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Turbotax 2011 Free Federal Edition

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Turbotax 2011 Free Federal Edition

Turbotax 2011 free federal edition 10. Turbotax 2011 free federal edition   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. Turbotax 2011 free federal edition Cash method. Turbotax 2011 free federal edition Debt acquired from a decedent. Turbotax 2011 free federal edition Liquidation. Turbotax 2011 free federal edition Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. Turbotax 2011 free federal edition Introduction You have a bad debt if you cannot collect money owed to you. Turbotax 2011 free federal edition A bad debt is either a business bad debt or a nonbusiness bad debt. Turbotax 2011 free federal edition This chapter discusses only business bad debts. Turbotax 2011 free federal edition Generally, a business bad debt is one that comes from operating your trade or business. Turbotax 2011 free federal edition You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. Turbotax 2011 free federal edition All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. Turbotax 2011 free federal edition For more information on nonbusiness bad debts, see Publication 550. Turbotax 2011 free federal edition Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. Turbotax 2011 free federal edition Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. Turbotax 2011 free federal edition A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. Turbotax 2011 free federal edition Bad debts of a corporation (other than an S corporation) are always business bad debts. Turbotax 2011 free federal edition Credit sales. Turbotax 2011 free federal edition   Business bad debts are mainly the result of credit sales to customers. Turbotax 2011 free federal edition Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. Turbotax 2011 free federal edition After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. Turbotax 2011 free federal edition   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. Turbotax 2011 free federal edition If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. Turbotax 2011 free federal edition    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. Turbotax 2011 free federal edition This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. Turbotax 2011 free federal edition Accrual method. Turbotax 2011 free federal edition   If you use the accrual method of accounting, you generally report income as you earn it. Turbotax 2011 free federal edition You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. Turbotax 2011 free federal edition   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. Turbotax 2011 free federal edition Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. Turbotax 2011 free federal edition Cash method. Turbotax 2011 free federal edition   If you use the cash method of accounting, you generally report income when you receive payment. Turbotax 2011 free federal edition You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. Turbotax 2011 free federal edition For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. Turbotax 2011 free federal edition Debts from a former business. Turbotax 2011 free federal edition   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. Turbotax 2011 free federal edition If any of these receivables subsequently become worthless, the loss is still a business bad debt. Turbotax 2011 free federal edition Debt acquired from a decedent. Turbotax 2011 free federal edition   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. Turbotax 2011 free federal edition The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. Turbotax 2011 free federal edition Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. Turbotax 2011 free federal edition Liquidation. Turbotax 2011 free federal edition   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. Turbotax 2011 free federal edition Types of Business Bad Debts Business bad debts may result from the following. Turbotax 2011 free federal edition Loans to clients and suppliers. Turbotax 2011 free federal edition   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. Turbotax 2011 free federal edition Debts owed by political parties. Turbotax 2011 free federal edition   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. Turbotax 2011 free federal edition You use the accrual method of accounting. Turbotax 2011 free federal edition The debt arose from the sale of goods or services in the ordinary course of your trade or business. Turbotax 2011 free federal edition More than 30% of your receivables accrued in the year of the sale were from sales to political parties. Turbotax 2011 free federal edition You made substantial and continuing efforts to collect on the debt. Turbotax 2011 free federal edition Loan or capital contribution. Turbotax 2011 free federal edition   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. Turbotax 2011 free federal edition Debts of an insolvent partner. Turbotax 2011 free federal edition   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. Turbotax 2011 free federal edition If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. Turbotax 2011 free federal edition Business loan guarantee. Turbotax 2011 free federal edition   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. Turbotax 2011 free federal edition You made the guarantee in the course of your trade or business. Turbotax 2011 free federal edition You have a legal duty to pay the debt. Turbotax 2011 free federal edition You made the guarantee before the debt became worthless. Turbotax 2011 free federal edition You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. Turbotax 2011 free federal edition You received reasonable consideration for making the guarantee. Turbotax 2011 free federal edition You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. Turbotax 2011 free federal edition Example. Turbotax 2011 free federal edition Jane Zayne owns the Zayne Dress Company. Turbotax 2011 free federal edition She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. Turbotax 2011 free federal edition Elegant Fashions is one of Zayne's largest clients. Turbotax 2011 free federal edition Elegant Fashions later defaulted on the loan. Turbotax 2011 free federal edition As a result, Ms. Turbotax 2011 free federal edition Zayne paid the remaining balance of the loan in full to the bank. Turbotax 2011 free federal edition She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. Turbotax 2011 free federal edition She was motivated by the desire to retain one of her better clients and keep a sales outlet. Turbotax 2011 free federal edition Deductible in the year paid. Turbotax 2011 free federal edition   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. Turbotax 2011 free federal edition Rights against a borrower. Turbotax 2011 free federal edition   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. Turbotax 2011 free federal edition The debt is then owed to you. Turbotax 2011 free federal edition If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. Turbotax 2011 free federal edition Joint debtor. Turbotax 2011 free federal edition   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. Turbotax 2011 free federal edition Sale of mortgaged property. Turbotax 2011 free federal edition   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. Turbotax 2011 free federal edition When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. Turbotax 2011 free federal edition This may occur when the debt is due or prior to that date. Turbotax 2011 free federal edition To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. Turbotax 2011 free federal edition It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Turbotax 2011 free federal edition Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Turbotax 2011 free federal edition Property received for debt. Turbotax 2011 free federal edition   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. Turbotax 2011 free federal edition You can deduct the remaining debt as a bad debt if and when it becomes worthless. Turbotax 2011 free federal edition   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. Turbotax 2011 free federal edition It is not a recovery of a bad debt. Turbotax 2011 free federal edition For information on the sale of an asset, see Publication 544. Turbotax 2011 free federal edition How To Claim a Business Bad Debt There are two methods to claim a business bad debt. Turbotax 2011 free federal edition The specific charge-off method. Turbotax 2011 free federal edition The nonaccrual-experience method. Turbotax 2011 free federal edition Generally, you must use the specific charge-off method. Turbotax 2011 free federal edition However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . Turbotax 2011 free federal edition Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. Turbotax 2011 free federal edition However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. Turbotax 2011 free federal edition Partly worthless debts. Turbotax 2011 free federal edition   You can deduct specific bad debts that become partly uncollectible during the tax year. Turbotax 2011 free federal edition Your tax deduction is limited to the amount you charge off on your books during the year. Turbotax 2011 free federal edition You do not have to charge off and deduct your partly worthless debts annually. Turbotax 2011 free federal edition You can delay the charge off until a later year. Turbotax 2011 free federal edition However, you cannot deduct any part of a debt after the year it becomes totally worthless. Turbotax 2011 free federal edition Significantly modified debt. Turbotax 2011 free federal edition   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. Turbotax 2011 free federal edition For more information, see Regulations section 1. Turbotax 2011 free federal edition 166-3(a)(3). Turbotax 2011 free federal edition Deduction disallowed. Turbotax 2011 free federal edition   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. Turbotax 2011 free federal edition If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. Turbotax 2011 free federal edition The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. Turbotax 2011 free federal edition Totally worthless debts. Turbotax 2011 free federal edition   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. Turbotax 2011 free federal edition   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. Turbotax 2011 free federal edition However, you may want to do so. Turbotax 2011 free federal edition If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. Turbotax 2011 free federal edition See Partly worthless debts, earlier. Turbotax 2011 free federal edition Filing a claim for refund. Turbotax 2011 free federal edition   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. Turbotax 2011 free federal edition If the bad debt was totally worthless, you must file the claim by the later of the following dates. Turbotax 2011 free federal edition 7 years from the date your original return was due (not including extensions). Turbotax 2011 free federal edition 2 years from the date you paid the tax. Turbotax 2011 free federal edition   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. Turbotax 2011 free federal edition 3 years from the date you filed your original return. Turbotax 2011 free federal edition 2 years from the date you paid the tax. Turbotax 2011 free federal edition You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. Turbotax 2011 free federal edition Such an impairment requires proof of existence. Turbotax 2011 free federal edition   For details and more information about filing a claim, see Publication 556. Turbotax 2011 free federal edition Use one of the following forms to file a claim. Turbotax 2011 free federal edition For more information, see the instructions for the applicable form. Turbotax 2011 free federal edition Table 10-1. Turbotax 2011 free federal edition Forms Used To File a Claim IF you filed as a. Turbotax 2011 free federal edition . Turbotax 2011 free federal edition . Turbotax 2011 free federal edition THEN file. Turbotax 2011 free federal edition . Turbotax 2011 free federal edition . Turbotax 2011 free federal edition Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. Turbotax 2011 free federal edition Under this method, you do not accrue service related income you expect to be uncollectible. Turbotax 2011 free federal edition Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. Turbotax 2011 free federal edition Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. Turbotax 2011 free federal edition Service related income. Turbotax 2011 free federal edition   You can use the nonaccrual-experience method only for amounts earned by performing services. Turbotax 2011 free federal edition You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. Turbotax 2011 free federal edition Gross receipts test. Turbotax 2011 free federal edition   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. Turbotax 2011 free federal edition If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. Turbotax 2011 free federal edition   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. Turbotax 2011 free federal edition For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. Turbotax 2011 free federal edition Interest or penalty charged. Turbotax 2011 free federal edition   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. Turbotax 2011 free federal edition However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. Turbotax 2011 free federal edition You otherwise accrue the full amount due as gross income at the time you provide the services. Turbotax 2011 free federal edition You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. Turbotax 2011 free federal edition Change in accounting method. Turbotax 2011 free federal edition   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. Turbotax 2011 free federal edition See Form 3115 and the Instructions for Form 3115 for more information. Turbotax 2011 free federal edition Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. Turbotax 2011 free federal edition The amount you include is limited to the amount you actually deducted. Turbotax 2011 free federal edition However, you can exclude the amount deducted that did not reduce your tax. Turbotax 2011 free federal edition Report the recovery as “Other income” on the appropriate business form or schedule. Turbotax 2011 free federal edition See Recoveries in Publication 525 for more information. Turbotax 2011 free federal edition Net operating loss (NOL) carryover. Turbotax 2011 free federal edition   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. Turbotax 2011 free federal edition A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. Turbotax 2011 free federal edition For more information about NOLs, see Publication 536. Turbotax 2011 free federal edition Also, see the Instructions for Form 1045, and the Instructions for Form 1139. Turbotax 2011 free federal edition Prev  Up  Next   Home   More Online Publications
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Turbotax 2011 free federal edition 11. Turbotax 2011 free federal edition   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Turbotax 2011 free federal edition It explains the following topics. Turbotax 2011 free federal edition How to figure whether your benefits are taxable. Turbotax 2011 free federal edition How to use the social security benefits worksheet (with examples). Turbotax 2011 free federal edition How to report your taxable benefits. Turbotax 2011 free federal edition How to treat repayments that are more than the benefits you received during the year. Turbotax 2011 free federal edition Social security benefits include monthly retirement, survivor, and disability benefits. Turbotax 2011 free federal edition They do not include supplemental security income (SSI) payments, which are not taxable. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Turbotax 2011 free federal edition If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Turbotax 2011 free federal edition These forms show the amounts received and repaid, and taxes withheld for the year. Turbotax 2011 free federal edition You may receive more than one of these forms for the same year. Turbotax 2011 free federal edition You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Turbotax 2011 free federal edition See the Appendix at the end of Publication 915 for more information. Turbotax 2011 free federal edition Note. Turbotax 2011 free federal edition When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Turbotax 2011 free federal edition What is not covered in this chapter. Turbotax 2011 free federal edition   This chapter does not cover the tax rules for the following railroad retirement benefits. Turbotax 2011 free federal edition Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Turbotax 2011 free federal edition Tier 2 benefits. Turbotax 2011 free federal edition Vested dual benefits. Turbotax 2011 free federal edition Supplemental annuity benefits. Turbotax 2011 free federal edition For information on these benefits, see Publication 575, Pension and Annuity Income. Turbotax 2011 free federal edition   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Turbotax 2011 free federal edition For information about these benefits, see Publication 519, U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Turbotax 2011 free federal edition   This chapter also does not cover the tax rules for foreign social security benefits. Turbotax 2011 free federal edition These benefits are taxable as annuities, unless they are exempt from U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition tax or treated as a U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition social security benefit under a tax treaty. Turbotax 2011 free federal edition Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Turbotax 2011 free federal edition When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Turbotax 2011 free federal edition Children's benefits. Turbotax 2011 free federal edition   The rules in this chapter apply to benefits received by children. Turbotax 2011 free federal edition See Who is taxed , later. Turbotax 2011 free federal edition Figuring total income. Turbotax 2011 free federal edition   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Turbotax 2011 free federal edition If the total is more than your base amount, part of your benefits may be taxable. Turbotax 2011 free federal edition    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. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition    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. Turbotax 2011 free federal edition If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Turbotax 2011 free federal edition Base amount. Turbotax 2011 free federal edition   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $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. Turbotax 2011 free federal edition Worksheet 11-1. Turbotax 2011 free federal edition   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Turbotax 2011 free federal edition This is a quick way to check whether some of your benefits may be taxable. Turbotax 2011 free federal edition Worksheet 11-1. Turbotax 2011 free federal edition A Quick Way To Check if Your Benefits May Be Taxable A. Turbotax 2011 free federal edition Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Turbotax 2011 free federal edition Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Turbotax 2011 free federal edition (If you received more than one form, combine the amounts from box 5 and enter the total. Turbotax 2011 free federal edition ) A. Turbotax 2011 free federal edition   Note. Turbotax 2011 free federal edition If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Turbotax 2011 free federal edition B. Turbotax 2011 free federal edition Enter one-half of the amount on line A B. Turbotax 2011 free federal edition   C. Turbotax 2011 free federal edition Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Turbotax 2011 free federal edition   D. Turbotax 2011 free federal edition Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Turbotax 2011 free federal edition   E. Turbotax 2011 free federal edition Add lines B, C, and D E. Turbotax 2011 free federal edition   Note. Turbotax 2011 free federal edition Compare the amount on line E to your base amount for your filing status. Turbotax 2011 free federal edition If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Turbotax 2011 free federal edition If the amount on line E is more than your base amount, some of your benefits may be taxable. Turbotax 2011 free federal edition You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Turbotax 2011 free federal edition If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Turbotax 2011 free federal edition Example. Turbotax 2011 free federal edition You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Turbotax 2011 free federal edition In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Turbotax 2011 free federal edition Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Turbotax 2011 free federal edition You also received a taxable pension of $22,800 and interest income of $500. Turbotax 2011 free federal edition You did not have any tax-exempt interest income. Turbotax 2011 free federal edition Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Turbotax 2011 free federal edition Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Turbotax 2011 free federal edition Filled-in Worksheet 11-1. Turbotax 2011 free federal edition A Quick Way To Check if Your Benefits May Be Taxable A. Turbotax 2011 free federal edition Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Turbotax 2011 free federal edition Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Turbotax 2011 free federal edition (If you received more than one form, combine the amounts from box 5 and enter the total. Turbotax 2011 free federal edition ) A. Turbotax 2011 free federal edition $11,000 Note. Turbotax 2011 free federal edition If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Turbotax 2011 free federal edition B. Turbotax 2011 free federal edition Enter one-half of the amount on line A B. Turbotax 2011 free federal edition 5,500 C. Turbotax 2011 free federal edition Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Turbotax 2011 free federal edition 23,300 D. Turbotax 2011 free federal edition Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Turbotax 2011 free federal edition -0- E. Turbotax 2011 free federal edition Add lines B, C, and D E. Turbotax 2011 free federal edition $28,800 Note. Turbotax 2011 free federal edition Compare the amount on line E to your base amount for your filing status. Turbotax 2011 free federal edition If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Turbotax 2011 free federal edition If the amount on line E is more than your base amount, some of your benefits may be taxable. Turbotax 2011 free federal edition You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Turbotax 2011 free federal edition If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Turbotax 2011 free federal edition Who is taxed. Turbotax 2011 free federal edition   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Turbotax 2011 free federal edition For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Turbotax 2011 free federal edition One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Turbotax 2011 free federal edition Repayment of benefits. Turbotax 2011 free federal edition   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Turbotax 2011 free federal edition It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Turbotax 2011 free federal edition If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Turbotax 2011 free federal edition   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Turbotax 2011 free federal edition Your repayments are shown in box 4. Turbotax 2011 free federal edition The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Turbotax 2011 free federal edition Use the amount in box 5 to figure whether any of your benefits are taxable. Turbotax 2011 free federal edition Tax withholding and estimated tax. Turbotax 2011 free federal edition   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Turbotax 2011 free federal edition If you choose to do this, you must complete a Form W-4V. Turbotax 2011 free federal edition   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. Turbotax 2011 free federal edition For details, see Publication 505 or the instructions for Form 1040-ES. Turbotax 2011 free federal edition How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Turbotax 2011 free federal edition You cannot use Form 1040EZ. Turbotax 2011 free federal edition Reporting on Form 1040. Turbotax 2011 free federal edition   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition Reporting on Form 1040A. Turbotax 2011 free federal edition   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition Benefits not taxable. Turbotax 2011 free federal edition   If you are filing Form 1040EZ, do not report any benefits on your tax return. Turbotax 2011 free federal edition If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Turbotax 2011 free federal edition Generally, the higher that total amount, the greater the taxable part of your benefits. Turbotax 2011 free federal edition Maximum taxable part. Turbotax 2011 free federal edition   Generally, up to 50% of your benefits will be taxable. Turbotax 2011 free federal edition However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Turbotax 2011 free federal edition 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). Turbotax 2011 free federal edition You are married filing separately and lived with your spouse at any time during 2013. Turbotax 2011 free federal edition Which worksheet to use. Turbotax 2011 free federal edition   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Turbotax 2011 free federal edition You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Turbotax 2011 free federal edition You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition Situation (1) does not apply and you take an exclusion for interest from qualified U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Turbotax 2011 free federal edition In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Turbotax 2011 free federal edition You received a lump-sum payment for an earlier year. Turbotax 2011 free federal edition In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Turbotax 2011 free federal edition See Lump-sum election next. Turbotax 2011 free federal edition Lump-sum election. Turbotax 2011 free federal edition   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. Turbotax 2011 free federal edition    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. Turbotax 2011 free federal edition No part of the lump-sum death benefit is subject to tax. Turbotax 2011 free federal edition   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition You can elect this method if it lowers your taxable benefits. Turbotax 2011 free federal edition Making the election. Turbotax 2011 free federal edition   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Turbotax 2011 free federal edition That discussion also explains how to make the election. Turbotax 2011 free federal edition    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Turbotax 2011 free federal edition Do not file an amended return for the earlier year. Turbotax 2011 free federal edition Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Turbotax 2011 free federal edition Example 1. Turbotax 2011 free federal edition George White is single and files Form 1040 for 2013. Turbotax 2011 free federal edition He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Turbotax 2011 free federal edition The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Turbotax 2011 free federal edition To figure his taxable benefits, George completes the worksheet shown here. Turbotax 2011 free federal edition Filled-in Worksheet 1. Turbotax 2011 free federal edition Figuring Your Taxable Benefits 1. Turbotax 2011 free federal edition Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Turbotax 2011 free federal edition Enter one-half of line 1 2,990 3. Turbotax 2011 free federal edition Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Turbotax 2011 free federal edition     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Turbotax 2011 free federal edition Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Turbotax 2011 free federal edition Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Turbotax 2011 free federal edition Combine lines 2, 3, 4, and 5 31,980 7. Turbotax 2011 free federal edition Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbotax 2011 free federal edition     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Turbotax 2011 free federal edition Is the amount on line 7 less than the amount on line 6?     No. Turbotax 2011 free federal edition None of your social security benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbotax 2011 free federal edition   Yes. Turbotax 2011 free federal edition Subtract line 7 from line 6 31,980 9. Turbotax 2011 free federal edition 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 25,000   Note. Turbotax 2011 free federal edition If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbotax 2011 free federal edition 85) and enter the result on line 17. Turbotax 2011 free federal edition Then go to line 18. Turbotax 2011 free federal edition   10. Turbotax 2011 free federal edition Is the amount on line 9 less than the amount on line 8?     No. Turbotax 2011 free federal edition None of your benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbotax 2011 free federal edition If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbotax 2011 free federal edition     Yes. Turbotax 2011 free federal edition Subtract line 9 from line 8 6,980 11. Turbotax 2011 free federal edition Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 9,000 12. Turbotax 2011 free federal edition Subtract line 11 from line 10. Turbotax 2011 free federal edition If zero or less, enter -0- -0- 13. Turbotax 2011 free federal edition Enter the smaller of line 10 or line 11 6,980 14. Turbotax 2011 free federal edition Enter one-half of line 13 3,490 15. Turbotax 2011 free federal edition Enter the smaller of line 2 or line 14 2,990 16. Turbotax 2011 free federal edition Multiply line 12 by 85% (. Turbotax 2011 free federal edition 85). Turbotax 2011 free federal edition If line 12 is zero, enter -0- -0- 17. Turbotax 2011 free federal edition Add lines 15 and 16 2,990 18. Turbotax 2011 free federal edition Multiply line 1 by 85% (. Turbotax 2011 free federal edition 85) 5,083 19. Turbotax 2011 free federal edition Taxable benefits. Turbotax 2011 free federal edition Enter the smaller of line 17 or line 18. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Turbotax 2011 free federal edition On line 20a of his Form 1040, George enters his net benefits of $5,980. Turbotax 2011 free federal edition On line 20b, he enters his taxable benefits of $2,990. Turbotax 2011 free federal edition Example 2. Turbotax 2011 free federal edition Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Turbotax 2011 free federal edition Ray is retired and received a fully taxable pension of $15,500. Turbotax 2011 free federal edition He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Turbotax 2011 free federal edition Alice worked during the year and had wages of $14,000. Turbotax 2011 free federal edition She made a deductible payment to her IRA account of $1,000. Turbotax 2011 free federal edition Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Turbotax 2011 free federal edition They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Turbotax 2011 free federal edition They find none of Ray's social security benefits are taxable. Turbotax 2011 free federal edition On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Turbotax 2011 free federal edition Filled-in Worksheet 1. Turbotax 2011 free federal edition Figuring Your Taxable Benefits 1. Turbotax 2011 free federal edition Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Turbotax 2011 free federal edition Enter one-half of line 1 2,800 3. Turbotax 2011 free federal edition Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Turbotax 2011 free federal edition     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Turbotax 2011 free federal edition Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Turbotax 2011 free federal edition Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Turbotax 2011 free federal edition Combine lines 2, 3, 4, and 5 32,550 7. Turbotax 2011 free federal edition Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbotax 2011 free federal edition     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Turbotax 2011 free federal edition Is the amount on line 7 less than the amount on line 6?     No. Turbotax 2011 free federal edition None of your social security benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbotax 2011 free federal edition   Yes. Turbotax 2011 free federal edition Subtract line 7 from line 6 31,550 9. Turbotax 2011 free federal edition 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 32,000   Note. Turbotax 2011 free federal edition If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbotax 2011 free federal edition 85) and enter the result on line 17. Turbotax 2011 free federal edition Then go to line 18. Turbotax 2011 free federal edition   10. Turbotax 2011 free federal edition Is the amount on line 9 less than the amount on line 8?     No. Turbotax 2011 free federal edition None of your benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbotax 2011 free federal edition If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbotax 2011 free federal edition     Yes. Turbotax 2011 free federal edition Subtract line 9 from line 8   11. Turbotax 2011 free federal edition Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013   12. Turbotax 2011 free federal edition Subtract line 11 from line 10. Turbotax 2011 free federal edition If zero or less, enter -0-   13. Turbotax 2011 free federal edition Enter the smaller of line 10 or line 11   14. Turbotax 2011 free federal edition Enter one-half of line 13   15. Turbotax 2011 free federal edition Enter the smaller of line 2 or line 14   16. Turbotax 2011 free federal edition Multiply line 12 by 85% (. Turbotax 2011 free federal edition 85). Turbotax 2011 free federal edition If line 12 is zero, enter -0-   17. Turbotax 2011 free federal edition Add lines 15 and 16   18. Turbotax 2011 free federal edition Multiply line 1 by 85% (. Turbotax 2011 free federal edition 85)   19. Turbotax 2011 free federal edition Taxable benefits. Turbotax 2011 free federal edition Enter the smaller of line 17 or line 18. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Turbotax 2011 free federal edition Joe and Betty Johnson file a joint return on Form 1040 for 2013. Turbotax 2011 free federal edition Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Turbotax 2011 free federal edition Joe's Form RRB-1099 shows $10,000 in box 5. Turbotax 2011 free federal edition Betty is a retired government worker and receives a fully taxable pension of $38,000. Turbotax 2011 free federal edition They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition savings bond. Turbotax 2011 free federal edition The savings bond interest qualified for the exclusion. Turbotax 2011 free federal edition They figure their taxable benefits by completing Worksheet 1. Turbotax 2011 free federal edition Because they have qualified U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Turbotax 2011 free federal edition On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Turbotax 2011 free federal edition Filled-in Worksheet 1. Turbotax 2011 free federal edition Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Turbotax 2011 free federal edition • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Turbotax 2011 free federal edition None of your benefits are taxable for 2013. Turbotax 2011 free federal edition For more information, see Repayments More Than Gross Benefits. Turbotax 2011 free federal edition • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Turbotax 2011 free federal edition S. Turbotax 2011 free federal edition Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Turbotax 2011 free federal edition Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Turbotax 2011 free federal edition 1. Turbotax 2011 free federal edition Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Turbotax 2011 free federal edition Enter one-half of line 1 5,000 3. Turbotax 2011 free federal edition Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Turbotax 2011 free federal edition     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Turbotax 2011 free federal edition Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Turbotax 2011 free federal edition Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Turbotax 2011 free federal edition Combine lines 2, 3, 4, and 5 45,500 7. Turbotax 2011 free federal edition Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Turbotax 2011 free federal edition     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Turbotax 2011 free federal edition Is the amount on line 7 less than the amount on line 6?     No. Turbotax 2011 free federal edition None of your social security benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Turbotax 2011 free federal edition   Yes. Turbotax 2011 free federal edition Subtract line 7 from line 6 45,500 9. Turbotax 2011 free federal edition 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 32,000   Note. Turbotax 2011 free federal edition If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Turbotax 2011 free federal edition 85) and enter the result on line 17. Turbotax 2011 free federal edition Then go to line 18. Turbotax 2011 free federal edition   10. Turbotax 2011 free federal edition Is the amount on line 9 less than the amount on line 8?     No. Turbotax 2011 free federal edition None of your benefits are taxable. Turbotax 2011 free federal edition Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Turbotax 2011 free federal edition If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Turbotax 2011 free federal edition     Yes. Turbotax 2011 free federal edition Subtract line 9 from line 8 13,500 11. Turbotax 2011 free federal edition Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 12,000 12. Turbotax 2011 free federal edition Subtract line 11 from line 10. Turbotax 2011 free federal edition If zero or less, enter -0- 1,500 13. Turbotax 2011 free federal edition Enter the smaller of line 10 or line 11 12,000 14. Turbotax 2011 free federal edition Enter one-half of line 13 6,000 15. Turbotax 2011 free federal edition Enter the smaller of line 2 or line 14 5,000 16. Turbotax 2011 free federal edition Multiply line 12 by 85% (. Turbotax 2011 free federal edition 85). Turbotax 2011 free federal edition If line 12 is zero, enter -0- 1,275 17. Turbotax 2011 free federal edition Add lines 15 and 16 6,275 18. Turbotax 2011 free federal edition Multiply line 1 by 85% (. Turbotax 2011 free federal edition 85) 8,500 19. Turbotax 2011 free federal edition Taxable benefits. Turbotax 2011 free federal edition Enter the smaller of line 17 or line 18. Turbotax 2011 free federal edition Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Turbotax 2011 free federal edition Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Turbotax 2011 free federal edition Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Turbotax 2011 free federal edition Disability payments. Turbotax 2011 free federal edition   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Turbotax 2011 free federal edition If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Turbotax 2011 free federal edition If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Turbotax 2011 free federal edition Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Turbotax 2011 free federal edition Legal expenses. Turbotax 2011 free federal edition   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Turbotax 2011 free federal edition   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition Do not use a worksheet in this case. Turbotax 2011 free federal edition 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. Turbotax 2011 free federal edition If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Turbotax 2011 free federal edition Joint return. Turbotax 2011 free federal edition   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 amount in box 5 of your form from the amount in box 5 of your spouse's form. Turbotax 2011 free federal edition You do this to get your net benefits when figuring if your combined benefits are taxable. Turbotax 2011 free federal edition Example. Turbotax 2011 free federal edition John and Mary file a joint return for 2013. Turbotax 2011 free federal edition John received Form SSA-1099 showing $3,000 in box 5. Turbotax 2011 free federal edition Mary also received Form SSA-1099 and the amount in box 5 was ($500). Turbotax 2011 free federal edition John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Turbotax 2011 free federal edition Repayment of benefits received in an earlier year. Turbotax 2011 free federal edition   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. Turbotax 2011 free federal edition Deduction $3,000 or less. Turbotax 2011 free federal edition   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. Turbotax 2011 free federal edition Claim it on Schedule A (Form 1040), line 23. Turbotax 2011 free federal edition Deduction more than $3,000. Turbotax 2011 free federal edition    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Turbotax 2011 free federal edition Figure your tax for 2013 in the following steps. Turbotax 2011 free federal edition Figure the tax without the itemized deduction included on Schedule A, line 28. Turbotax 2011 free federal edition For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Turbotax 2011 free federal edition Then refigure the tax for that year. Turbotax 2011 free federal edition Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Turbotax 2011 free federal edition Subtract the result in (c) from the result in (a). Turbotax 2011 free federal edition Compare the tax figured in methods (1) and (2). Turbotax 2011 free federal edition Your tax for 2013 is the smaller of the two amounts. Turbotax 2011 free federal edition If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Turbotax 2011 free federal edition If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Turbotax 2011 free federal edition Check box d and enter “I. Turbotax 2011 free federal edition R. Turbotax 2011 free federal edition C. Turbotax 2011 free federal edition 1341” in the space next to that box. Turbotax 2011 free federal edition If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Turbotax 2011 free federal edition Prev  Up  Next   Home   More Online Publications