is discussed later under 50% Limit. Pa ez form Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. Pa ez form Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Pa ez form Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. Pa ez form See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. Pa ez form You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. Pa ez form It is not necessary to devote more time to business than to entertainment. Pa ez form However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. Pa ez form Table 2-1. Pa ez form When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Pa ez form Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Pa ez form An ordinary expense is one that is common and accepted in your trade or business. Pa ez form A necessary expense is one that is helpful and appropriate. Pa ez form Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Pa ez form   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. Pa ez form Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Pa ez form You cannot deduct expenses that are lavish or extravagant under the circumstances. Pa ez form You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). Pa ez form You do not have to show that business income or other business benefit actually resulted from each entertainment expense. Pa ez form Clear business setting. Pa ez form   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. Pa ez form The following situations are examples of entertainment in a clear business setting. Pa ez form Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. Pa ez form Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). Pa ez form Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. Pa ez form An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. Pa ez form Expenses not considered directly related. Pa ez form   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. Pa ez form The following are examples of situations where there are substantial distractions. Pa ez form A meeting or discussion at a nightclub, theater, or sporting event. Pa ez form A meeting or discussion during what is essentially a social gathering, such as a cocktail party. Pa ez form A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. Pa ez form Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. Pa ez form To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). Pa ez form Associated with trade or business. Pa ez form   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. Pa ez form The purpose may be to get new business or to encourage the continuation of an existing business relationship. Pa ez form Substantial business discussion. Pa ez form   Whether a business discussion is substantial depends on the facts of each case. Pa ez form A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. Pa ez form   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. Pa ez form It is not necessary that you devote more time to business than to entertainment. Pa ez form You do not have to discuss business during the meal or entertainment. Pa ez form Meetings at conventions. Pa ez form   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. Pa ez form However, your reason for attending the convention or meeting must be to further your trade or business. Pa ez form The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. Pa ez form Directly before or after business discussion. Pa ez form   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. Pa ez form   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Pa ez form Among the facts to consider are the place, date, and duration of the business discussion. Pa ez form If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. Pa ez form Example. Pa ez form A group of business associates comes from out of town to your place of business to hold a substantial business discussion. Pa ez form If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. Pa ez form The expense meets the associated test. Pa ez form 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Pa ez form (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Pa ez form See Individuals subject to “hours of service” limits , later. Pa ez form ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Pa ez form Figure A summarizes the general rules explained in this section. Pa ez form The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Pa ez form Included expenses. Pa ez form   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Pa ez form However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Pa ez form Figure A. Pa ez form Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Pa ez form See Exceptions to the 50% Limit . Pa ez form Please click here for the text description of the image. Pa ez form Figure A. Pa ez form Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. Pa ez form   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. Pa ez form   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Pa ez form It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. Pa ez form It also applies to the cost of meals included in deductible educational expenses. Pa ez form When to apply the 50% limit. Pa ez form   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Pa ez form You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. Pa ez form Example 1. Pa ez form You spend $200 for a business-related meal. Pa ez form If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Pa ez form Your deduction cannot be more than $45 (50% × $90). Pa ez form Example 2. Pa ez form You purchase two tickets to a concert and give them to a client. Pa ez form You purchased the tickets through a ticket agent. Pa ez form You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Pa ez form Your deduction cannot be more than $80 (50% × $160). Pa ez form Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Pa ez form Figure A can help you determine if the 50% limit applies to you. Pa ez form Expenses not subject to 50% limit. Pa ez form   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Pa ez form 1 - Employee's reimbursed expenses. Pa ez form   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Pa ez form Accountable plans are discussed in chapter 6. Pa ez form 2 - Self-employed. Pa ez form   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. Pa ez form You have these expenses as an independent contractor. Pa ez form Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. Pa ez form You provide adequate records of these expenses to your customer or client. Pa ez form (See chapter 5 . Pa ez form )   In this case, your client or customer is subject to the 50% limit on the expenses. Pa ez form Example. Pa ez form You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. Pa ez form You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. Pa ez form If the client can deduct the expenses, the client is subject to the 50% limit. Pa ez form If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. Pa ez form 3 - Advertising expenses. Pa ez form   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Pa ez form For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. Pa ez form 4 - Sale of meals or entertainment. Pa ez form   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. Pa ez form For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. Pa ez form 5 - Charitable sports event. Pa ez form   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. Pa ez form For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. Pa ez form Individuals subject to “hours of service” limits. Pa ez form   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Pa ez form The percentage is 80%. Pa ez form   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Pa ez form Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Pa ez form Interstate truck operators and bus drivers who are under Department of Transportation regulations. Pa ez form Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Pa ez form Certain merchant mariners who are under Coast Guard regulations. Pa ez form What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Pa ez form Entertainment. Pa ez form   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Pa ez form Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Pa ez form   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. Pa ez form A meal as a form of entertainment. Pa ez form   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Pa ez form A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Pa ez form To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Pa ez form    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Pa ez form    Meals sold in the normal course of your business are not considered entertainment. Pa ez form Deduction may depend on your type of business. Pa ez form   Your kind of business may determine if a particular activity is considered entertainment. Pa ez form For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. Pa ez form This is because fashion shows are typical in your business. Pa ez form But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. Pa ez form Separating costs. Pa ez form   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Pa ez form You must have a reasonable basis for making this allocation. Pa ez form For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Pa ez form Taking turns paying for meals or entertainment. Pa ez form   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Pa ez form Lavish or extravagant expenses. Pa ez form   You cannot deduct expenses for entertainment that are lavish or extravagant. Pa ez form An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Pa ez form Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Pa ez form Allocating between business and nonbusiness. Pa ez form   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. Pa ez form You can deduct only the business part. Pa ez form If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. Pa ez form Example. Pa ez form You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Pa ez form Only 4/11 of the expense qualifies as a business entertainment expense. Pa ez form You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. Pa ez form Trade association meetings. Pa ez form   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Pa ez form These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Pa ez form Entertainment tickets. Pa ez form   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Pa ez form For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Pa ez form Exception for events that benefit charitable organizations. Pa ez form   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. Pa ez form You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. Pa ez form The event's main purpose is to benefit a qualified charitable organization. Pa ez form The entire net proceeds go to the charity. Pa ez form The event uses volunteers to perform substantially all the event's work. Pa ez form    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. Pa ez form Example 1. Pa ez form You purchase tickets to a golf tournament organized by the local volunteer fire company. Pa ez form All net proceeds will be used to buy new fire equipment. Pa ez form The volunteers will run the tournament. Pa ez form You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. Pa ez form Example 2. Pa ez form You purchase tickets to a college football game through a ticket broker. Pa ez form After having a business discussion, you take a client to the game. Pa ez form Net proceeds from the game go to colleges that qualify as charitable organizations. Pa ez form However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. Pa ez form Skyboxes and other private luxury boxes. Pa ez form   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. Pa ez form   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. Pa ez form For example, renting a skybox for a series of playoff games is considered renting it for more than one event. Pa ez form All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. Pa ez form   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. Pa ez form Example. Pa ez form You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. Pa ez form The cost of regular nonluxury box seats at each event is $30 a seat. Pa ez form You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). Pa ez form Food and beverages in skybox seats. Pa ez form   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. Pa ez form The amounts separately stated for food and beverages must be reasonable. Pa ez form You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. Pa ez form What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Pa ez form Club dues and membership fees. Pa ez form   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Pa ez form This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. Pa ez form   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Pa ez form You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Pa ez form Entertainment facilities. Pa ez form   Generally, you cannot deduct any expense for the use of an entertainment facility. Pa ez form This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Pa ez form   An entertainment facility is any property you own, rent, or use for entertainment. Pa ez form Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Pa ez form Out-of-pocket expenses. Pa ez form   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Pa ez form These are not expenses for the use of an entertainment facility. Pa ez form However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. Pa ez form Expenses for spouses. Pa ez form   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. Pa ez form However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. Pa ez form Example. Pa ez form You entertain a customer. Pa ez form The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. Pa ez form The customer's spouse joins you because it is impractical to entertain the customer without the spouse. Pa ez form You can deduct the cost of entertaining the customer's spouse. Pa ez form If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. Pa ez form Gift or entertainment. Pa ez form   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Pa ez form However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. Pa ez form   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Pa ez form You can treat the tickets as either a gift or entertainment, whichever is to your advantage. Pa ez form   You can change your treatment of the tickets at a later date by filing an amended return. Pa ez form Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Pa ez form   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Pa ez form You cannot choose, in this case, to treat the tickets as a gift. Pa ez form Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Oklahoma Attorney General

Website: Oklahoma Attorney General

Address: Oklahoma Attorney General
Public Protection Unit
313 N.E. 21st St.
Oklahoma City, OK 73105

Phone Number: 405-521-3921 (Oklahoma City) 918-581-2885 (Tulsa)

Oklahoma Department of Consumer Credit

Website: Oklahoma Department of Consumer Credit

Address: Oklahoma Department of Consumer Credit
3613 N.W. 56th St., Suite 240
Oklahoma City, OK 73112-4512

Phone Number: 405-521-3653

Toll-free: 1-800-448-4904 (Consumer Hotline)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

State Banking Department

Website: State Banking Department

Address: State Banking Department
2900 N. Lincoln Blvd.
Oklahoma City, OK 73105

Phone Number: 405-521-2782

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Insurance Department

Website: Insurance Department

Address: Insurance Department
Consumer Assistance Division
Five Corporate Plaza
3625 N.W. 56th St., Suite 100
Oklahoma City, OK 73112

Phone Number: 405-521-2991

Toll-free: 1-800-522-0071 (OK)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Department of Securities

Website: Department of Securities

Address: Department of Securities
First National Center
120 N. Robinson Ave., Suite 860
Oklahoma City, OK 73102

Phone Number: 405-280-7700

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Corporation Commission

Website: Corporation Commission

Address: Corporation Commission
Consumer Services Division
PO Box 52000
Oklahoma City, OK 73152-2000

Phone Number: 405-522-0478

Toll-free: 1-800-522-8154 (OK)

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The Pa Ez Form

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