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Tax Return Preparation State And Income Taxes

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Tax Return Preparation State And Income Taxes

Tax return preparation state and income taxes Publication 570 - Introductory Material Table of Contents Future developments. Tax return preparation state and income taxes What's New Reminders IntroductionOrdering forms and publications. Tax return preparation state and income taxes Tax questions. Tax return preparation state and income taxes Useful Items - You may want to see: Future developments. Tax return preparation state and income taxes For information about any additional changes to the 2013 tax law affecting Pub. Tax return preparation state and income taxes 570, please go to www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/pub570. Tax return preparation state and income taxes What's New Maximum income subject to social security tax. Tax return preparation state and income taxes . Tax return preparation state and income taxes  For 2013, the maximum amount of self-employment income subject to social security is $113,700. Tax return preparation state and income taxes Optional methods to figure net earnings. Tax return preparation state and income taxes . Tax return preparation state and income taxes  For 2013, the maximum income for using the optional methods is $4,640. Tax return preparation state and income taxes Additional Medicare Tax. Tax return preparation state and income taxes  Beginning in 2013, you may be required to pay Additional Medicare Tax. Tax return preparation state and income taxes Also, you may need to report Additional Medicare Tax withheld by your employer. Tax return preparation state and income taxes For more information, see Additional Medicare Tax under Special Rules for Completing Your U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Tax Return in chapter 4. Tax return preparation state and income taxes Net Investment Income Tax. Tax return preparation state and income taxes  Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Tax return preparation state and income taxes 8% tax on the lesser of an individual's net investment income or the excess of the individual's modified adjusted gross income over a specified threshold amount. Tax return preparation state and income taxes Bona fide residents of Puerto Rico and American Samoa who have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer's modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Tax return preparation state and income taxes Also, bona fide residents must take into account any additional tax liability associated with the NIIT when calculating their estimated tax payments. Tax return preparation state and income taxes The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Tax return preparation state and income taxes For more information, see Net Investment Income Tax under Bona Fide Resident of American Samoa and Bona Fide Resident of Puerto Rico in chapter 3. Tax return preparation state and income taxes Reminders Individual taxpayer identification numbers (ITINs) for aliens. Tax return preparation state and income taxes  If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an ITIN. Tax return preparation state and income taxes For details on how to do so, see Form W-7, Application for IRS Individual Taxpayer Identification Number, and its instructions. Tax return preparation state and income taxes Allow 6 weeks for the IRS to notify you of your ITIN (8-10 weeks if submitted during peak processing periods (January 15 through April 30) or if you are filing from overseas). Tax return preparation state and income taxes If you already have an ITIN, enter it wherever your SSN is requested on your tax return. Tax return preparation state and income taxes Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Tax return preparation state and income taxes The documentation requirements for individuals seeking an ITIN, have been superseded by these changes. Tax return preparation state and income taxes Authorized representatives are required to complete forensic training and submit the certificate of completion to the IRS no later than January 31, 2014. Tax return preparation state and income taxes Taxpayers and their representatives should review these program changes, which are further explained in the Frequently Asked Questions at www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/Individuals/Individual-Taxpayer-Identification-Number-(ITIN), before requesting an ITIN. Tax return preparation state and income taxes An ITIN is for tax use only. Tax return preparation state and income taxes It does not entitle you to social security benefits or change your employment or immigration status under U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes law. Tax return preparation state and income taxes Electronic filing. Tax return preparation state and income taxes . Tax return preparation state and income taxes  You can e-file Form 1040-SS. Tax return preparation state and income taxes For general information about  electronic filing, visit www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/efile. Tax return preparation state and income taxes Earned income credit (EIC). Tax return preparation state and income taxes  Generally, if you are a bona fide resident of a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possession, you cannot claim the EIC on your U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes tax return. Tax return preparation state and income taxes However, certain U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possessions may allow bona fide residents to claim the EIC on their possession tax return. Tax return preparation state and income taxes To claim the EIC on your U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes tax return, your home (and your spouse's if filing a joint return) must have been in the United States for more than half the year. Tax return preparation state and income taxes If you have a child, the child must have lived with you in the United States for more than half the year. Tax return preparation state and income taxes For this purpose, the United States includes only the 50 states and the District of Columbia. Tax return preparation state and income taxes Special rules apply to military personnel stationed outside the United States. Tax return preparation state and income taxes For more information on this credit, see Publication 596, Earned Income Credit. Tax return preparation state and income taxes Form 8938, Statement of Specified Foreign Financial Assets. Tax return preparation state and income taxes  If you have specified foreign financial assets in foreign jurisdictions valued above certain threshold dollar amounts, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, when you file your U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes income tax return with the IRS. Tax return preparation state and income taxes If you are required to file Form 8938, you do not have to report certain specified foreign financial assets on Form 8938. Tax return preparation state and income taxes See Bona fide resident of a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possession, in the Instructions for Form 8938 for more details. Tax return preparation state and income taxes For additional details, go to the page for the Foreign Account Tax Compliance Act (FATCA) at www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/businesses/corporations/article/0,,id=236667,00. Tax return preparation state and income taxes html. Tax return preparation state and income taxes If you do not have to file a federal income tax return with the United States, you are not required to file a Form 8938 with the IRS. Tax return preparation state and income taxes Change of address. Tax return preparation state and income taxes  If you change your mailing address, use Form 8822, Change of Address, to notify the Internal Revenue Service and U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possession tax administration, if appropriate. Tax return preparation state and income taxes Mail Form 8822 to the Internal Revenue Service Center or U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possession tax administration for your old address (addresses for the Service Centers are on the back of the form). Tax return preparation state and income taxes If you change your address before filing your tax return, write the new address in the appropriate boxes of your tax return when you file. Tax return preparation state and income taxes Photographs of missing children. Tax return preparation state and income taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax return preparation state and income taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax return preparation state and income taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax return preparation state and income taxes Introduction This publication discusses how to treat income received from the following U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possessions on your tax return(s). Tax return preparation state and income taxes American Samoa. Tax return preparation state and income taxes The Commonwealth of Puerto Rico (Puerto Rico). Tax return preparation state and income taxes The Commonwealth of the Northern Mariana Islands (CNMI). Tax return preparation state and income taxes Guam. Tax return preparation state and income taxes The U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Virgin Islands (USVI). Tax return preparation state and income taxes Unless stated otherwise, when the term “possession” is used in this publication, it includes the Commonwealths of Puerto Rico and the Northern Mariana Islands. Tax return preparation state and income taxes Chapter 1 discusses the requirements for being considered a bona fide resident of the listed possessions. Tax return preparation state and income taxes Chapter 2 gives the rules for determining if your income is from sources within, or effectively connected with a trade or business in, those possessions. Tax return preparation state and income taxes Next, chapter 3 looks at the rules for filing tax returns when you receive income from any of these possessions. Tax return preparation state and income taxes You may have to file a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes tax return only, a possession tax return only, or both returns. Tax return preparation state and income taxes This generally depends on whether you are a bona fide resident of the possession. Tax return preparation state and income taxes In some cases, you may have to file a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes return, but will be able to exclude income earned in a possession from U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes tax. Tax return preparation state and income taxes You can find illustrated examples of some of the additional forms required in chapter 5. Tax return preparation state and income taxes If you are not a bona fide resident of one of the possessions listed earlier, or are otherwise required to file a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes income tax return, the information in chapter 4 will tell you how to file your U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes tax return. Tax return preparation state and income taxes This information also applies if you have income from U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes insular areas other than the five possessions listed earlier because that income will not qualify for any of the exclusions or other benefits discussed in chapter 3. Tax return preparation state and income taxes These other U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes insular areas include: Baker Island, Howland Island, Jarvis Island, Johnston Island, Kingman Reef, Midway Islands, Palmyra Atoll, and Wake Island. Tax return preparation state and income taxes If you need information on U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes taxation, write to: Internal Revenue Service Philadelphia, PA 19255-0725 If you need additional information on your tax obligations in a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes possession, write to the tax department of that possession. Tax return preparation state and income taxes Their addresses are provided in chapter 3 under the individual headings for each possession. Tax return preparation state and income taxes Comments and suggestions. Tax return preparation state and income taxes   We welcome your comments about this publication and your suggestions for future editions. Tax return preparation state and income taxes   You can send us comments from www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/formspubs/. Tax return preparation state and income taxes Click on “More Information”and then on “Comment on Tax Forms and Publications. Tax return preparation state and income taxes ” Or you can write to us at the following address: Internal Revenue Service Tax Forms and Publications SE:W:CAR:MP:TFP 1111 Constitution Ave. Tax return preparation state and income taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax return preparation state and income taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax return preparation state and income taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax return preparation state and income taxes Ordering forms and publications. Tax return preparation state and income taxes   Visit www. Tax return preparation state and income taxes irs. Tax return preparation state and income taxes gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax return preparation state and income taxes Internal Revenue Service 1201 N. Tax return preparation state and income taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax return preparation state and income taxes   If you have a tax question, check the information available on IRS. Tax return preparation state and income taxes gov or call 1-800-829-1040. Tax return preparation state and income taxes We cannot answer tax questions sent to either of the above addresses. Tax return preparation state and income taxes You can get the necessary possession tax forms at the tax office for the appropriate possession. Tax return preparation state and income taxes The office addresses are given in chapter 3. Tax return preparation state and income taxes Useful Items - You may want to see: Publication 54 Tax Guide for U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Citizens and Resident Aliens Abroad 514 Foreign Tax Credit for Individuals 519 U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Tax Guide for Aliens Form (and Instructions) 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico) 1040-SS U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico) 1116 Foreign Tax Credit 4563 Exclusion of Income for Bona Fide Residents of American Samoa 4868 Application for Automatic Extension of Time To File U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Individual Income Tax Return 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI) 8689 Allocation of Individual Income Tax to the U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Virgin Islands 8898 Statement for Individuals Who Begin or End Bona Fide Residence In a U. Tax return preparation state and income taxes S. Tax return preparation state and income taxes Possession 8959 Additional Medicare Tax 8960 Net Investment Income Tax—Individuals, Estates, and Trusts Prev  Up  Next   Home   More Online Publications
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The Tax Return Preparation State And Income Taxes

Tax return preparation state and income taxes 4. Tax return preparation state and income taxes   Limit on Elective Deferrals Table of Contents Excess elective deferrals. Tax return preparation state and income taxes General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. Tax return preparation state and income taxes This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. Tax return preparation state and income taxes A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. Tax return preparation state and income taxes You can enter into more than one salary reduction agreement during a year. Tax return preparation state and income taxes More than one 403(b) account. Tax return preparation state and income taxes If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. Tax return preparation state and income taxes 403(b) plan and another retirement plan. Tax return preparation state and income taxes If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. Tax return preparation state and income taxes The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. Tax return preparation state and income taxes Roth contribution program. Tax return preparation state and income taxes   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. Tax return preparation state and income taxes Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. Tax return preparation state and income taxes   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. Tax return preparation state and income taxes For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. Tax return preparation state and income taxes Excess elective deferrals. Tax return preparation state and income taxes   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. Tax return preparation state and income taxes General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. Tax return preparation state and income taxes This limit applies without regard to community property laws. Tax return preparation state and income taxes 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Tax return preparation state and income taxes If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. Tax return preparation state and income taxes To determine whether you have 15 years of service with your employer, see Years of Service , next. Tax return preparation state and income taxes Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. Tax return preparation state and income taxes How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. Tax return preparation state and income taxes You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. Tax return preparation state and income taxes If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. Tax return preparation state and income taxes Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. Tax return preparation state and income taxes Figuring Your Years of Service Take the following rules into account when figuring your years of service. Tax return preparation state and income taxes Status of employer. Tax return preparation state and income taxes   Your years of service include only periods during which your employer was a qualified employer. Tax return preparation state and income taxes Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. Tax return preparation state and income taxes Service with one employer. Tax return preparation state and income taxes   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. Tax return preparation state and income taxes Church employee. Tax return preparation state and income taxes   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. Tax return preparation state and income taxes For more information about church employees, see chapter 5. Tax return preparation state and income taxes Self-employed ministers. Tax return preparation state and income taxes   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. Tax return preparation state and income taxes Total years of service. Tax return preparation state and income taxes   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. Tax return preparation state and income taxes Marsha began working with ABC schools in September 2009. Tax return preparation state and income taxes She has always worked full-time for each annual work period. Tax return preparation state and income taxes At the end of 2013, Marsha had 4. Tax return preparation state and income taxes 5 years of service with ABC Public Schools, as shown in Table 4-1. Tax return preparation state and income taxes Table 4-1. Tax return preparation state and income taxes Marsha's Years of Service Note. Tax return preparation state and income taxes This table shows how Marsha figures her years of service, as explained in the previous example. Tax return preparation state and income taxes Year Period Worked Portion of Work Period Years of Service 2009 Sept. Tax return preparation state and income taxes –Dec. Tax return preparation state and income taxes . Tax return preparation state and income taxes 5 year . Tax return preparation state and income taxes 5 year 2010 Feb. Tax return preparation state and income taxes –May . Tax return preparation state and income taxes 5 year 1 year Sept. Tax return preparation state and income taxes –Dec. Tax return preparation state and income taxes . Tax return preparation state and income taxes 5 year 2011 Feb. Tax return preparation state and income taxes –May . Tax return preparation state and income taxes 5 year 1 year Sept. Tax return preparation state and income taxes –Dec. Tax return preparation state and income taxes . Tax return preparation state and income taxes 5 year 2012 Feb. Tax return preparation state and income taxes –May . Tax return preparation state and income taxes 5 year 1 year Sept. Tax return preparation state and income taxes –Dec. Tax return preparation state and income taxes . Tax return preparation state and income taxes 5 year 2013 Feb. Tax return preparation state and income taxes –May . Tax return preparation state and income taxes 5 year 1 year Sept. Tax return preparation state and income taxes –Dec. Tax return preparation state and income taxes . Tax return preparation state and income taxes 5 year Total years of service 4. Tax return preparation state and income taxes 5 years Full-time or part-time. Tax return preparation state and income taxes   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. Tax return preparation state and income taxes When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. Tax return preparation state and income taxes Employer's annual work period. Tax return preparation state and income taxes   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. Tax return preparation state and income taxes Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. Tax return preparation state and income taxes Note. Tax return preparation state and income taxes You cannot accumulate more than 1 year of service in a 12-month period. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. Tax return preparation state and income taxes Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. Tax return preparation state and income taxes Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. Tax return preparation state and income taxes Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. Tax return preparation state and income taxes In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. Tax return preparation state and income taxes How to compare. Tax return preparation state and income taxes   You can use any method that reasonably and accurately reflects the amount of work required. Tax return preparation state and income taxes For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. Tax return preparation state and income taxes   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. Tax return preparation state and income taxes   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. Tax return preparation state and income taxes Full year of service. Tax return preparation state and income taxes   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. Tax return preparation state and income taxes Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. Tax return preparation state and income taxes Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. Tax return preparation state and income taxes Full-time for part of the year. Tax return preparation state and income taxes   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. Tax return preparation state and income taxes The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). Tax return preparation state and income taxes The annual work period for the college is 8 months (February through May and July through October). Tax return preparation state and income taxes Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. Tax return preparation state and income taxes Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. Tax return preparation state and income taxes   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. Tax return preparation state and income taxes The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes Vance teaches one course at a local medical school. Tax return preparation state and income taxes He teaches 3 hours per week for two semesters. Tax return preparation state and income taxes Other faculty members at the same school teach 9 hours per week for two semesters. Tax return preparation state and income taxes The annual work period of the medical school is two semesters. Tax return preparation state and income taxes An instructor teaching 9 hours a week for two semesters is considered a full-time employee. Tax return preparation state and income taxes Given these facts, Vance has worked part-time for a full annual work period. Tax return preparation state and income taxes Vance has completed 1/3 of a year of service, figured as shown below. Tax return preparation state and income taxes Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. Tax return preparation state and income taxes   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. Tax return preparation state and income taxes   Figure the first fraction as though you had worked full-time for part of the annual work period. Tax return preparation state and income taxes The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. Tax return preparation state and income taxes The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. Tax return preparation state and income taxes   Figure the second fraction as though you had worked part-time for the entire annual work period. Tax return preparation state and income taxes The fraction is as follows: The numerator (top number) is the number of hours or days you worked. Tax return preparation state and income taxes The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. Tax return preparation state and income taxes   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. Tax return preparation state and income taxes Example. Tax return preparation state and income taxes Maria, an attorney, teaches a course for one semester at a law school. Tax return preparation state and income taxes She teaches 3 hours per week. Tax return preparation state and income taxes The annual work period for teachers at the school is two semesters. Tax return preparation state and income taxes All full-time instructors at the school are required to teach 12 hours per week. Tax return preparation state and income taxes Based on these facts, Maria is employed part-time for part of the annual work period. Tax return preparation state and income taxes Her year of service for this year is determined by multiplying two fractions. Tax return preparation state and income taxes Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. Tax return preparation state and income taxes Example Floyd has figured his limit on annual additions. Tax return preparation state and income taxes The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. Tax return preparation state and income taxes Figuring Floyd's limit on elective deferrals. Tax return preparation state and income taxes   Floyd has been employed with his current employer for less than 15 years. Tax return preparation state and income taxes He is not eligible for the special 15-year increase. Tax return preparation state and income taxes Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. Tax return preparation state and income taxes Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. Tax return preparation state and income taxes Additionally, Floyd's employer does not offer a Roth contribution program. Tax return preparation state and income taxes Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. Tax return preparation state and income taxes Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. Tax return preparation state and income taxes Table 4-2. Tax return preparation state and income taxes Worksheet 1. Tax return preparation state and income taxes Maximum Amount Contributable (MAC) Note. Tax return preparation state and income taxes Use this worksheet to figure your MAC. Tax return preparation state and income taxes Part I. Tax return preparation state and income taxes Limit on Annual Additions     1. Tax return preparation state and income taxes Enter your includible compensation for your most recent year of service 1. Tax return preparation state and income taxes $70,475 2. Tax return preparation state and income taxes Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. Tax return preparation state and income taxes 52,000 3. Tax return preparation state and income taxes Enter the lesser of line 1 or line 2. Tax return preparation state and income taxes This is your limit on annual additions 3. Tax return preparation state and income taxes 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Tax return preparation state and income taxes     Part II. Tax return preparation state and income taxes Limit on Elective Deferrals     4. Tax return preparation state and income taxes Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Tax return preparation state and income taxes 17,500   Note. Tax return preparation state and income taxes If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Tax return preparation state and income taxes If not, enter zero (-0-) on line 16 and go to line 17. Tax return preparation state and income taxes     5. Tax return preparation state and income taxes Amount per year of service 5. Tax return preparation state and income taxes 5,000 6. Tax return preparation state and income taxes Enter your years of service 6. Tax return preparation state and income taxes   7. Tax return preparation state and income taxes Multiply line 5 by line 6 7. Tax return preparation state and income taxes   8. Tax return preparation state and income taxes Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Tax return preparation state and income taxes   9. Tax return preparation state and income taxes Subtract line 8 from line 7. Tax return preparation state and income taxes If zero or less, enter zero (-0-) 9. Tax return preparation state and income taxes   10. Tax return preparation state and income taxes Maximum increase in limit for long service 10. Tax return preparation state and income taxes 15,000 11. Tax return preparation state and income taxes Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Tax return preparation state and income taxes   12. Tax return preparation state and income taxes Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Tax return preparation state and income taxes   13. Tax return preparation state and income taxes Add lines 11 and 12 13. Tax return preparation state and income taxes   14. Tax return preparation state and income taxes Subtract line 13 from line 10 14. Tax return preparation state and income taxes   15. Tax return preparation state and income taxes Maximum additional contributions 15. Tax return preparation state and income taxes 3,000 16. Tax return preparation state and income taxes Enter the least of lines 9, 14, or 15. Tax return preparation state and income taxes This is your increase in the limit for long service 16. Tax return preparation state and income taxes -0- 17. Tax return preparation state and income taxes Add lines 4 and 16. Tax return preparation state and income taxes This is your limit on elective deferrals 17. Tax return preparation state and income taxes 17,500   Part III. Tax return preparation state and income taxes Maximum Amount Contributable     18. Tax return preparation state and income taxes If you had only nonelective contributions, enter the amount from line 3. Tax return preparation state and income taxes This is your MAC. Tax return preparation state and income taxes    If you had only elective deferrals, enter the lesser of lines 3 or 17. Tax return preparation state and income taxes This is your MAC. Tax return preparation state and income taxes    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Tax return preparation state and income taxes This is your MAC. Tax return preparation state and income taxes (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Tax return preparation state and income taxes ) 18. Tax return preparation state and income taxes $17,500 Prev  Up  Next   Home   More Online Publications