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Taxaide 6. Taxaide   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Taxaide Free help with your tax return. Taxaide   You can get free help preparing your return nationwide from IRS-certified volunteers. Taxaide The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Taxaide The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Taxaide Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Taxaide In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Taxaide To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Taxaide gov, download the IRS2Go app, or call 1-800-906-9887. Taxaide   As part of the TCE program, AARP offers the Tax-Aide counseling program. Taxaide To find the nearest AARP Tax-Aide site, visit AARP's website at www. Taxaide aarp. Taxaide org/money/taxaide or call 1-888-227-7669. Taxaide For more information on these programs, go to IRS. Taxaide gov and enter “VITA” in the search box. Taxaide Internet. Taxaide    IRS. Taxaide gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Taxaide Download the free IRS2Go app from the iTunes app store or from Google Play. Taxaide Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Taxaide Check the status of your 2013 refund with the Where's My Refund? application on IRS. Taxaide gov or download the IRS2Go app and select the Refund Status option. Taxaide The IRS issues more than 9 out of 10 refunds in less than 21 days. Taxaide Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Taxaide You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxaide The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Taxaide Use the Interactive Tax Assistant (ITA) to research your tax questions. Taxaide No need to wait on the phone or stand in line. Taxaide The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Taxaide When you reach the response screen, you can print the entire interview and the final response for your records. Taxaide New subject areas are added on a regular basis. Taxaide  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Taxaide gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Taxaide You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Taxaide The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Taxaide When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Taxaide Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Taxaide You can also ask the IRS to mail a return or an account transcript to you. Taxaide Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Taxaide gov or by calling 1-800-908-9946. Taxaide Tax return and tax account transcripts are generally available for the current year and the past three years. Taxaide Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Taxaide Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Taxaide If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Taxaide Check the status of your amended return using Where's My Amended Return? Go to IRS. Taxaide gov and enter Where's My Amended Return? in the search box. Taxaide You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Taxaide It can take up to 3 weeks from the date you mailed it to show up in our system. Taxaide Make a payment using one of several safe and convenient electronic payment options available on IRS. Taxaide gov. Taxaide Select the Payment tab on the front page of IRS. Taxaide gov for more information. Taxaide Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Taxaide Figure your income tax withholding with the IRS Withholding Calculator on IRS. Taxaide gov. Taxaide Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Taxaide Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Taxaide gov. Taxaide Request an Electronic Filing PIN by going to IRS. Taxaide gov and entering Electronic Filing PIN in the search box. Taxaide Download forms, instructions and publications, including accessible versions for people with disabilities. Taxaide Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Taxaide gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Taxaide An employee can answer questions about your tax account or help you set up a payment plan. Taxaide Before you visit, check the Office Locator on IRS. Taxaide gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Taxaide If you have a special need, such as a disability, you can request an appointment. Taxaide Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Taxaide Apply for an Employer Identification Number (EIN). Taxaide Go to IRS. Taxaide gov and enter Apply for an EIN in the search box. Taxaide Read the Internal Revenue Code, regulations, or other official guidance. Taxaide Read Internal Revenue Bulletins. Taxaide Sign up to receive local and national tax news and more by email. Taxaide Just click on “subscriptions” above the search box on IRS. Taxaide gov and choose from a variety of options. Taxaide Phone. Taxaide    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Taxaide Download the free IRS2Go app from the iTunes app store or from Google Play. Taxaide Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Taxaide gov, or download the IRS2Go app. Taxaide Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Taxaide The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Taxaide Most VITA and TCE sites offer free electronic filing. Taxaide Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Taxaide Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Taxaide Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Taxaide If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Taxaide The IRS issues more than 9 out of 10 refunds in less than 21 days. Taxaide Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxaide Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Taxaide The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Taxaide Note, the above information is for our automated hotline. Taxaide Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Taxaide Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Taxaide You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Taxaide It can take up to 3 weeks from the date you mailed it to show up in our system. Taxaide Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Taxaide You should receive your order within 10 business days. Taxaide Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Taxaide If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Taxaide Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Taxaide The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Taxaide These individuals can also contact the IRS through relay services such as the Federal Relay Service. Taxaide Walk-in. Taxaide   You can find a selection of forms, publications and services — in-person. Taxaide Products. Taxaide You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Taxaide Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Taxaide Services. Taxaide You can walk in to your local TAC for face-to-face tax help. Taxaide An employee can answer questions about your tax account or help you set up a payment plan. Taxaide Before visiting, use the Office Locator tool on IRS. Taxaide gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Taxaide Mail. Taxaide   You can send your order for forms, instructions, and publications to the address below. Taxaide You should receive a response within 10 business days after your request is received. Taxaide Internal Revenue Service 1201 N. Taxaide Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Taxaide The Taxpayer Advocate Service (TAS) is your voice at the IRS. Taxaide Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Taxaide   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Taxaide We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Taxaide You face (or your business is facing) an immediate threat of adverse action. Taxaide You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Taxaide   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Taxaide Here's why we can help: TAS is an independent organization within the IRS. Taxaide Our advocates know how to work with the IRS. Taxaide Our services are free and tailored to meet your needs. Taxaide We have offices in every state, the District of Columbia, and Puerto Rico. Taxaide   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Taxaide   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Taxaide If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Taxaide Low Income Taxpayer Clinics (LITCs). Taxaide   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Taxaide Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Taxaide Visit www. Taxaide TaxpayerAdvocate. Taxaide irs. Taxaide gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 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The Department of Agriculture's Risk Management Agency administers the Federal Crop Insurance Corporation and provides risk management information and services to farmers and producers.

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Website: Risk Management Agency (Agriculture Department)

Contact In-Person: Risk Management Agency Local Offices

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Address: 1400 Independence Ave SW
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Phone Number: (202) 690-2803

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Taxaide 2. Taxaide   Taxable and Nontaxable Income Table of Contents Compensation for Services Retirement Plan DistributionsIndividual Retirement Arrangements (IRAs) Pensions and Annuities Social Security and Equivalent Railroad Retirement BenefitsAre Any of Your Benefits Taxable? How Much Is Taxable? How To Report Your Benefits Lump-Sum Election Repayments More Than Gross Benefits Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Life Insurance ProceedsInstallments for life. Taxaide Surviving spouse. Taxaide Endowment Contract Proceeds Accelerated Death Benefits Sale of HomeMaximum Amount of Exclusion Ownership and Use Tests Married Persons Business Use or Rental of Home Reporting the Sale Reverse Mortgages Other ItemsWelfare benefits. Taxaide Payments from a state fund for victims of crime. Taxaide Home Affordable Modification Program (HAMP). Taxaide Mortgage assistance payments. Taxaide Payments to reduce cost of winter energy use. Taxaide Nutrition Program for the Elderly. Taxaide Reemployment Trade Adjustment Assistance (RTAA). Taxaide Generally, income is taxable unless it is specifically exempt (not taxed) by law. Taxaide Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. Taxaide Under special provisions of the law, certain items are partially or fully exempt from tax. Taxaide Provisions that are of special interest to older taxpayers are discussed in this chapter. Taxaide Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. Taxaide In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Taxaide You need not receive the compensation in cash for it to be taxable. Taxaide Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. Taxaide Volunteer work. Taxaide   Do not include in your gross income amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs. Taxaide Retired Senior Volunteer Program (RSVP). Taxaide Foster Grandparent Program. Taxaide Senior Companion Program. Taxaide Service Corps of Retired Executives (SCORE). Taxaide Unemployment compensation. Taxaide   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. Taxaide More information. Taxaide   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. Taxaide Retirement Plan Distributions This section summarizes the tax treatment of amounts you receive from traditional individual retirement arrangements (IRA), employee pensions or annuities, and disability pensions or annuities. Taxaide A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. Taxaide A Roth IRA is an individual retirement plan that can be either an account or an annuity and features nondeductible contributions and tax-free distributions. Taxaide A SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Taxaide More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. Taxaide Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. Taxaide Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. Taxaide These are discussed in Publication 590. Taxaide If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. Taxaide If you do not file Form 8606 with your return, you may have to pay a $50 penalty. Taxaide Also, when you receive distributions from your traditional IRA, the amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Taxaide Early distributions. Taxaide   Generally, early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age  59½. Taxaide You must include early distributions of taxable amounts in your gross income. Taxaide These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. Taxaide For purposes of the additional 10% tax, an IRA is a qualified retirement plan. Taxaide For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. Taxaide After age 59½ and before age 70½. Taxaide   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. Taxaide Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. Taxaide Required distributions. Taxaide   If you are the owner of a traditional IRA, you generally must receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Taxaide See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. Taxaide If distributions from your traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required. Taxaide For purposes of the 50% excise tax, an IRA is a qualified retirement plan. Taxaide For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. Taxaide See also Excess Accumulations (Insufficient Distributions) in Publication 590. Taxaide Pensions and Annuities Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. Taxaide However, see Insurance Premiums for Retired Public Safety Officers , later. Taxaide If you paid part of the cost of your pension or annuity plan (see Cost , later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). Taxaide This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. Taxaide The rest of each payment is taxable. Taxaide However, see Insurance Premiums for Retired Public Safety Officers , later. Taxaide You figure the tax-free part of the payment using one of the following methods. Taxaide Simplified Method. Taxaide You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). Taxaide You cannot use this method if your annuity is paid under a nonqualified plan. Taxaide General Rule. Taxaide You must use this method if your annuity is paid under a nonqualified plan. Taxaide You generally cannot use this method if your annuity is paid under a qualified plan. Taxaide Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. Taxaide You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. Taxaide Exclusion limit. Taxaide   If your annuity starting date is after 1986, the total amount of annuity income you can exclude over the years as a recovery of the cost cannot exceed your total cost. Taxaide Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Taxaide This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Taxaide   If you contributed to your pension or annuity and your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Taxaide If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. Taxaide The total exclusion may be more than your cost. Taxaide Cost. Taxaide   Before you can figure how much, if any, of your pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). Taxaide Your total cost in the plan includes everything that you paid. Taxaide It also includes amounts your employer contributed that were taxable to you when paid. Taxaide However, see Foreign employment contributions , later. Taxaide   From this total cost, subtract any refunded premiums, rebates, dividends, unrepaid loans, or other tax-free amounts you received by the later of the annuity starting date or the date on which you received your first payment. Taxaide   The annuity starting date is the later of the first day of the first period for which you received a payment from the plan or the date on which the plan's obligations became fixed. Taxaide    The amount of your contributions to the plan may be shown in box 9b of any Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Taxaide , that you receive. Taxaide Foreign employment contributions. Taxaide   If you worked abroad, certain amounts your employer paid into your retirement plan that were not includible in your gross income may be considered part of your cost. Taxaide For details, see Foreign employment contributions in Publication 575. Taxaide Withholding. Taxaide   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable part of amounts paid to you. Taxaide However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. Taxaide (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Taxaide ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. Taxaide   For payments other than eligible rollover distributions, you can tell the payer how much to withhold by filing a Form W-4P, Withholding Certificate for Pension or Annuity Payments. Taxaide Simplified Method. Taxaide   Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. Taxaide For an annuity that is payable over the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Taxaide For any other annuity, this number is the number of monthly annuity payments under the contract. Taxaide Who must use the Simplified Method. Taxaide   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you receive your pension or annuity payments from a qualified plan or annuity, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments (defined next). Taxaide   In addition, if your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use the Simplified Method for payments from a qualified plan, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments. Taxaide If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Taxaide Guaranteed payments. Taxaide   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. Taxaide If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. Taxaide Who cannot use the Simplified Method. Taxaide   You cannot use the Simplified Method and must use the General Rule if you receive pension or annuity payments from: A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan, or A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5 years of guaranteed payments (defined above). Taxaide   In addition, you had to use the General Rule for either circumstance described above if your annuity starting date is after July 1, 1986, and before November 19, 1996. Taxaide If you did not have to use the General Rule, you could have chosen to use it. Taxaide You also had to use the General Rule for payments from a qualified plan if your annuity starting date is before July 2, 1986, and you did not qualify to use the Three-Year Rule. Taxaide   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. Taxaide   Unless your annuity starting date was before 1987, once you have recovered all of your non-taxable investment, all of each remaining payment you receive is fully taxable. Taxaide Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. Taxaide   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. Taxaide How to use the Simplified Method. Taxaide   Complete the Simplified Method Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions or in Publication 575 to figure your taxable annuity for 2013. Taxaide Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Taxaide   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Taxaide How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Taxaide For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. Taxaide    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. Taxaide Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Taxaide Single-life annuity. Taxaide   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. Taxaide Enter on line 3 the number shown for your age on your annuity starting date. Taxaide This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Taxaide Multiple-lives annuity. Taxaide   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. Taxaide Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Taxaide For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. Taxaide For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. Taxaide Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Taxaide   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Taxaide Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Taxaide This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Taxaide Fixed-period annuities. Taxaide   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. Taxaide Line 6. Taxaide   The amount on line 6 should include all amounts that could have been recovered in prior years. Taxaide If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Taxaide    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. Taxaide Example. Taxaide Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Taxaide Bill's annuity starting date is January 1, 2013. Taxaide The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. Taxaide Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Taxaide Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. Taxaide Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. Taxaide See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. Taxaide You can find a blank version of this worksheet in Publication 575. Taxaide (The references in the illustrated worksheet are to sections in Publication 575). Taxaide His annuity is payable over the lives of more than one annuitant, so Bill uses his and Kathy's combined ages, 130 (65 + 65), and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet and finds the line 3 amount to be 310. Taxaide Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). Taxaide Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Taxaide The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. Taxaide If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. Taxaide This deduction is not subject to the 2%-of-adjusted-gross-income limit. Taxaide Worksheet 2-A. Taxaide Simplified Method Worksheet—Illustrated 1. Taxaide Enter the total pension or annuity payments received this year. Taxaide Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Taxaide $ 14,400 2. Taxaide Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion* See Cost (Investment in the Contract), earlier 2. Taxaide 31,000   Note. Taxaide 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). Taxaide Otherwise, go to line 3. Taxaide     3. Taxaide Enter the appropriate number from Table 1 below. Taxaide But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. Taxaide 310 4. Taxaide Divide line 2 by the number on line 3 4. Taxaide 100 5. Taxaide Multiply line 4 by the number of months for which this year's payments were made. Taxaide If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Taxaide Otherwise, go to line 6 5. Taxaide 1,200 6. Taxaide Enter any amount previously recovered tax free in years after 1986. Taxaide This is the amount shown on line 10 of your worksheet for last year 6. Taxaide 0 7. Taxaide Subtract line 6 from line 2 7. Taxaide 31,000 8. Taxaide Enter the smaller of line 5 or line 7 8. Taxaide 1,200 9. Taxaide Taxable amount for year. Taxaide Subtract line 8 from line 1. Taxaide Enter the result, but not less than zero. Taxaide Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Taxaide Note. Taxaide If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Taxaide If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return. Taxaide 9. Taxaide $ 13,200 10. Taxaide Was your annuity starting date before 1987? □ Yes. Taxaide STOP. Taxaide Do not complete the rest of this worksheet. Taxaide  ☑ No. Taxaide Add lines 6 and 8. Taxaide This is the amount you have recovered tax free through 2013. Taxaide You will need this number if you need to fill out this worksheet next year. Taxaide 10. Taxaide 1,200 11. Taxaide Balance of cost to be recovered. Taxaide Subtract line 10 from line 2. Taxaide If zero, you will not have to complete this worksheet next year. Taxaide The payments you receive next year will generally be fully taxable 11. Taxaide $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Taxaide   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . Taxaide . Taxaide . Taxaide   BEFORE November 19, 1996, enter on line 3 . Taxaide . Taxaide . Taxaide AFTER November 18, 1996, enter on line 3 . Taxaide . Taxaide . Taxaide   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 . Taxaide . Taxaide . Taxaide   THEN enter on line 3 . Taxaide . Taxaide . Taxaide         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. Taxaide   Benefits paid to you as a survivor under a joint and survivor annuity must be included in your gross income in the same way the retiree would have included them in gross income. Taxaide   If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule, include the total received in your income. Taxaide The retiree's cost has already been recovered tax free. Taxaide   If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for in the contract. Taxaide The resulting tax-free amount will then remain fixed. Taxaide Any increases in the survivor annuity are fully taxable. Taxaide   If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. Taxaide See Simplified Method , earlier. Taxaide How to report. Taxaide   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. Taxaide If your pension or annuity is fully taxable, enter it on line 16b. Taxaide Do not make an entry on line 16a. Taxaide   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. Taxaide If your pension or annuity is fully taxable, enter it on line 12b. Taxaide Do not make an entry on line 12a. Taxaide   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. Taxaide If your pension or annuity is fully taxable, enter it on line 17b. Taxaide Do not make an entry on line 17a. Taxaide Example. Taxaide You are a Form 1040 filer and you received monthly payments totaling $1,200 (12 months x $100) during 2013 from a pension plan that was completely financed by your employer. Taxaide You had paid no tax on the payments that your employer made to the plan, and the payments were not used to pay for accident, health, or long-term care insurance premiums (as discussed later under Insurance Premiums for Retired Public Safety Officers ). Taxaide The entire $1,200 is taxable. Taxaide You include $1,200 only on Form 1040, line 16b. Taxaide Joint return. Taxaide   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on line 16a of Form 1040, line 12a of Form 1040A, or line 17a of Form 1040NR. Taxaide Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. Taxaide Form 1099-R. Taxaide   You should receive a Form 1099-R for your pension or annuity. Taxaide Form 1099-R shows your pension or annuity for the year and any income tax withheld. Taxaide You should receive a Form W-2 if you receive distributions from certain nonqualified plans. Taxaide You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. Taxaide Generally, you should be sent these forms by January 31, 2014. Taxaide Nonperiodic Distributions If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from your income as a recovery of your cost. Taxaide Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. Taxaide For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. Taxaide The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. Taxaide See Tax on Early Distributions, later. Taxaide Lump-sum distributions. Taxaide   If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. Taxaide The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Taxaide The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. Taxaide You may be able to use the 10-year tax option to figure tax on the ordinary income part. Taxaide Form 1099-R. Taxaide   If you receive a total distribution from a plan, you should receive a Form 1099-R. Taxaide If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. Taxaide The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. Taxaide More information. Taxaide   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. Taxaide Tax on Early Distributions Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you reach age 59½ are subject to an additional tax of 10%. Taxaide The tax applies to the taxable part of the distribution. Taxaide For this purpose, a qualified retirement plan is: A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under Internal Revenue Code section 401(k)), A qualified employee annuity plan, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). Taxaide  An IRA is also a qualified retirement plan for purposes of this tax. Taxaide General exceptions to tax. Taxaide   The early distribution tax does not apply to any distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. Taxaide Additional exceptions. Taxaide   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. Taxaide See Publication 575 for details. Taxaide Reporting tax. Taxaide   If you owe only the tax on early distributions and distribution code 1 (early distribution, no known exception) is correctly shown in Form 1099-R, box 7, multiply the taxable part of the early distribution by 10% (. Taxaide 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. Taxaide See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. Taxaide Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date. Taxaide Unless the rule for 5% owners applies, this is generally April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. Taxaide However, your plan may require you to begin to receive payments by April 1 of the year that follows the year in which you reach 70½, even if you have not retired. Taxaide For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986). Taxaide  An IRA is also a qualified retirement plan for purposes of this tax. Taxaide An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. Taxaide 5% owners. Taxaide   If you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the company maintaining your qualified retirement plan, you must begin to receive distributions from the plan by April 1 of the year after the calendar year in which you reach age 70½. Taxaide See Publication 575 for more information. Taxaide Amount of tax. Taxaide   If you do not receive the required minimum distribution, you are subject to an additional tax. Taxaide The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. Taxaide You can get this excise tax excused if you establish that the shortfall in distributions was due to reasonable error and that you are taking reasonable steps to remedy the shortfall. Taxaide Form 5329. Taxaide   You must file a Form 5329 if you owe a tax because you did not receive a minimum required distribution from your qualified retirement plan. Taxaide Additional information. Taxaide   For more detailed information on the tax on excess accumulation, see Publication 575. Taxaide Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. Taxaide The premiums can be for coverage for you, your spouse, or dependent(s). Taxaide The distribution must be made directly from the plan to the insurance provider. Taxaide You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Taxaide You can only make this election for amounts that would otherwise be included in your income. Taxaide The amount excluded from your income cannot be used to claim a medical expense deduction. Taxaide An eligible retirement plan is a governmental plan that is a: Qualified trust, Section 403(a) plan, Section 403(b) annuity, or Section 457(b) plan. Taxaide If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Taxaide The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. Taxaide Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Taxaide Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Taxaide Enter “PSO” next to the appropriate line on which you report the taxable amount. Taxaide Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Taxaide These categories are treated differently for income tax purposes. Taxaide Social security equivalent benefits. Taxaide   The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. Taxaide This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. Taxaide (See Social Security and Equivalent Railroad Retirement Benefits , later. Taxaide ) Non-social security equivalent benefits. Taxaide   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). Taxaide It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Taxaide This category of benefits is treated as an amount received from a qualified employee plan. Taxaide This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. Taxaide Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Taxaide More information. Taxaide   For more information about railroad retirement benefits, see Publication 575. Taxaide Military Retirement Pay Military retirement pay based on age or length of service is taxable and must be included in income as a pension on Form 1040, lines 16a and 16b; on Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. Taxaide But, certain military and government disability pensions that are based on a percentage of disability from active service in the Armed Forces of any country generally are not taxable. Taxaide For more information, including information about veterans' benefits and insurance, see Publication 525. Taxaide Social Security and Equivalent Railroad Retirement Benefits This discussion explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Taxaide Social security benefits include monthly retirement, survivor, and disability benefits. Taxaide They do not include supplemental security income (SSI) payments, which are not taxable. Taxaide Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Taxaide They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Taxaide If you received these benefits during 2013, you should have received a Form SSA-1099 or Form RRB-1099 (Form SSA-1042S or Form RRB-1042S if you are a nonresident alien), showing the amount of the benefits. Taxaide Are Any of Your Benefits Taxable? Note. Taxaide When the term “benefits” is used in this section, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Taxaide  To find out whether any of your benefits may be taxable, compare the base amount for your filing status (explained later) with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Taxaide When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Taxaide S. Taxaide savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned in American Samoa or Puerto Rico by bona fide residents. Taxaide Figuring total income. Taxaide   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. Taxaide If that total amount is more than your base amount, part of your benefits may be taxable. Taxaide If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Taxaide Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Taxaide If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Taxaide If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Taxaide Worksheet 2-B. Taxaide A Quick Way To Check if Your Benefits May Be Taxable A. Taxaide Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Taxaide Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. Taxaide (If you received more than one form, combine the amounts from box 5  and enter the total. Taxaide ) A. Taxaide     Note. Taxaide If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. Taxaide     B. Taxaide Enter one-half of the amount on line A B. Taxaide   C. Taxaide Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Taxaide   D. Taxaide Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. Taxaide S. Taxaide savings bonds, •Employer-provided adoption benefits, •Foreign earned income or foreign housing, or •Income earned in American Samoa or Puerto Rico by bona fide residents D. Taxaide   E. Taxaide Add lines B, C, and D and enter the total E. Taxaide   F. Taxaide If you are: •Married filing jointly, enter $32,000 •Single, head of household, qualifying widow(er), or married filing separately and you  lived apart from your spouse for all of 2013, enter $25,000 •Married filing separately and you lived with your spouse at any time during 2013,  enter -0- F. Taxaide   G. Taxaide Is the amount on line F less than or equal to the amount on line E? □ No. Taxaide None of your benefits are taxable this year. Taxaide  □ Yes. Taxaide Some of your benefits may be taxable. Taxaide To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. Taxaide     Base Amount Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er) with dependent child, $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $0 if you are married filing separately and lived with your spouse at any time during 2013. Taxaide Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Taxaide It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Taxaide If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Taxaide Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Taxaide Your repayments are shown in box 4. Taxaide The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Taxaide Use the amount in box 5 to figure whether any of your benefits are taxable. Taxaide Tax Withholding and Estimated Tax You can choose to have federal income tax withheld from your social security and/or the SSEB portion of your tier 1 railroad retirement benefits. Taxaide If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. Taxaide If you do not choose to have income tax withheld, you may have to request additional withholding from other income, or pay estimated tax during the year. Taxaide For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Taxaide How Much Is Taxable? If part of your benefits is taxable, how much is taxable depends on the total amount of your benefits and other income. Taxaide Generally, the higher that total amount, the greater the taxable part of your benefits. Taxaide Maximum taxable part. Taxaide   The taxable part of your benefits usually cannot be more than 50%. Taxaide However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Taxaide The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Taxaide You are married filing separately and lived with your spouse at any time during 2013. Taxaide   If you are a nonresident alien, 85% of your benefits are taxable. Taxaide However, this income is exempt under some tax treaties. Taxaide Which worksheet to use. Taxaide   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Taxaide However, you will need to use a different worksheet(s) if any of the following situations applies to you. Taxaide You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. Taxaide In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Taxaide Situation (1) does not apply and you take one or more of the following exclusions. Taxaide Interest from qualified U. Taxaide S. Taxaide savings bonds (Form 8815). Taxaide Employer-provided adoption benefits (Form 8839). Taxaide Foreign earned income or housing (Form 2555 or Form 2555-EZ). Taxaide Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Taxaide In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. Taxaide You received a lump-sum payment for an earlier year. Taxaide In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Taxaide See Lump-Sum Election , later. Taxaide How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. Taxaide You cannot use Form 1040EZ. Taxaide Reporting on Form 1040. Taxaide   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. Taxaide If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Taxaide Reporting on Form 1040A. Taxaide   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. Taxaide If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Taxaide Reporting on Form 1040NR. Taxaide   Report 85% of the total amount of your benefits (box 5 of your Form SSA-1042S or Form RRB-1042S) in the appropriate column of Form 1040NR, Schedule NEC, line 8. Taxaide Benefits not taxable. Taxaide   If you are filing Form 1040EZ, do not report any benefits on your tax return. Taxaide If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Taxaide Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Taxaide If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Taxaide Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Taxaide This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Taxaide No part of the lump-sum death benefit is subject to tax. Taxaide For more information about the lump-sum death benefit, visit the Social Security Administration website at www. Taxaide SSA. Taxaide gov, and use keyword: death benefit. Taxaide Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Taxaide However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Taxaide You can elect this method if it lowers your taxable benefits. Taxaide See Publication 915 for more information. Taxaide Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Taxaide If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Taxaide If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Taxaide If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. Taxaide S. Taxaide Railroad Retirement Board field office. Taxaide Joint return. Taxaide   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's does not, subtract the box 5 amount on your form from the box 5 amount on your spouse's form. Taxaide You do this to get your net benefits when figuring if your combined benefits are taxable. Taxaide Repayment of benefits received in an earlier year. Taxaide   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Taxaide   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Taxaide Claim it on Schedule A (Form 1040), line 23. Taxaide   If this deduction is more than $3,000, you have to follow some special instructions. Taxaide See Publication 915 for those instructions. Taxaide Sickness and Injury Benefits Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Taxaide If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Taxaide However, certain payments may not be taxable to you. Taxaide Some of these payments are discussed later in this section. Taxaide Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. Taxaide Cost paid by you. Taxaide   If you pay the entire cost of an accident or health plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Taxaide If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Taxaide Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Taxaide You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. Taxaide Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Taxaide If you were 65 or older by the end of 2013 or you were retired on permanent and total disability and received taxable disability income, you may be able to claim the credit for the elderly or the disabled. Taxaide See Credit for the Elderly or the Disabled, later. Taxaide For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Taxaide Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Taxaide Report the payments on lines 16a and 16b of Form 1040, on lines 12a and 12b of Form 1040A, or on lines 17a and 17b of Form 1040NR. Taxaide For more information on pensions and annuities, see Publication 575. Taxaide Retirement and profit-sharing plans. Taxaide   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Taxaide The payments must be reported as a pension or annuity. Taxaide Accrued leave payment. Taxaide   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Taxaide The payment is not a disability payment. Taxaide Include it in your income in the tax year you receive it. Taxaide Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. Taxaide Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Taxaide However, the amount you can exclude may be limited. Taxaide Long-term care insurance contracts are discussed in more detail in Publication 525. Taxaide Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Taxaide The exemption also applies to your survivors. Taxaide The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Taxaide If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Taxaide For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Taxaide Return to work. Taxaide   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Taxaide Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Taxaide Federal Employees' Compensation Act (FECA). Taxaide   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Taxaide However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Taxaide Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. Taxaide Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Taxaide    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Taxaide For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Taxaide Other compensation. Taxaide   Many other amounts you receive as compensation for sickness or injury are not taxable. Taxaide These include the following amounts. Taxaide Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Taxaide Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Taxaide Compensation you receive for permanent loss or loss of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). Taxaide This compensation must be based only on the injury and not on the period of your absence from work. Taxaide These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Taxaide Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Taxaide This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Taxaide Proceeds not received in installments. Taxaide   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Taxaide If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Taxaide Proceeds received in installments. Taxaide   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Taxaide   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Taxaide Include anything over this excluded part in your income as interest. Taxaide Installments for life. Taxaide   If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. Taxaide If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee. Taxaide Surviving spouse. Taxaide   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude, in any year, up to $1,000 of the interest included in the installments. Taxaide If you remarry, you can continue to take the exclusion. Taxaide Surrender of policy for cash. Taxaide   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Taxaide In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Taxaide You should receive a Form 1099-R showing the total proceeds and the taxable part. Taxaide Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. Taxaide Endowment Contract Proceeds An endowment contract is a policy that pays over to you a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Taxaide Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Taxaide To determine your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your income. Taxaide Include in your income the part of the lump-sum payment that is more than your cost. Taxaide Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. Taxaide The tax treatment of an annuity is explained in Publication 575. Taxaide For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. Taxaide This election must be made within 60 days after the lump-sum payment first becomes payable to you. Taxaide Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. Taxaide However, see Exception , later. Taxaide For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Taxaide Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. Taxaide In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. Taxaide Generally, a viatical settlement provider is one who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill. Taxaide To report taxable accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Taxaide Terminally or chronically ill defined. Taxaide   A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. Taxaide A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions. Taxaide The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity. Taxaide The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. Taxaide Exception. Taxaide   The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the other person, or Has a financial interest in the business of the other person. Taxaide Sale of Home You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. Taxaide Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. Taxaide You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Taxaide Main home. Taxaide   Usually, your main home is the home you live in most of the time and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Taxaide Repaying the first-time homebuyer credit because you sold your home. Taxaide   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. Taxaide For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return. Taxaide   For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. Taxaide If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. Taxaide If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return. Taxaide   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. Taxaide Maximum Amount of Exclusion You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Taxaide You meet the ownership test. Taxaide You meet the use test. Taxaide During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Taxaide You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Taxaide Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Taxaide This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Taxaide Exception to ownership and use tests. Taxaide   If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. Taxaide Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. Taxaide The maximum amount you can exclude will be reduced. Taxaide See Publication 523, Selling Your Home, for more information. Taxaide Exception to use test for individuals with a disability. Taxaide   There is an exception to the use test if, during the 5-year period before the sale of your home: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year. Taxaide Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition. Taxaide   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Taxaide Exception to ownership test for property acquired in a like-kind exchange. Taxaide   You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. Taxaide This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. Taxaide A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. Taxaide See Publication 523 for more information. Taxaide Period of nonqualified use. Taxaide   Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. Taxaide Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. Taxaide See Publication 523 for more information. Taxaide Married Persons In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. Taxaide However, see Special rules for joint returns , next. Taxaide Special rules for joint returns. Taxaide   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Taxaide You are married and file a joint return for the year. Taxaide Either you or your spouse meets the ownership test. Taxaide Both you and your spouse meet the use test. Taxaide During the 2-year period ending on the date of the sale, neither you nor your spouse exclude gain from the sale of another home. Taxaide Sale of home by surviving spouse. Taxaide   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Taxaide   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013. Taxaide The sale or exchange took place no more than 2 years after the date of death of your spouse. Taxaide You have not remarried. Taxaide You and your spouse met the use test at the time of your spouse's death. Taxaide You or your spouse met the ownership test at the time of your spouse's death. Taxaide Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Taxaide Home transferred from spouse. Taxaide   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Taxaide Use of home after divorce. Taxaide   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Taxaide Business Use or Rental of Home You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. Taxaide However, you must meet the ownership and use tests. Taxaide See Publication 523 for more information. Taxaide Depreciation after May 6, 1997. Taxaide   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Taxaide See Publication 523 for more information. Taxaide Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and you do not qualify to exclude all of it, You have a gain and you choose not to exclude it, or You received Form 1099-S. Taxaide If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. Taxaide Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. Taxaide If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. Taxaide See Publication 523 for more information. Taxaide Reverse Mortgages A revers