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Turbotax Amended Return

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Turbotax Amended Return

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

Turbotax amended return Publication 575 - Main Content Table of Contents General InformationPension. Turbotax amended return Annuity. Turbotax amended return Qualified employee plan. Turbotax amended return Qualified employee annuity. Turbotax amended return Designated Roth account. Turbotax amended return Tax-sheltered annuity plan. Turbotax amended return Fixed-period annuities. Turbotax amended return Annuities for a single life. Turbotax amended return Joint and survivor annuities. Turbotax amended return Variable annuities. Turbotax amended return Disability pensions. Turbotax amended return Variable Annuities Section 457 Deferred Compensation Plans Disability Pensions Insurance Premiums for Retired Public Safety Officers Railroad Retirement Benefits Withholding Tax and Estimated Tax Cost (Investment in the Contract)Foreign employment contributions while a nonresident alien. Turbotax amended return Taxation of Periodic PaymentsPeriod of participation. Turbotax amended return Fully Taxable Payments Partly Taxable Payments Taxation of Nonperiodic PaymentsFiguring the Taxable Amount Loans Treated as Distributions Transfers of Annuity Contracts Lump-Sum Distributions RolloversExceptions. Turbotax amended return No tax withheld. Turbotax amended return Partial rollovers. Turbotax amended return Frozen deposits. Turbotax amended return Reasonable period of time. Turbotax amended return 20% Mandatory withholding. Turbotax amended return How to report. Turbotax amended return How to report. Turbotax amended return Special rule for Roth IRAs and designated Roth accounts. Turbotax amended return Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. Turbotax amended return How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. Turbotax amended return   Some of the terms used in this publication are defined in the following paragraphs. Turbotax amended return Pension. Turbotax amended return   A pension is generally a series of definitely determinable payments made to you after you retire from work. Turbotax amended return Pension payments are made regularly and are based on such factors as years of service and prior compensation. Turbotax amended return Annuity. Turbotax amended return   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. Turbotax amended return They can be either fixed (under which you receive a definite amount) or variable (not fixed). Turbotax amended return You can buy the contract alone or with the help of your employer. Turbotax amended return Qualified employee plan. Turbotax amended return   A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries and that meets Internal Revenue Code requirements. Turbotax amended return It qualifies for special tax benefits, such as tax deferral for employer contributions and capital gain treatment or the 10-year tax option for lump-sum distributions (if participants qualify). Turbotax amended return To determine whether your plan is a qualified plan, check with your employer or the plan administrator. Turbotax amended return Qualified employee annuity. Turbotax amended return   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Turbotax amended return Designated Roth account. Turbotax amended return   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. Turbotax amended return Elective deferrals that are designated as Roth contributions are included in your income. Turbotax amended return However, qualified distributions (explained later) are not included in your income. Turbotax amended return You should check with your plan administrator to determine if your plan will accept designated Roth contributions. Turbotax amended return Tax-sheltered annuity plan. Turbotax amended return   A tax-sheltered annuity plan (often referred to as a 403(b) plan or a tax-deferred annuity plan) is a retirement plan for employees of public schools and certain tax-exempt organizations. Turbotax amended return Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. Turbotax amended return Types of pensions and annuities. Turbotax amended return   Pensions and annuities include the following types. Turbotax amended return Fixed-period annuities. Turbotax amended return   You receive definite amounts at regular intervals for a specified length of time. Turbotax amended return Annuities for a single life. Turbotax amended return   You receive definite amounts at regular intervals for life. Turbotax amended return The payments end at death. Turbotax amended return Joint and survivor annuities. Turbotax amended return   The first annuitant receives a definite amount at regular intervals for life. Turbotax amended return After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Turbotax amended return The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Turbotax amended return Variable annuities. Turbotax amended return   You receive payments that may vary in amount for a specified length of time or for life. Turbotax amended return The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds, cost-of-living indexes, or earnings from a mutual fund. Turbotax amended return Disability pensions. Turbotax amended return   You receive disability payments because you retired on disability and have not reached minimum retirement age. Turbotax amended return More than one program. Turbotax amended return   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. Turbotax amended return If you participate in more than one program, you may have to treat each as a separate pension or annuity contract, depending upon the facts in each case. Turbotax amended return Also, you may be considered to have received more than one pension or annuity. Turbotax amended return Your former employer or the plan administrator should be able to tell you if you have more than one contract. Turbotax amended return Example. Turbotax amended return Your employer set up a noncontributory profit-sharing plan for its employees. Turbotax amended return The plan provides that the amount held in the account of each participant will be paid when that participant retires. Turbotax amended return Your employer also set up a contributory defined benefit pension plan for its employees providing for the payment of a lifetime pension to each participant after retirement. Turbotax amended return The amount of any distribution from the profit-sharing plan depends on the contributions (including allocated forfeitures) made for the participant and the earnings from those contributions. Turbotax amended return Under the pension plan, however, a formula determines the amount of the pension benefits. Turbotax amended return The amount of contributions is the amount necessary to provide that pension. Turbotax amended return Each plan is a separate program and a separate contract. Turbotax amended return If you get benefits from these plans, you must account for each separately, even though the benefits from both may be included in the same check. Turbotax amended return Distributions from a designated Roth account are treated separately from other distributions from the plan. Turbotax amended return Qualified domestic relations order (QDRO). Turbotax amended return   A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan. Turbotax amended return The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant's benefits to be paid to each alternate payee. Turbotax amended return A QDRO may not award an amount or form of benefit that is not available under the plan. Turbotax amended return   A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if he or she were a plan participant. Turbotax amended return The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. Turbotax amended return The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. Turbotax amended return The denominator is the present value of all benefits payable to the participant. Turbotax amended return   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. Turbotax amended return Variable Annuities The tax rules in this publication apply both to annuities that provide fixed payments and to annuities that provide payments that vary in amount based on investment results or other factors. Turbotax amended return For example, they apply to commercial variable annuity contracts, whether bought by an employee retirement plan for its participants or bought directly from the issuer by an individual investor. Turbotax amended return Under these contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. Turbotax amended return The earnings are not taxed until distributed either in a withdrawal or in annuity payments. Turbotax amended return The taxable part of a distribution is treated as ordinary income. Turbotax amended return Net investment income tax. Turbotax amended return   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). Turbotax amended return For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. Turbotax amended return For information on the tax treatment of a transfer or exchange of a variable annuity contract, see Transfers of Annuity Contracts under Taxation of Nonperiodic Payments, later. Turbotax amended return Withdrawals. Turbotax amended return   If you withdraw funds before your annuity starting date and your annuity is under a qualified retirement plan, a ratable part of the amount withdrawn is tax free. Turbotax amended return The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. Turbotax amended return   If your annuity is under a nonqualified plan (including a contract you bought directly from the issuer), the amount withdrawn is allocated first to earnings (the taxable part) and then to your cost (the tax-free part). Turbotax amended return However, if you bought your annuity contract before August 14, 1982, a different allocation applies to the investment before that date and the earnings on that investment. Turbotax amended return To the extent the amount withdrawn does not exceed that investment and earnings, it is allocated first to your cost (the tax-free part) and then to earnings (the taxable part). Turbotax amended return   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. Turbotax amended return   The amount you receive in a full surrender of your annuity contract at any time is tax free to the extent of any cost that you have not previously recovered tax free. Turbotax amended return The rest is taxable. Turbotax amended return   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. Turbotax amended return If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. Turbotax amended return Annuity payments. Turbotax amended return   If you receive annuity payments under a variable annuity plan or contract, you recover your cost tax free under either the Simplified Method or the General Rule, as explained under Taxation of Periodic Payments , later. Turbotax amended return For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. Turbotax amended return For a variable annuity paid under a nonqualified plan (including a contract you bought directly from the issuer), you must use a special computation under the General Rule. Turbotax amended return For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. Turbotax amended return Death benefits. Turbotax amended return    If you receive a single-sum distribution from a variable annuity contract because of the death of the owner or annuitant, the distribution is generally taxable only to the extent it is more than the unrecovered cost of the contract. Turbotax amended return If you choose to receive an annuity, the payments are subject to tax as described above. Turbotax amended return If the contract provides a joint and survivor annuity and the primary annuitant had received annuity payments before death, you figure the tax-free part of annuity payments you receive as the survivor in the same way the primary annuitant did. Turbotax amended return See Survivors and Beneficiaries , later. Turbotax amended return Section 457 Deferred Compensation Plans If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. Turbotax amended return If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. Turbotax amended return You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. Turbotax amended return You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. Turbotax amended return Your 457(b) plan may have a designated Roth account option. Turbotax amended return If so, you may be able to roll over amounts to the designated Roth account or make contributions. Turbotax amended return Elective deferrals to a designated Roth account are included in your income. Turbotax amended return Qualified distributions (explained later) are not included in your income. Turbotax amended return See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. Turbotax amended return This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Turbotax amended return For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. Turbotax amended return Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. Turbotax amended return Plans that are not eligible section 457 plans include the following: Bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plans. Turbotax amended return Nonelective deferred compensation plans for nonemployees (independent contractors). Turbotax amended return Deferred compensation plans maintained by churches. Turbotax amended return Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. Turbotax amended return An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. Turbotax amended return Disability Pensions If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. Turbotax amended return 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. Turbotax amended return Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Turbotax amended return You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Turbotax amended return For information on this credit, see Publication 524. Turbotax amended return Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Turbotax amended return Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. Turbotax amended return Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. Turbotax amended return For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Turbotax amended return 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. Turbotax amended return The premiums can be for coverage for you, your spouse, or dependents. Turbotax amended return The distribution must be made directly from the plan to the insurance provider. Turbotax amended return You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Turbotax amended return You can only make this election for amounts that would otherwise be included in your income. Turbotax amended return The amount excluded from your income cannot be used to claim a medical expense deduction. Turbotax amended return An eligible retirement plan is a governmental plan that is: a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan. Turbotax amended return If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Turbotax amended return The amount shown in box 2a of Form 1099-R does not reflect this exclusion. Turbotax amended return Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Turbotax amended return Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Turbotax amended return Enter “PSO” next to the appropriate line on which you report the taxable amount. Turbotax amended return If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line. Turbotax amended return Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Turbotax amended return These categories are treated differently for income tax purposes. Turbotax amended return 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. Turbotax amended return This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes like social security benefits. Turbotax amended return If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2013, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien) from the U. Turbotax amended return S. Turbotax amended return Railroad Retirement Board (RRB). Turbotax amended return For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Publication 915. Turbotax amended return The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). Turbotax amended return It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Turbotax amended return Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. Turbotax amended return 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. Turbotax amended return (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. Turbotax amended return ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Turbotax amended return See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. Turbotax amended return Form RRB-1099-R is used for U. Turbotax amended return S. Turbotax amended return citizens, resident aliens, and nonresident aliens. Turbotax amended return Nonresident aliens. Turbotax amended return   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Turbotax amended return Nonresident aliens are subject to mandatory U. Turbotax amended return S. Turbotax amended return tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. Turbotax amended return A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. Turbotax amended return See Tax withholding next for more information. Turbotax amended return   If you are a nonresident alien and your tax withholding rate changed or your country of legal residence changed during the year, you may receive more than one Form RRB-1042S or Form RRB-1099-R. Turbotax amended return To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year. Turbotax amended return For information on filing requirements for aliens, see Publication 519, U. Turbotax amended return S. Turbotax amended return Tax Guide for Aliens. Turbotax amended return For information on tax treaties between the United States and other countries that may reduce or eliminate U. Turbotax amended return S. Turbotax amended return tax on your benefits, see Publication 901, U. Turbotax amended return S. Turbotax amended return Tax Treaties. Turbotax amended return Tax withholding. Turbotax amended return   To request or change your income tax withholding from SSEB payments, U. Turbotax amended return S. Turbotax amended return citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. Turbotax amended return To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments. Turbotax amended return If you are a nonresident alien or a U. Turbotax amended return S. Turbotax amended return citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U. Turbotax amended return S. Turbotax amended return tax withholding. Turbotax amended return Nonresident U. Turbotax amended return S. Turbotax amended return citizens cannot elect to be exempt from withholding on payments delivered outside of the U. Turbotax amended return S. Turbotax amended return Help from the RRB. Turbotax amended return   To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 1-877-772-5772 for the nearest field office) or U. Turbotax amended return S. Turbotax amended return consulate/Embassy if you reside outside the United States. Turbotax amended return You can visit the RRB on the Internet at www. Turbotax amended return rrb. Turbotax amended return gov. Turbotax amended return Form RRB-1099-R. Turbotax amended return   The following discussion explains the items shown on Form RRB-1099-R. Turbotax amended return The amounts shown on this form are before any deduction for: Federal income tax withholding, Medicare premiums, Legal process garnishment payments, Recovery of a prior year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit, or Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity. Turbotax amended return   The amounts shown on this form are after any offset for: Social Security benefits, Age reduction, Public Service pensions or public disability benefits, Dual railroad retirement entitlement under another RRB claim number, Work deductions, Legal process partition deductions, Actuarial adjustment, Annuity waiver, or Recovery of a current-year overpayment of NSSEB, tier 2, VDB, or supplemental annuity benefits. Turbotax amended return   The amounts shown on Form RRB-1099-R do not reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. Turbotax amended return To determine if any of these rules apply to your benefits, see the discussions about them later. Turbotax amended return   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. Turbotax amended return Use distribution code “7” if you are asked for a distribution code. Turbotax amended return Distribution codes are not shown on Form RRB-1099-R. Turbotax amended return   There are three copies of this form. Turbotax amended return Copy B is to be included with your income tax return if federal income tax is withheld. Turbotax amended return Copy C is for your own records. Turbotax amended return Copy 2 is filed with your state, city, or local income tax return, when required. Turbotax amended return See the illustrated Copy B (Form RRB-1099-R) above. Turbotax amended return       Each beneficiary will receive his or her own Form RRB-1099-R. Turbotax amended return If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. Turbotax amended return So that you get your form timely, make sure the RRB always has your current mailing address. Turbotax amended return Please click here for the text description of the image. Turbotax amended return Form RRB-1099-R Box 1—Claim Number and Payee Code. Turbotax amended return   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. Turbotax amended return This is the number under which the RRB paid your benefits. Turbotax amended return Your payee code follows your claim number and is the last number in this box. Turbotax amended return It is used by the RRB to identify you under your claim number. Turbotax amended return In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. Turbotax amended return Box 2—Recipient's Identification Number. Turbotax amended return   This is the recipient's U. Turbotax amended return S. Turbotax amended return taxpayer identification number. Turbotax amended return It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient. Turbotax amended return If you are a resident or nonresident alien who must furnish a taxpayer identification number to the IRS and are not eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. Turbotax amended return The Instructions for Form W-7 explain how and when to apply. Turbotax amended return Box 3—Employee Contributions. Turbotax amended return   This is the amount of taxes withheld from the railroad employee's earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. Turbotax amended return This amount is the employee's cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). Turbotax amended return (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. Turbotax amended return ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. Turbotax amended return It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. Turbotax amended return If this amount has changed, the change is retroactive. Turbotax amended return You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. Turbotax amended return If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. Turbotax amended return    If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount. Turbotax amended return Box 4—Contributory Amount Paid. Turbotax amended return   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. Turbotax amended return (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Turbotax amended return ) This amount is the total contributory pension paid in 2013. Turbotax amended return It may be partly taxable and partly tax free or fully taxable. Turbotax amended return If you determine you are eligible to compute a tax-free part as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost. Turbotax amended return Box 5—Vested Dual Benefit. Turbotax amended return   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. Turbotax amended return It is fully taxable. Turbotax amended return VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Turbotax amended return Note. Turbotax amended return The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. Turbotax amended return Box 6—Supplemental Annuity. Turbotax amended return   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. Turbotax amended return It is fully taxable. Turbotax amended return Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Turbotax amended return Box 7—Total Gross Paid. Turbotax amended return   This is the sum of boxes 4, 5, and 6. Turbotax amended return The amount represents the total pension paid in 2013. Turbotax amended return Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Turbotax amended return Box 8—Repayments. Turbotax amended return   This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2013 for years before 2013 or for unknown years. Turbotax amended return The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. Turbotax amended return It only includes repayments of benefits that were taxable to you. Turbotax amended return This means it only includes repayments in 2013 of NSSEB benefits paid after 1985, tier 2 and VDB benefits paid after 1983, and supplemental annuity benefits paid in any year. Turbotax amended return If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. Turbotax amended return For more information about repayments, see Repayment of benefits received in an earlier year , later. Turbotax amended return    You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment. Turbotax amended return Box 9—Federal Income Tax Withheld. Turbotax amended return   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. Turbotax amended return Include this on your income tax return as tax withheld. Turbotax amended return If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2013, you will receive more than one Form RRB-1099-R for 2013. Turbotax amended return Determine the total amount of U. Turbotax amended return S. Turbotax amended return federal income tax withheld from your 2013 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2013 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive. Turbotax amended return Box 10—Rate of Tax. Turbotax amended return   If you are taxed as a U. Turbotax amended return S. Turbotax amended return citizen or resident alien, this box does not apply to you. Turbotax amended return If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2013. Turbotax amended return If you are a nonresident alien whose tax was withheld at more than one rate during 2013, you will receive a separate Form RRB-1099-R for each rate change during 2013. Turbotax amended return Box 11—Country. Turbotax amended return   If you are taxed as a U. Turbotax amended return S. Turbotax amended return citizen or resident alien, this box does not apply to you. Turbotax amended return If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2013. Turbotax amended return If you are a nonresident alien who was a resident of more than one country during 2013, you will receive a separate Form RRB-1099-R for each country of residence during 2013. Turbotax amended return Box 12—Medicare Premium Total. Turbotax amended return   This is for information purposes only. Turbotax amended return The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. Turbotax amended return Medicare premium refunds are not included in the Medicare total. Turbotax amended return The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). Turbotax amended return However, if Form RRB-1099 or Form RRB-1042S is not required for 2013, then this total will be shown on Form RRB-1099-R. Turbotax amended return If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total will not be shown in this box. Turbotax amended return Repayment of benefits received in an earlier year. Turbotax amended return   If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it. Turbotax amended return   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. Turbotax amended return The 2%-of-adjusted-gross-income limit applies to this deduction. Turbotax amended return You cannot take this deduction if you file Form 1040A. Turbotax amended return    If you repaid more than $3,000 in 2013, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 28 or you can take a credit against your tax. Turbotax amended return For more information, see Repayments in Publication 525. Turbotax amended return Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. Turbotax amended return However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. Turbotax amended return (These are distributions, described later under Rollovers, that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Turbotax amended return ) If you choose not to have tax withheld or if you do not have enough tax withheld, you may have to make estimated tax payments. Turbotax amended return See Estimated tax , later. Turbotax amended return The withholding rules apply to the taxable part of payments you receive from: An employer pension, annuity, profit-sharing, or stock bonus plan, Any other deferred compensation plan, A traditional individual retirement arrangement (IRA), or A commercial annuity. Turbotax amended return For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. Turbotax amended return There will be no withholding on any part of a distribution where it is reasonable to believe that it will not be includible in gross income. Turbotax amended return Choosing no withholding. Turbotax amended return   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. Turbotax amended return You can make this choice on Form W-4P for periodic and nonperiodic payments. Turbotax amended return This choice generally remains in effect until you revoke it. Turbotax amended return   The payer will ignore your choice not to have tax withheld if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer, before the payment is made, that you gave an incorrect social security number. Turbotax amended return   To choose not to have tax withheld, a U. Turbotax amended return S. Turbotax amended return citizen or resident alien must give the payer a home address in the United States or its possessions. Turbotax amended return Without that address, the payer must withhold tax. Turbotax amended return For example, the payer has to withhold tax if the recipient has provided a U. Turbotax amended return S. Turbotax amended return address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. Turbotax amended return S. Turbotax amended return home address. Turbotax amended return   If you do not give the payer a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to the payer that you are not a U. Turbotax amended return S. Turbotax amended return citizen, a U. Turbotax amended return S. Turbotax amended return resident alien, or someone who left the country to avoid tax. Turbotax amended return But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Turbotax amended return This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. Turbotax amended return For details, get Publication 519. Turbotax amended return Periodic payments. Turbotax amended return   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. Turbotax amended return Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Turbotax amended return You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). Turbotax amended return If you do not, tax will be withheld as if you were married and claiming three withholding allowances. Turbotax amended return   Tax will be withheld as if you were single and were claiming no withholding allowances if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer (before any payment is made) that you gave an incorrect social security number. Turbotax amended return   You must file a new withholding certificate to change the amount of withholding. Turbotax amended return Nonperiodic distributions. Turbotax amended return    Unless you choose no withholding, the withholding rate for a nonperiodic distribution (a payment other than a periodic payment) that is not an eligible rollover distribution is 10% of the distribution. Turbotax amended return You can also ask the payer to withhold an additional amount using Form W-4P. Turbotax amended return The part of any loan treated as a distribution (except an offset amount to repay the loan), explained later, is subject to withholding under this rule. Turbotax amended return Eligible rollover distribution. Turbotax amended return    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. Turbotax amended return You cannot choose not to have tax withheld from an eligible rollover distribution. Turbotax amended return However, tax will not be withheld if you have the plan administrator pay the eligible rollover distribution directly to another qualified plan or an IRA in a direct rollover. Turbotax amended return For more information about eligible rollover distributions, see Rollovers , later. Turbotax amended return Estimated tax. Turbotax amended return   Your estimated tax is the total of your expected income tax, self-employment tax, and certain other taxes for the year, minus your expected credits and withheld tax. Turbotax amended return Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 return, or 100% of the tax shown on your 2013 return. Turbotax amended return If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Turbotax amended return For more information, get Publication 505, Tax Withholding and Estimated Tax. Turbotax amended return In figuring your withholding or estimated tax, remember that a part of your monthly social security or equivalent tier 1 railroad retirement benefits may be taxable. Turbotax amended return See Publication 915. Turbotax amended return You can choose to have income tax withheld from those benefits. Turbotax amended return Use Form W-4V to make this choice. Turbotax amended return Cost (Investment in the Contract) Distributions from your pension or annuity plan may include amounts treated as a recovery of your cost (investment in the contract). Turbotax amended return If any part of a distribution is treated as a recovery of your cost under the rules explained in this publication, that part is tax free. Turbotax amended return Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. Turbotax amended return In general, your cost is your net investment in the contract as of the annuity starting date (or the date of the distribution, if earlier). Turbotax amended return To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. Turbotax amended return This includes the amounts your employer contributed that were taxable to you when paid. Turbotax amended return (However, see Foreign employment contributions , later. Turbotax amended return ) It does not include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). Turbotax amended return It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). Turbotax amended return From this total cost you must subtract the following amounts. Turbotax amended return Any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income and that you received by the later of the annuity starting date or the date on which you received your first payment. Turbotax amended return Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). Turbotax amended return If you must use the Simplified Method for your annuity payments, the tax-free part of any single-sum payment received in connection with the start of the annuity payments, regardless of when you received it. Turbotax amended return (See Simplified Method , later, for information on its required use. Turbotax amended return ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. Turbotax amended return (See General Rule , later, for information on its use. Turbotax amended return ) Your annuity contract has a refund feature if the annuity payments are for your life (or the lives of you and your survivor) and payments in the nature of a refund of the annuity's cost will be made to your beneficiary or estate if all annuitants die before a stated amount or a stated number of payments are made. Turbotax amended return For more information, see Publication 939. Turbotax amended return The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . Turbotax amended return Form 1099-R. Turbotax amended return If you began receiving periodic payments of a life annuity in 2013, the payer should show your total contributions to the plan in box 9b of your 2013 Form 1099-R. Turbotax amended return Annuity starting date defined. Turbotax amended return   Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. Turbotax amended return Example. Turbotax amended return On January 1, you completed all your payments required under an annuity contract providing for monthly payments starting on August 1 for the period beginning July 1. Turbotax amended return The annuity starting date is July 1. Turbotax amended return This is the date you use in figuring the cost of the contract and selecting the appropriate number from Table 1 for line 3 of the Simplified Method Worksheet. Turbotax amended return Designated Roth accounts. Turbotax amended return   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. Turbotax amended return Your cost will also include any in-plan Roth rollovers you included in income. Turbotax amended return Foreign employment contributions. Turbotax amended return   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. Turbotax amended return The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (not including the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) but only if the contributions would be excludible from your gross income had they been paid directly to you. Turbotax amended return Foreign employment contributions while a nonresident alien. Turbotax amended return   In determining your cost, special rules apply if you are a U. Turbotax amended return S. Turbotax amended return citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. Turbotax amended return Your contributions and your employer's contributions are not included in your cost if the contribution: Was made based on compensation which was for services performed outside the United States while you were a nonresident alien, and Was not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if paid as cash compensation when the services were performed. Turbotax amended return Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. Turbotax amended return Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Turbotax amended return These payments are also known as amounts received as an annuity. Turbotax amended return If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. Turbotax amended return In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. Turbotax amended return The amount of each payment that is more than the part that represents your cost is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Turbotax amended return Designated Roth accounts. Turbotax amended return   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. Turbotax amended return This applies to both your cost in the account and income earned on that account. Turbotax amended return A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Turbotax amended return   If the distribution is not a qualified distribution, the rules discussed in this section apply. Turbotax amended return The designated Roth account is treated as a separate contract. Turbotax amended return Period of participation. Turbotax amended return   The 5-tax-year period of participation is the 5-tax-year period beginning with the first tax year for which the participant made a designated Roth contribution to the plan. Turbotax amended return Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. Turbotax amended return   However, if a direct rollover is made to the plan from a designated Roth account under another plan, the 5-tax-year period for the recipient plan begins with the first tax year for which the participant first had designated Roth contributions made to the other plan. Turbotax amended return   Your 401(k), 403(b), or 457(b) plan may permit you to roll over amounts from those plans to a designated Roth account within the same plan. Turbotax amended return This is known as an in-plan Roth rollover. Turbotax amended return For more details, see In-plan Roth rollovers , later. Turbotax amended return Fully Taxable Payments The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations applies to you (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Turbotax amended return You did not pay anything or are not considered to have paid anything for your pension or annuity. Turbotax amended return Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. Turbotax amended return Your employer did not withhold contributions from your salary. Turbotax amended return You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). Turbotax amended return Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. Turbotax amended return You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Turbotax amended return Deductible voluntary employee contributions. Turbotax amended return   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. Turbotax amended return Accumulated deductible voluntary employee contributions include net earnings on the contributions. Turbotax amended return If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. Turbotax amended return Partly Taxable Payments If you have a cost to recover from your pension or annuity plan (see Cost (Investment in the Contract) , earlier), you can exclude part of each annuity payment from income as a recovery of your cost. Turbotax amended return 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. Turbotax amended return The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Turbotax amended return You figure the tax-free part of the payment using one of the following methods. Turbotax amended return Simplified Method. Turbotax amended return 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). Turbotax amended return You cannot use this method if your annuity is paid under a nonqualified plan. Turbotax amended return General Rule. Turbotax amended return You must use this method if your annuity is paid under a nonqualified plan. Turbotax amended return You generally cannot use this method if your annuity is paid under a qualified plan. Turbotax amended return 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. Turbotax amended return If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. Turbotax amended return Qualified plan annuity starting before November 19, 1996. Turbotax amended return   If your annuity is paid under a qualified plan and your annuity starting date (defined earlier under Cost (Investment in the Contract) ) is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the Simplified Method or the General Rule. Turbotax amended return If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. Turbotax amended return If you used the Three-Year Rule (which was repealed for annuities starting after July 1, 1986), your annuity payments are generally now fully taxable. Turbotax amended return Exclusion limit. Turbotax amended return   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Turbotax amended return Once your annuity starting date is determined, it does not change. Turbotax amended return If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. Turbotax amended return That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Turbotax amended return Exclusion limited to cost. Turbotax amended return   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. Turbotax amended return 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. Turbotax amended return This deduction is not subject to the 2%-of-adjusted-gross-income limit. Turbotax amended return Example 1. Turbotax amended return Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. Turbotax amended return The total cost of your annuity is $12,000. Turbotax amended return Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). Turbotax amended return After that, your annuity payments are generally fully taxable. Turbotax amended return Example 2. Turbotax amended return The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. Turbotax amended return You have recovered tax free only $9,600 (8 × $1,200) of your cost. Turbotax amended return An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. Turbotax amended return Exclusion not limited to cost. Turbotax amended return   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Turbotax amended return 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. Turbotax amended return The total exclusion may be more than your cost. Turbotax amended return Simplified Method 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. Turbotax amended return For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Turbotax amended return For any other annuity, this number is the number of monthly annuity payments under the contract. Turbotax amended return Who must use the Simplified Method. Turbotax amended return   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. Turbotax amended return You receive your pension or annuity payments from any of the following plans. Turbotax amended return A qualified employee plan. Turbotax amended return A qualified employee annuity. Turbotax amended return A tax-sheltered annuity plan (403(b) plan). Turbotax amended return On your annuity starting date, at least one of the following conditions applies to you. Turbotax amended return You are under age 75. Turbotax amended return You are entitled to less than 5 years of guaranteed payments. Turbotax amended return Guaranteed payments. Turbotax amended return   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. Turbotax amended return 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. Turbotax amended return Annuity starting before November 19, 1996. Turbotax amended return   If your annuity starting date is after July 1, 1986, and before November 19, 1996, and you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Turbotax amended return You could have chosen to use the Simplified Method if your annuity is payable for your life (or the lives of you and your survivor annuitant) and you met both of the conditions listed earlier under Who must use the Simplified Method . Turbotax amended return Who cannot use the Simplified Method. Turbotax amended return   You cannot use the Simplified Method if you receive your pension or annuity from a nonqualified plan or otherwise do not meet the conditions described in the preceding discussion. Turbotax amended return See General Rule , later. Turbotax amended return How to use the Simplified Method. Turbotax amended return    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. Turbotax amended return Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Turbotax amended return   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Turbotax amended return How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Turbotax amended return 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. Turbotax amended return    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. Turbotax amended return Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Turbotax amended return Single-life annuity. Turbotax amended return   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. Turbotax amended return Enter on line 3 the number shown for your age on your annuity starting date. Turbotax amended return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Turbotax amended return Multiple-lives annuity. Turbotax amended return   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. Turbotax amended return Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Turbotax amended return 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. Turbotax amended return 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. Turbotax amended return Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Turbotax amended return   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Turbotax amended return 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. Turbotax amended return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Turbotax amended return Fixed-period annuity. Turbotax amended return   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. Turbotax amended return Line 6. Turbotax amended return   The amount on line 6 should include all amounts that could have been recovered in prior years. Turbotax amended return If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Turbotax amended return Example. Turbotax amended return Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. Turbotax amended return Bill's annuity starting date is January 1, 2013. Turbotax amended return The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. Turbotax amended return Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Turbotax amended return 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. Turbotax amended return 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. Turbotax amended return Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of Worksheet A in completing line 3 of the worksheet. Turbotax amended return His completed worksheet is shown later. Turbotax amended return Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Turbotax amended return Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Turbotax amended return The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Turbotax amended return 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. Turbotax amended return This deduction is not subject to the 2%-of-adjusted-gross-income limit. Turbotax amended return Worksheet A. Turbotax amended return Simplified Method Worksheet for Bill Smith 1. Turbotax amended return Enter the total pension or annuity payments received this year. Turbotax amended return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Turbotax amended return $14,400 2. Turbotax amended return Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. Turbotax amended return * See Cost (Investment in the Contract) , earlier 2. Turbotax amended return 31,000   Note. Turbotax amended return 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). Turbotax amended return Otherwise, go to line 3. Turbotax amended return     3. Turbotax amended return Enter the appropriate number from Table 1 below. Turbotax amended return 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. Turbotax amended return 310 4. Turbotax amended return Divide line 2 by the number on line 3 4. Turbotax amended return 100 5. Turbotax amended return Multiply line 4 by the number of months for which this year's payments were made. Turbotax amended return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Turbotax amended return Otherwise, go to line 6 5. Turbotax amended return 1,200 6. Turbotax amended return Enter any amount previously recovered tax free in years after 1986. Turbotax amended return This is the amount shown on line 10 of your worksheet for last year 6. Turbotax amended return -0- 7. Turbotax amended return Subtract line 6 from line 2 7. Turbotax amended return 31,000 8. Turbotax amended return Enter the smaller of line 5 or line 7 8. Turbotax amended return 1,200 9. Turbotax amended return Taxable amount for year. Turbotax amended return Subtract line 8 from line 1. Turbotax amended return Enter the result, but not less than zero. Turbotax amended return Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Turbotax amended return Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Turbotax amended return 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 9. Turbotax amended return $13,200 10. Turbotax amended return Was your annuity starting date before 1987? □ Yes. Turbotax amended return STOP. Turbotax amended return Do not complete the rest of this worksheet. Turbotax amended return  ☑ No. Turbotax amended return Add lines 6 and 8. Turbotax amended return This is the amount you have recovered tax free through 2013. Turbotax amended return You will need this number if you need to fill out this worksheet next year 10. Turbotax amended return 1,200 11. Turbotax amended return Balance of cost to be recovered. Turbotax amended return Subtract line 10 from line 2. Turbotax amended return If zero, you will not have to complete this worksheet next year. Turbotax amended return The payments you receive next year will generally be fully taxable 11. Turbotax amended return $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Turbotax amended return           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. Turbotax amended return . Turbotax amended return . Turbotax amended return BEFORE November 19, 1996, enter on line 3. Turbotax amended return . Turbotax amended return . Turbotax amended return AFTER November 18, 1996, enter on line 3. Turbotax amended return . Turbotax amended return . Turbotax amended return     55 or under 300 360     56-60 260 310     61-65 240 260     66-70 170 210     71 or older 120 160     Table 2 for Line 3 Above     IF the combined ages at  annuity starting date were. Turbotax amended return . Turbotax amended return . Turbotax amended return THEN enter on line 3. Turbotax amended return . Turbotax amended return . Turbotax amended return     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. Turbotax amended return   If you and one or more other annuitants receive payments at the same time, you exclude from each annuity payment a pro rata share of the monthly tax-free amount. Turbotax amended return Figure your share by taking the following steps. Turbotax amended return Complete your worksheet through line 4 to figure the monthly tax-free amount. Turbotax amended return Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. Turbotax amended return Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. Turbotax amended return The result is your share of the monthly tax-free amount. Turbotax amended return   Replace the amount on line 4 of the worksheet with the result in (3) above. Turbotax amended return Enter that amount on line 4 of your worksheet each year. Turbotax amended return General Rule Under the General Rule, you determine the tax-free part of each annuity payment based on the ratio of the cost of the contract to the total expected return. Turbotax amended return Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Turbotax amended return To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. Turbotax amended return Who must use the General Rule. Turbotax amended return   You 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 your annuity payments are guaranteed for at least 5 years. Turbotax amended return Annuity starting before November 19, 1996. Turbotax amended return   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. Turbotax amended return You also had to use it for any fixed-period annuity. Turbotax amended return If you did not have to use the General Rule, you could have chosen to use it. Turbotax amended return If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. Turbotax amended return   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. Turbotax amended return Who cannot use the General Rule. Turbotax amended return   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. Turbotax amended return See Simplified Method , earlier. Turbotax amended return More information. Turbotax amended return   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Turbotax amended return Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. Turbotax amended return Nonperiodic distributions are also known as amounts not received as an annuity. Turbotax amended return They include all payments other than periodic payments and corrective distributions. Turbotax amended return For example, the following items are treated as nonperiodic distributions. Turbotax amended return Cash withdrawals. Turbotax amended return Distributions of current earnings (dividends) on your investment. Turbotax amended return However, do not include these distributions in your income to the extent the insurer keeps them to pay premiums or other consideration for the contract. Turbotax amended return Certain loans. Turbotax amended return See Loans Treated as Distributions , later. Turbotax amended return The value of annuity contracts transferred without full and adequate consideration. Turbotax amended return See Transfers of Annuity Contracts , later. Turbotax amended return Corrective distributions of excess plan contributions. Turbotax amended return   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. Turbotax amended return To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Turbotax amended return Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. Turbotax amended return It is not subject to the allocation rules explained in the following discussion, it cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Turbotax amended return    If your retirement plan made a corrective distribution of excess amounts (excess deferrals, excess contributions, or excess annual additions), your Form 1099-R should have the code “8,” “B,” “P,” or “E” in box 7. Turbotax amended return   For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. Turbotax amended return Figuring the Taxable Amount How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. Turbotax amended return If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. Turbotax amended return If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. Turbotax amended return You may be able to roll over the taxable amount of a nonperiodic distribution from a qualified retirement plan into another qualified retirement plan or a traditional IRA tax free. Turbotax amended return See Rollovers, later. Turbotax amended return If you do not make a tax-free rollover and the distribution qualifies as a lump-sum distribution, you may be able to elect an optional method of figuring the tax on the taxable amount. Turbotax amended return See Lump-Sum Distributions, later. Turbotax amended return Annuity starting date. Turbotax amended return   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. Turbotax amended return Distributions of employer securities. Turbotax amended return    If you receive a distribution of employer securities from a qualified retirement plan, you may be able to defer the tax on the net unrealized appreciation (NUA) in the securities. Turbotax amended return The NUA is the net increase in the securities' value while they were in the trust. Turbotax amended return This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. Turbotax amended return   If the distribution is a lump-sum distribution, tax is deferred on all of the NUA unless you choose to include it in your income for the year of the distribution. Turbotax amended return    A lump-sum distribution for this purpose is the distribution or payment of a plan participant's entire balance (within a single tax year) from all of the employer's qualified plans of one kind (pension, profit-sharing, or stock bonus plans), but only if paid: Because of the plan participant's death, After the participant reaches age 59½, Because the participant, if an employee, separates from service, or After the participant, if a self-employed individual, becomes totally and permanently disabled. Turbotax amended return    If you choose to include NUA in your income for the year of the distribution and the participant was born before January 2, 1936, you may be able to figure the tax on the NUA using the optional methods described und