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Vita taxes 2. Vita taxes   Estimated Tax for 2014 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated TaxGeneral Rule Married Taxpayers Special Rules Aliens Estates and Trusts How To Figure Estimated Tax2014 Estimated Tax Worksheet When To Pay Estimated TaxWhen To Start Farmers and Fishermen How To Figure Each PaymentRegular Installment Method Annualized Income Installment Method Estimated Tax Payments Not Required How To Pay Estimated TaxCredit an Overpayment Pay Online Pay by Phone Pay by Check or Money Order Using the Estimated Tax Payment Voucher Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Vita taxes This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Vita taxes You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Vita taxes Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Vita taxes If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Vita taxes If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Vita taxes For information on when the penalty applies, see chapter 4. Vita taxes It would be helpful for you to have a copy of your 2013 tax return and an estimate of your 2014 income nearby while reading this chapter. Vita taxes Topics - This chapter discusses: Who must pay estimated tax, How to figure estimated tax (including illustrated examples), When to pay estimated tax, How to figure each payment, and How to pay estimated tax. Vita taxes Useful Items - You may want to see: Form (and Instructions) 1040-ES Estimated Tax for Individuals See chapter 5 for information about how to get this publication and form. Vita taxes Worksheets. Vita taxes   You may need to use several of the blank worksheets included in this chapter. Vita taxes See Worksheets for Chapter 2, later, to locate what you need. Vita taxes Who Does Not Have To Pay Estimated Tax If you receive salaries and wages, you may be able to avoid paying estimated tax by asking your employer to take more tax out of your earnings. Vita taxes To do this, file a new Form W-4 with your employer. Vita taxes See chapter 1. Vita taxes Estimated tax not required. Vita taxes   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Vita taxes You had no tax liability for 2013. Vita taxes You were a U. Vita taxes S. Vita taxes citizen or resident alien for the whole year. Vita taxes Your 2013 tax year covered a 12-month period. Vita taxes   You had no tax liability for 2013 if your total tax (defined later under Total tax for 2013—line 14b ) was zero or you did not have to file an income tax return. Vita taxes Please click here for the text description of the image. Vita taxes Figure 2-A: Do You Have To Pay Estimated Tax? Who Must Pay Estimated Tax If you owed additional tax for 2013, you may have to pay estimated tax for 2014. Vita taxes You can use the following general rule as a guide during the year to see if you will have enough withholding, or should increase your withholding or make estimated tax payments. Vita taxes General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. Vita taxes You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Vita taxes You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Vita taxes Your 2013 tax return must cover all 12 months. Vita taxes Note. Vita taxes The percentages in (2a) or (2b) above may be different if you are a farmer, fisherman, or higher income taxpayer. Vita taxes See Special Rules , later. Vita taxes If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet for a more accurate calculation. Vita taxes Figure 2-A takes you through the general rule. Vita taxes You may find this helpful in determining if you must pay estimated tax. Vita taxes If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. Vita taxes Example 1. Vita taxes Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2014. Vita taxes She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2014. Vita taxes Expected adjusted gross income (AGI) for 2014 $82,800 AGI for 2013 $73,700 Total tax on 2013 return (Form 1040,  line 61) $  8,746 Total 2014 estimated tax (line 13c of the 2014 Estimated Tax Worksheet) $11,015 Tax expected to be withheld in 2014 $10,000 Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2014 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). Vita taxes Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2014 return ($11,015 × 90% = $9,913. Vita taxes 50). Vita taxes Jane does not need to pay estimated tax. Vita taxes Example 2. Vita taxes The facts are the same as in Example 1, except that Jane expects only $8,700 tax to be withheld in 2014. Vita taxes Because that is less than $9,913. Vita taxes 50, her answer to box 2a is NO. Vita taxes Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,700) to be at least 100% of the total tax shown on her 2013 return ($8,746). Vita taxes Jane must increase her withholding or pay estimated tax for 2014. Vita taxes Example 3. Vita taxes The facts are the same as in Example 2, except that the total tax shown on Jane's 2013 return was $8,600. Vita taxes Because she expects to have more than $8,600 withheld in 2014 ($8,700), her answer to box 2b is YES. Vita taxes Jane does not need to pay estimated tax for 2014. Vita taxes Married Taxpayers If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Vita taxes You and your spouse can make joint estimated tax payments even if you are not living together. Vita taxes However, you and your spouse cannot make joint estimated tax payments if: You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). Vita taxes See Choosing Resident Alien Status in Publication 519, or Individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law cannot make joint estimated tax payments. Vita taxes These individuals can take credit only for the estimated tax payments that he or she made. Vita taxes If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income. Vita taxes Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Vita taxes 2013 separate returns and 2014 joint return. Vita taxes   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Vita taxes You filed a separate return if you filed as single, head of household, or married filing separately. Vita taxes 2013 joint return and 2014 separate returns. Vita taxes   If you plan to file a separate return for 2014, but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Vita taxes You file a separate return if you file as single, head of household, or married filing separately. Vita taxes   To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status for 2014. Vita taxes Then multiply the tax on the joint return by the following fraction. Vita taxes      The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Vita taxes Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Vita taxes Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Vita taxes For 2014, they plan to file married filing separately. Vita taxes Joe figures his share of the tax on the 2013 joint return as follows: Tax on $40,100 based on separate return $5,960 Tax on $8,400 based on separate return 843 Total $6,803 Joe's percentage of total ($5,960 ÷ $6,803) 87. Vita taxes 6% Joe's share of tax on joint return  ($6,386 × 87. Vita taxes 6%) $5,594 Special Rules There are special rules for farmers, fishermen, and certain higher income taxpayers. Vita taxes Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule , earlier. Vita taxes Gross income. Vita taxes   Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Vita taxes To determine whether two-thirds of your gross income for 2013 was from farming or fishing, use as your gross income the total of the income (not loss) amounts. Vita taxes Joint returns. Vita taxes   On a joint return, you must add your spouse's gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing. Vita taxes Gross income from farming. Vita taxes   This is income from cultivating the soil or raising agricultural commodities. Vita taxes It includes the following amounts. Vita taxes Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Vita taxes Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Vita taxes Crop shares for the use of your land. Vita taxes Gains from sales of draft, breeding, dairy, or sporting livestock. Vita taxes   For 2013, gross income from farming is the total of the following amounts. Vita taxes Schedule F (Form 1040), Profit or Loss From Farming, line 9. Vita taxes Form 4835, Farm Rental Income and Expenses, line 7. Vita taxes Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Vita taxes Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property. Vita taxes   Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming. Vita taxes Gross income from fishing. Vita taxes   This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life. Vita taxes   Gross income from fishing includes the following amounts. Vita taxes Schedule C (Form 1040), Profit or Loss From Business. Vita taxes Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing. Vita taxes Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Vita taxes Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation. Vita taxes Income for services normally performed in connection with fishing. Vita taxes Services normally performed in connection with fishing include: Shore service as an officer or crew member of a vessel engaged in fishing, and Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch. Vita taxes Higher Income Taxpayers If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule , earlier. Vita taxes For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Vita taxes Note. Vita taxes This rule does not apply to farmers and fishermen. Vita taxes Aliens Resident and nonresident aliens also may have to pay estimated tax. Vita taxes Resident aliens should follow the rules in this publication, unless noted otherwise. Vita taxes Nonresident aliens should get Form 1040-ES (NR), U. Vita taxes S. Vita taxes Estimated Tax for Nonresident Alien Individuals. Vita taxes You are an alien if you are not a citizen or national of the United States. Vita taxes You are a resident alien if you either have a green card or meet the substantial presence test. Vita taxes For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519. Vita taxes Estates and Trusts Estates and trusts also must pay estimated tax. Vita taxes However, estates (and certain grantor trusts that receive the residue of the decedent's estate under the decedent's will) are exempt from paying estimated tax for the first 2 years after the decedent's death. Vita taxes Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax. Vita taxes How To Figure Estimated Tax To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year. Vita taxes When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Vita taxes Use your 2013 federal tax return as a guide. Vita taxes You can use Form 1040-ES to figure your estimated tax. Vita taxes Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. Vita taxes You must make adjustments both for changes in your own situation and for recent changes in the tax law. Vita taxes Some of these changes are discussed under What's New for 2014 , earlier. Vita taxes For information about these and other changes in the law, visit the IRS website at IRS. Vita taxes gov. Vita taxes The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Vita taxes Keep the worksheet for your records. Vita taxes 2014 Estimated Tax Worksheet Use Worksheet 2-1 to help guide you through the information about completing the 2014 Estimated Tax Worksheet. Vita taxes You can also find a copy of the worksheet in the Instructions for Form 1040-ES. Vita taxes Expected AGI—Line 1 Your expected AGI for 2014 (line 1) is your expected total income minus your expected adjustments to income. Vita taxes Total income. Vita taxes   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. Vita taxes However, do not include income that is tax exempt. Vita taxes   Total income includes all income and loss for 2014 that, if you had received it in 2013, would have been included on your 2013 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. Vita taxes Social security and railroad retirement benefits. Vita taxes If you expect to receive social security or tier 1 railroad retirement benefits during 2014, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1. Vita taxes Adjustments to income. Vita taxes   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2014 tax return. Vita taxes Self-employed. Vita taxes If you expect to have income from self-employment, use Worksheet 2-3 to figure your expected self-employment tax and your allowable deduction for self-employment tax. Vita taxes Include the amount from Worksheet 2-3 in your expected adjustments to income. Vita taxes If you file a joint return and both you and your spouse have net earnings from self-employment, each of you must complete a separate worksheet. Vita taxes Expected Taxable Income— Lines 2–5 Reduce your expected AGI for 2014 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5). Vita taxes Itemized deductions—line 2. Vita taxes   If you expect to claim itemized deductions on your 2014 tax return, enter the estimated amount on line 2. Vita taxes   Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040). Vita taxes    For 2014, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status. Vita taxes Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2. Vita taxes Standard deduction—line 2. Vita taxes   If you expect to claim the standard deduction on your 2014 tax return, enter the amount on line 2. Vita taxes Use Worksheet 2-4 to figure your standard deduction. Vita taxes No standard deduction. Vita taxes   The standard deduction for some individuals is zero. Vita taxes Your standard deduction will be zero if you: File a separate return and your spouse itemizes deductions, Are a dual-status alien, or File a return for a period of less than 12 months because you change your accounting period. Vita taxes Exemptions—line 4. Vita taxes   After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $3,950 for each exemption you expect to take on your 2014 tax return. Vita taxes If another person (such as your parent) can claim an exemption for you on his or her tax return, you cannot claim your own personal exemption. Vita taxes This is true even if the other person will not claim your exemption or the exemption will be reduced or eliminated under the phaseout rule. Vita taxes    For 2014, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status. Vita taxes Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4. Vita taxes Expected Taxes and Credits— Lines 6–13c After you have figured your expected taxable income (line 5), follow the steps next to figure your expected taxes, credits, and total tax for 2014. Vita taxes Most people will have entries for only a few of these steps. Vita taxes However, you should check every step to be sure you do not overlook anything. Vita taxes Step 1. Vita taxes   Figure your expected income tax (line 6). Vita taxes Generally, you will use the 2014 Tax Rate Schedules, later, to figure your expected income tax. Vita taxes   However, see below for situations where you must use a different method to compute your estimated tax. Vita taxes Tax on child's investment income. Vita taxes   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Vita taxes Children under age 18 at the end of 2014. Vita taxes The following children if their earned income is not more than half their support. Vita taxes Children age 18 at the end of 2014. Vita taxes Children who are full-time students over age 18 and under age 24 at the end of 2014. Vita taxes See Publication 929, Tax Rules for Children and Dependents. Vita taxes Although the ages and dollar amounts in the publication may be different in the 2014 revision, this reference will give you basic information for figuring the tax. Vita taxes Tax on net capital gain. Vita taxes   The regular income tax rates for individuals do not apply to a net capital gain. Vita taxes Instead, your net capital gain is taxed at a lower maximum rate. Vita taxes   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Vita taxes Tax on capital gain and qualified dividends. Vita taxes If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax. Vita taxes Note. Vita taxes For 2014, your capital gains and dividends rate will depend on your income. Vita taxes Tax if excluding foreign earned income or excluding or deducting foreign housing. Vita taxes If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-8 to figure your estimated tax. Vita taxes Step 2. Vita taxes   Total your expected taxes (line 8). Vita taxes Include on line 8 the sum of the following. Vita taxes Your tax on line 6. Vita taxes Your expected alternative minimum tax (AMT) from Form 6251, or included on Form 1040A. Vita taxes Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions. Vita taxes Any recapture of education credits. Vita taxes Step 3. Vita taxes   Subtract your expected credits (line 9). Vita taxes If you are using your 2013 return as a guide and filed Form 1040, your total credits for 2013 were shown on line 54. Vita taxes If you filed Form 1040A, your total credits for 2013 were on line 34. Vita taxes   If your credits on line 9 are more than your taxes on line 8, enter “-0-” on line 10 and go to Step 4. Vita taxes Step 4. Vita taxes   Add your expected self-employment tax (line 11). Vita taxes You already should have figured your self-employment tax (see Self-employed under Expected AGI—Line 1, earlier). Vita taxes Step 5. Vita taxes   Add your expected other taxes (line 12). Vita taxes   Other taxes include the following. Vita taxes Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Vita taxes Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Vita taxes Amounts written on Form 1040 on the line for “other taxes” (line 60 on the 2013 Form 1040). Vita taxes But, do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Vita taxes Repayment of the first-time homebuyer credit. Vita taxes See Form 5405. Vita taxes Additional Medicare Tax. Vita taxes A 0. Vita taxes 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Vita taxes Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Vita taxes A self-employment loss should not be considered for purposes of this tax. Vita taxes RRTA compensation should be separately compared to the threshold. Vita taxes Your employer is responsible for withholding the 0. Vita taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2014. Vita taxes You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Vita taxes For more information on Additional Medicare Tax, go to IRS. Vita taxes gov and enter “Additional Medicare Tax” in the search box. Vita taxes Net Investment Income Tax (NIIT). Vita taxes The NIIT is 3. Vita taxes 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over the amount listed in the following chart, based on your filing status. Vita taxes Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Vita taxes gov and enter “Net Investment Income Tax” in the search box. Vita taxes Step 6. Vita taxes   Subtract your refundable credit (line 13b). Vita taxes   To figure your expected fuel tax credit, do not include fuel tax for the first three quarters of the year that you expect to have refunded to you. Vita taxes   The result of steps 1 through 6 is your total estimated tax for 2014 (line 13c). Vita taxes Required Annual Payment— Line 14c On lines 14a through 14c, figure the total amount you must pay for 2014, through withholding and estimated tax payments, to avoid paying a penalty. Vita taxes General rule. Vita taxes   The total amount you must pay is the smaller of: 90% of your total expected tax for 2014, or 100% of the total tax shown on your 2013 return. Vita taxes Your 2013 tax return must cover all 12 months. Vita taxes Special rules. Vita taxes   There are special rules for higher income taxpayers and for farmers and fishermen. Vita taxes Higher income taxpayers. Vita taxes   If your AGI 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. Vita taxes This rule does not apply to farmers and fishermen. Vita taxes For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Vita taxes Example. Vita taxes   Jeremy Martin's total tax on his 2013 return was $42,581, and his expected tax for 2014 is $71,253. Vita taxes His 2013 AGI was $180,000. Vita taxes Because Jeremy had more than $150,000 of AGI in 2013, he figures his required annual payment as follows. Vita taxes He determines that 90% of his expected tax for 2014 is $64,128 (. Vita taxes 90 × $71,253). Vita taxes Next, he determines that 110% of the tax shown on his 2013 return is $46,839 (1. Vita taxes 10 x $42,581). Vita taxes Finally, he determines that his required annual payment is $46,839, the smaller of the two. Vita taxes Farmers and fishermen. Vita taxes   If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, your required annual payment is the smaller of: 662/3% (. Vita taxes 6667) of your total tax for 2014, or 100% of the total tax shown on your 2013 return. Vita taxes (Your 2013 tax return must cover all 12 months. Vita taxes )   For definitions of “gross income from farming” and “gross income from fishing,” see Farmers and Fishermen , under Special Rules discussed earlier. Vita taxes Total tax for 2013—line 14b. Vita taxes   Your 2013 total tax, if you filed Form 1040, is the amount on line 61 reduced by the following. Vita taxes Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Vita taxes The following amounts from Form 5329 included on line 58. Vita taxes Any tax on excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts. Vita taxes Any tax on excess accumulations in qualified retirement plans. Vita taxes The following write-ins on line 60. Vita taxes Excise tax on excess golden parachute payments (identified as “EPP”). Vita taxes Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”). Vita taxes Look-back interest due under section 167(g) (identified as “From Form 8866”). Vita taxes Look-back interest due under section 460(b) (identified as “From Form 8697”). Vita taxes Recapture of federal mortgage subsidy (identified as “FMSR”). Vita taxes Additional tax on advance payments of health coverage tax credit when not eligible (identified as “HCTC”). Vita taxes Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”). Vita taxes Any refundable credit amounts. Vita taxes   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits. Vita taxes   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Vita taxes Total Estimated Tax Payments Needed—Line 16a Use lines 15 and 16a to figure the total estimated tax you may be required to pay for 2014. Vita taxes Subtract your expected withholding from your required annual payment (line 14c). Vita taxes You usually must pay this difference in four equal installments. Vita taxes See When To Pay Estimated Tax and How To Figure Each Payment . Vita taxes You do not have to pay estimated tax if: Line 14c minus line 15 is zero or less, or Line 13c minus line 15 is less than $1,000. Vita taxes Withholding—line 15. Vita taxes   Your expected withholding for 2014 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc. Vita taxes ). Vita taxes It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. Vita taxes For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2014 only if your wages and compensation from two or more employers are more than $117,000. Vita taxes See Excess Social Security or Railroad Retirement Tax Withholding in chapter 3. Vita taxes   It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Vita taxes Your employer is responsible for withholding the 0. Vita taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Vita taxes When To Pay Estimated Tax For estimated tax purposes, the year is divided into four payment periods. Vita taxes Each period has a specific payment due date. Vita taxes If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. Vita taxes If a payment is mailed, the date of the U. Vita taxes S. Vita taxes postmark is considered the date of payment. Vita taxes The payment periods and due dates for estimated tax payments are shown next. Vita taxes For exceptions to the dates listed, see Saturday, Sunday, holiday rule below. Vita taxes For the period: Due date: Jan. Vita taxes 11 – March 31 April 15 April 1 – May 31 June 16 June 1 – August 31 September 15 Sept. Vita taxes 1 – Dec. Vita taxes 31 January 15  next year2 1If your tax year does not begin on January 1,  see Fiscal year taxpayers . Vita taxes 2See January payment . Vita taxes Saturday, Sunday, holiday rule. Vita taxes   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday. Vita taxes January payment. Vita taxes   If you file your 2014 Form 1040 or Form 1040A by February 2, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Vita taxes Example. Vita taxes Janet Adams does not pay any estimated tax for 2014. Vita taxes She files her 2014 income tax return and pays the balance due shown on her return on January 26, 2015. Vita taxes Janet's estimated tax for the fourth payment period is considered to have been paid on time. Vita taxes However, she may owe a penalty for not making the first three estimated tax payments, if required. Vita taxes Any penalty for not making those payments will be figured up to January 26, 2015. Vita taxes Fiscal year taxpayers. Vita taxes   If your tax year does not start on January 1, your payment due dates are: The 15th day of the 4th month of your fiscal year, The 15th day of the 6th month of your fiscal year, The 15th day of the 9th month of your fiscal year, and The 15th day of the 1st month after the end of your fiscal year. Vita taxes   You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return. Vita taxes When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Vita taxes If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Vita taxes You have several options when paying estimated taxes. Vita taxes You can: apply an overpayment from the previous tax year, pay all your estimated tax by the due date of your first payment, or pay it in installments. Vita taxes If you choose to pay in installments, make your first payment by the due date for the first payment period. Vita taxes Make your remaining installment payments by the due dates for the later periods. Vita taxes To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount. Vita taxes No income subject to estimated tax during first period. Vita taxes   If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Vita taxes You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Vita taxes Table 2-1 shows the dates for making installment payments. Vita taxes    Table 2-1. Vita taxes Due Dates for Estimated Tax Installment Payments If you first have income on which you must pay estimated tax: Make a payment  by:* Make later  installments  by:* Before April 1 April 15 June 16     Sept. Vita taxes 15     Jan. Vita taxes 15 next year April 1–May 31 June 16 Sept. Vita taxes 15     Jan. Vita taxes 15 next year June 1–Aug. Vita taxes 31 Sept. Vita taxes 15 Jan. Vita taxes 15 next year After Aug. Vita taxes 31 Jan. Vita taxes 15 next year (None) *See January payment and Saturday, Sunday, holiday rule . Vita taxes How much to pay to avoid penalty. Vita taxes   To determine how much you should pay by each payment due date, see How To Figure Each Payment , later. Vita taxes Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, you have only one payment due date for your 2014 estimated tax, January 15, 2015. Vita taxes The due dates for the first three payment periods, discussed under When To Pay Estimated Tax , earlier, do not apply to you. Vita taxes If you file your 2014 Form 1040 by March 2, 2015, and pay all the tax you owe at that time, you do not need to make an estimated tax payment. Vita taxes Fiscal year farmers and fishermen. Vita taxes   If you are a farmer or fisherman, but your tax year does not start on January 1, you can either: Pay all your estimated tax by the 15th day after the end of your tax year, or File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year. Vita taxes How To Figure Each Payment After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. Vita taxes You should pay enough by each due date to avoid a penalty for that period. Vita taxes If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Vita taxes The penalty is discussed in chapter 4. Vita taxes Regular Installment Method If your first estimated tax payment is due April 15, 2014, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2014 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Vita taxes Enter this amount on line 17. Vita taxes However, use this method only if your income is basically the same throughout the year. Vita taxes Change in estimated tax. Vita taxes   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Vita taxes Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Vita taxes If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. Vita taxes See Annualized Income Installment Method . Vita taxes Amended estimated tax. Vita taxes If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2014, figure your required payment for each remaining payment period using Worksheet 2-14. Vita taxes Example. Vita taxes Early in 2014, Mira Roberts figures that her estimated tax due is $1,800. Vita taxes She makes estimated tax payments on April 15 and June 16 of $450 each ($1,800 ÷ 4). Vita taxes On July 10, she sells investment property at a gain. Vita taxes Her refigured estimated tax is $4,100. Vita taxes Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-14. Vita taxes If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. Vita taxes Worksheet 2-14. Vita taxes Amended Estimated Tax Worksheet—Illustrated               1. Vita taxes Amended total estimated tax due 1. Vita taxes $4,100 2. Vita taxes Multiply line 1 by:           50% (. Vita taxes 50) if next payment is due June 16, 2014           75% (. Vita taxes 75) if next payment is due September 15,  2014           100% (1. Vita taxes 00) if next payment is due January 15,  2015 2. Vita taxes 3,075     3. Vita taxes Estimated tax payments for all previous periods 3. Vita taxes 900     4. Vita taxes Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Vita taxes $2,175       Note. Vita taxes If the payment on line 4 is due January 15, 2015, stop here. Vita taxes Otherwise, go to line 5. Vita taxes         5. Vita taxes Add lines 3 and 4 5. Vita taxes 3,075 6. Vita taxes Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Vita taxes 1,025 7. Vita taxes Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Vita taxes If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Vita taxes $1,025 Worksheet 2-14. Vita taxes Amended Estimated Tax Worksheet—Blank               1. Vita taxes Amended total estimated tax due 1. Vita taxes   2. Vita taxes Multiply line 1 by:           50% (. Vita taxes 50) if next payment is due June 16, 2014           75% (. Vita taxes 75) if next payment is due September 15,  2014           100% (1. Vita taxes 00) if next payment is due January 15,  2015 2. Vita taxes       3. Vita taxes Estimated tax payments for all previous periods 3. Vita taxes       4. Vita taxes Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Vita taxes         Note. Vita taxes If the payment on line 4 is due January 15, 2015, stop here. Vita taxes Otherwise, go to line 5. Vita taxes         5. Vita taxes Add lines 3 and 4 5. Vita taxes   6. Vita taxes Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Vita taxes   7. Vita taxes Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Vita taxes If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Vita taxes   Underpayment penalty. Vita taxes   The penalty is figured separately for each payment period. Vita taxes If you figure your payments using the regular installment method and later refigure your payments because of an increase in income, you may be charged a penalty for underpayment of estimated tax for the period(s) before you changed your payments. Vita taxes To see how you may be able to avoid or reduce this penalty, see Annualized Income Installment Method (Schedule AI) in chapter 4. Vita taxes Annualized Income Installment Method If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. Vita taxes The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Vita taxes To see whether you can pay less for any period, complete the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Vita taxes You first must complete the 2014 Estimated Tax Worksheet (Worksheet 2-1) through line 16b. Vita taxes Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment vouchers. Vita taxes Note. Vita taxes If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2014 tax return. Vita taxes See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information. Vita taxes Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Use Worksheet 2-9 to help you follow these instructions. Vita taxes The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year's estimated tax liability by four as if your income was earned equally throughout the year. Vita taxes The top of the worksheet shows the dates for each payment period. Vita taxes The periods build; that is, each period includes all previous periods. Vita taxes After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period. Vita taxes Line 1. Vita taxes   Enter your AGI for the period. Vita taxes This is your gross income for the period, including your share of partnership or S corporation income or loss, minus your adjustments to income for that period. Vita taxes See Expected AGI—Line 1 , earlier. Vita taxes Self-employment income. Vita taxes   If you had self-employment income, first complete Section B of this worksheet. Vita taxes Use the amounts on line 43 when figuring your expected AGI to enter in each column of Section A, line 1. Vita taxes Line 4. Vita taxes   Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7. Vita taxes 5% if either you or your spouse was born before January 2, 1950) or reducing certain miscellaneous deductions by 2% of your AGI. Vita taxes Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2014 Annualized Estimated Tax Worksheet (Worksheet 2-9)). Vita taxes Line 6. Vita taxes   Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Vita taxes In that case, use Worksheet 2-10 to figure the amount to enter on line 6. Vita taxes Complete Worksheet 2–10 for each period, as necessary. Vita taxes Line 7. Vita taxes   If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction. Vita taxes Line 10. Vita taxes   Multiply $3,950 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Vita taxes   In that case, use Worksheet 2-11 to figure the amount to enter on line 10. Vita taxes Line 12. Vita taxes   Generally, you will use the Tax Rate Schedules to figure the tax on your annualized income. Vita taxes However, see below for situations where you must use a different method to compute your estimated tax. Vita taxes Tax on child's investment income. Vita taxes   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Vita taxes Children under age 18 at the end of 2014. Vita taxes The following children if their earned income is not more than half their support. Vita taxes Children age 18 at the end of 2014. Vita taxes Children who are full-time students over age 18 and under age 24 at the end of 2014. Vita taxes See Publication 929. Vita taxes Tax on net capital gain. Vita taxes   The regular income tax rates for individuals do not apply to a net capital gain. Vita taxes Instead, your net capital gain is taxed at a lower maximum rate. Vita taxes   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Vita taxes Tax on qualified dividends and capital gains. Vita taxes   For 2014, your capital gain and dividends rate will depend on your income. Vita taxes Tax on capital gain or qualified dividends. Vita taxes If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-12 to figure the amount to enter on line 12. Vita taxes Tax if excluding foreign earned income or excluding or deducting foreign housing. Vita taxes If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-13 to figure the amount to enter on line 12. Vita taxes Line 13. Vita taxes   If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the period. Vita taxes If you file Form 1040A, add the amount from the Alternative Minimum Tax Worksheet found in the instructions. Vita taxes Also include any recapture of an education credit for each period. Vita taxes You may owe this tax if you claimed an education credit in an earlier year and you received either tax-free educational assistance or a refund of qualifying expenses for the same student after filing your 2013 return. Vita taxes   Use the 2013 forms or worksheets to see if you will owe any of the taxes discussed above. Vita taxes Figure the tax based on your income and deductions during the period shown in the column headings. Vita taxes Multiply this amount by the annualization amounts shown for each column on line 2 of the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Vita taxes Enter the result on line 13 of this worksheet. Vita taxes Line 15. Vita taxes   Include all the nonrefundable credits you expect to claim because of events that will occur during the period. Vita taxes Note. Vita taxes When figuring your credits for each period, annualize any item of income or deduction to figure each credit. Vita taxes For example, if you need to use your AGI to figure a credit, use line 3 of Worksheet 2-9 to figure the credit for each column. Vita taxes Line 18. Vita taxes   Add your expected other taxes. Vita taxes   Other taxes include the following. Vita taxes Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Vita taxes Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Vita taxes Amounts on Form 1040 written on the line for “other taxes” (line 60 on the 2013 Form 1040). Vita taxes But do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Vita taxes Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2014. Vita taxes See Form 5405 for exceptions. Vita taxes Additional Medicare Tax. Vita taxes A 0. Vita taxes 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Vita taxes Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Vita taxes A self-employment loss should not be considered for purposes of this tax. Vita taxes RRTA compensation should be separately compared to the threshold. Vita taxes Your employer is responsible for withholding the 0. Vita taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2014. Vita taxes You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Vita taxes For more information on Additional Medicare Tax, go to IRS. Vita taxes gov and enter “Additional Medicare Tax” in the search box. Vita taxes Net Investment Income Tax (NIIT). Vita taxes The NIIT is 3. Vita taxes 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. Vita taxes Threshold amounts: Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Vita taxes gov and enter “Net Investment Income Tax” in the search box. Vita taxes Line 20. Vita taxes   Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. Vita taxes Note. Vita taxes When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit. Vita taxes Line 29. Vita taxes   If line 28 is smaller than line 25 and you are not certain of the estimate of your 2014 tax, you can avoid a penalty by entering the amount from line 25 on line 29. Vita taxes Line 31. Vita taxes   For each period, include estimated tax payments made and any excess social security and railroad retirement tax. Vita taxes   Also include estimated federal income tax withholding. Vita taxes One-fourth of your estimated withholding is considered withheld on the due date of each payment period. Vita taxes To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2014 by: 25% (. Vita taxes 25) for the first period, 50% (. Vita taxes 50) for the second period, 75% (. Vita taxes 75) for the third period, and 100% (1. Vita taxes 00) for the fourth period. Vita taxes   However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. Vita taxes For each period, include withholding made from the beginning of the period up to and including the payment due date. Vita taxes You can make this choice separately for the taxes withheld from your wages and all other withholding. Vita taxes For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a , earlier. Vita taxes Nonresident aliens. Vita taxes   If you will file Form 1040NR and you do not receive wages as an employee subject to U. Vita taxes S. Vita taxes income tax withholding, the instructions for the worksheet are modified as follows. Vita taxes Skip column (a). Vita taxes On line 1, enter your income for the period that is effectively connected with a U. Vita taxes S. Vita taxes trade or business. Vita taxes On line 21, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U. Vita taxes S. Vita taxes trade or business by the following. Vita taxes 72% for column (b). Vita taxes 45% for column (c). Vita taxes 30% for column (d). Vita taxes However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2. Vita taxes 4, 1. Vita taxes 5, and 1, respectively. Vita taxes On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2014 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9. Vita taxes On lines 24 and 27, skip column (b). Vita taxes On line 31, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d). Vita taxes See Publication 519 for more information. Vita taxes Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Vita taxes You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000. Vita taxes How To Pay Estimated Tax There are several ways to pay estimated tax. Vita taxes Credit an overpayment on your 2013 return to your 2014 estimated tax. Vita taxes Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Vita taxes Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Vita taxes Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Vita taxes On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Vita taxes Take the amount you have credited into account when figuring your estimated tax payments. Vita taxes If you timely file your 2013 return, treat the credit as a payment made on April 15, 2014. Vita taxes If you are a beneficiary of an estate or trust, and the trustee elects to credit 2014 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2015. Vita taxes If you choose to have an overpayment of tax credited to your estimated tax, you cannot have any of that amount refunded to you until you file your tax return for the following year. Vita taxes You also cannot use that overpayment in any other way. Vita taxes Example. Vita taxes When Kathleen finished filling out her 2013 tax return, she saw that she had overpaid her taxes by $750. Vita taxes Kathleen knew she would owe additional tax in 2014. Vita taxes She credited $600 of the overpayment to her 2014 estimated tax and had the remaining $150 refunded to her. Vita taxes In September, she amended her 2013 return by filing Form 1040X, Amended U. Vita taxes S. Vita taxes Individual Income Tax Return. Vita taxes It turned out that she owed $250 more in tax than she had thought. Vita taxes This reduced her 2013 overpayment from $750 to $500. Vita taxes Because the $750 had already been applied to her 2014 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. Vita taxes Kathleen could not use any of the $600 she had credited to her 2014 estimated tax to pay this bill. Vita taxes Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Vita taxes You can make your estimated tax payments online when you e-file or at any time during the year. Vita taxes You can pay using either of the following electronic payment methods. Vita taxes Direct transfer from your bank account. Vita taxes Credit or debit card. Vita taxes To pay your taxes online or for more information, go to www. Vita taxes irs. Vita taxes gov/e-pay. Vita taxes Pay by Phone Paying by phone is another safe and secure method of paying electronically. Vita taxes Use one of the following methods. Vita taxes Direct transfer from your bank account. Vita taxes Credit or debit card. Vita taxes To pay by direct transfer from your bank account, call EFTPS Customer Service at 1-800-555-4477 (English), 1-800-244-4829 (Espanol), or TTY/TDD 1-800-733-4829. Vita taxes To pay using a credit or debit card, you can call one of the following service providers. Vita taxes There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Vita taxes WorldPay 1-888-9-PAY-TAXTM (1-888-972-9829) www. Vita taxes payUSAtax. Vita taxes com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Vita taxes officialpayments. Vita taxes com Link2GOV Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Vita taxes PAY1040. Vita taxes com For the latest details on how to pay by phone, go to www. Vita taxes irs. Vita taxes gov/e-pay. Vita taxes Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Vita taxes If you use your own envelopes (and not the window envelope that comes with the 1040-ES package), make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Vita taxes Do not use the address shown in the Form 1040 or Form 1040A instructions. Vita taxes If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). Vita taxes Follow the instructions to make sure you use the vouchers correctly. Vita taxes Joint estimated tax payments. Vita taxes    If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Vita taxes Change of address. Vita taxes    You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Vita taxes Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Vita taxes Worksheets for Chapter 2 Use the following worksheets and tables to figure your correct estimated tax. Vita taxes IF you need. Vita taxes . Vita taxes . Vita taxes THEN use. Vita taxes . Vita taxes . Vita taxes 2014 Tax Rate Schedules   the 2014 Estimated Tax Worksheet Worksheet 2-1 to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-2 to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-3 to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-4 to reduce your itemized deductions because your estimated AGI is more than $152,525—line 2 of ES Worksheet Worksheet 2-5 to reduce your exemption amount because your estimated AGI is more than $152,525—line 4 of ES Worksheet Worksheet 2-6 to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 6 of ES Worksheet Worksheet 2-7 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 6 of ES Worksheet Worksheet 2-8 the 2014 Annualized Estimated Tax Worksheet (Annualized ES Worksheet) Worksheet 2-9 to reduce your itemized deductions because your estimated annualized AGI is more than $152,525—line 6 of Annualized ES Worksheet Worksheet 2-10 to reduce your exemption amount because your estimated annualized AGI is more than $152,525—line 10 of Annualized ES Worksheet Worksheet 2-11 to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 12 of Annualized ES Worksheet Worksheet 2-12 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 12 of Annualized ES Worksheet Worksheet 2-13 to refigure (amend) your estimated tax during the year Worksheet 2-14 2014 Tax Rate Schedules Do not use these Tax Rate Schedules to figure your 2013 taxes. Vita taxes Use them only to figure your 2014 estimated taxes. Vita taxes Schedule X—Use if your 2014 filing status is  Single Schedule Z—Use if your 2014 filing status is Head of household If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $9,075     10. Vita taxes 0%   $0 $0 $12,950     10. Vita taxes 0%   $0 9,075 36,900 $907. Vita taxes 50 + 15. Vita taxes 0%   9,075 12,950 49,400 $1,295. Vita taxes 00 + 15. Vita taxes 0%   12,950 36,900 89,350 5,081. Vita taxes 25 + 25. Vita taxes 0%   36,900 49,400 127,550 6,762. Vita taxes 50 + 25. Vita taxes 0%   49,400 89,350 186,350 18,193. Vita taxes 75 + 28. Vita taxes 0%   89,350 127,550 206,600 26,300. Vita taxes 00 + 28. Vita taxes 0%   127,550 186,350 405,100 45,353. Vita taxes 75 + 33. Vita taxes 0%   186,350 206,600 405,100 48,434. Vita taxes 00 + 33. Vita taxes 0%   206,600 405,100 406,750 117,541. Vita taxes 25 + 35. Vita taxes 0%   405,100 405,100 432,200 113,939. Vita taxes 00 + 35. Vita taxes 0%   405,100 406,750 - - - - - - 118,118. Vita taxes 75 + 39. Vita taxes 6%   406,750 432,200 - - - - - - 123,424. Vita taxes 00 + 39. Vita taxes 6%   432,200 Schedule Y-1—Use if your 2014 filing status is Married filing jointly or Qualifying widow(er) Schedule Y-2—Use if your 2014 filing status is  Married filing separately If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $18,150     10. Vita taxes 0%   $0 $0 $9,075     10. Vita taxes 0%   $0 18,150 73,800 $1,815. Vita taxes 00 + 15. Vita taxes 0%   18,150 9,075 36,900 $907. Vita taxes 50 + 15. Vita taxes 0%   9,075 73,800 148,850 10,162. Vita taxes 50 + 25. Vita taxes 0%   73,800 36,900 74,425 5,081. Vita taxes 25 + 25. Vita taxes 0%   36,900 148,850 226,850 28,925. Vita taxes 00 + 28. Vita taxes 0%   148,850 74,425 113,425 14,462. Vita taxes 50 + 28. Vita taxes 0%   74,425 226,850 405,100 50,765. Vita taxes 00 + 33. Vita taxes 0%   226,850 113,425 202,550 25,382. Vita taxes 50 + 33. Vita taxes 0%   113,425 405,100 457,600 109,587. Vita taxes 50 + 35. Vita taxes 0%   405,100 202,550 228,800 54,793. Vita taxes 75 + 35. Vita taxes 0%   202,550 457,600 - - - - - - 127,962. Vita taxes 50 + 39. Vita taxes 6%   457,600 228,800 - - - - - - 63,981. Vita taxes 25 + 39. Vita taxes 6%   228,800                             Worksheet 2-1. Vita taxes 2014 Estimated Tax Worksheet When this worksheet refers you to instructions, you can find those instructions in the Instructions for 2014 Form 1040-ES. Vita taxes 1 Adjusted gross income you expect in 2014 (see instructions) 1     2 If you plan to itemize deductions, enter the estimated total of your itemized deductions. Vita taxes  Caution: If line 1 is over $152,525, your deduction may be reduced. Vita taxes See Worksheet 2-5. Vita taxes If you do not plan to itemize deductions, enter your standard deduction. Vita taxes 2     3 Subtract line 2 from line 1 3     4 Exemptions. Vita taxes Multiply $3,950 by the number of personal exemptions. Vita taxes  Caution: If line 1 is over $152,525, the amount of your personal exemptions may be limited. Vita taxes See Worksheet 2-6. Vita taxes 4     5 Subtract line 4 from line 3 5     6 Tax. Vita taxes Figure your tax on the amount on line 5 by using the 2014 Tax Rate Schedules Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-7 and 2-8 to figure the tax 6     7 Alternative minimum tax from Form 6251 or included on Form 1040A, line 28 7     8 Add lines 6 and 7. Vita taxes Add to this amount any other taxes you expect to include in the total on Form 1040, line 44 8     9 Credits (see instructions). Vita taxes Do not include any income tax withholding on this line 9     10 Subtract line 9 from line 8. Vita taxes If zero or less, enter -0- 10     11 Self-employment tax (see instructions) 11     12 Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 12     13a Add lines 10 through 12 13a     b Earned income credit, additional child tax credit, fuel tax credit, and refundable American opportunity credit 13b     c Total 2014 estimated tax. Vita taxes Subtract line 13b from line 13a. Vita taxes If zero or less, enter -0- ▶ 13c     14a Multiply line 13c by 90% (662/3% for farmers and fishermen) 14a           b Required annual payment based on prior year's tax (see instructions) 14b           c Required annual payment to avoid a penalty. Vita taxes Enter the smaller of line 14a or 14b ▶ 14c        Caution: Generally, if you do not prepay (through income tax withholding and estimated tax payments) at least the amount on line 14c, you may owe a penalty for not paying enough estimated tax. Vita taxes To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. Vita taxes Even if you pay the required annual payment, you may still owe tax when you file your return. Vita taxes If you prefer, you can pay the amount shown on line 13c. Vita taxes                         15 Income tax withheld and estimated to be withheld during 2014 (including income tax withholding on pensions, annuities, certain deferred income, etc. Vita taxes ) 15     16a Subtract line 15 from line 14c 16a             Is the result zero or less? □ Yes. Vita taxes Stop here. Vita taxes You are not required to make estimated tax payments. Vita taxes  □ No. Vita taxes Go to line 16b. Vita taxes             b Subtract line 15 from line 13c 16b             Is the result less than $1,000? □ Yes. Vita taxes Stop here. Vita taxes You are not required to make estimated tax payments. Vita taxes  □ No. Vita taxes Go to line 17 to figure your required payment. Vita taxes                         17 If the first payment you are required to make is due April 15, 2014, enter ¼ of line 16a (minus any 2013 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order 17     Worksheet 2-2. Vita taxes 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Note. Vita taxes If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-9, 2014 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-9, line 2, for the same period before entering it on line 1 below. Vita taxes     1. Vita taxes Enter your expected social security and railroad retirement benefits 1. Vita taxes   2. Vita taxes Enter one-half of line 1 2. Vita taxes   3. Vita taxes Enter your expected total income. Vita taxes Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. Vita taxes   4. Vita taxes Enter your expected nontaxable interest income 4. Vita taxes   5. Vita taxes Enter (as a positive amount) the total of any expected exclusions or deductions for: U. Vita taxes S. Vita taxes savings bond interest used for higher education expenses (Form 8815) Employer-provided adoption benefits (Form 8839) Foreign earned income or housing (Form 2555 or 2555-EZ) Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico 5. Vita taxes   6. Vita taxes Add lines 2, 3, 4, and 5 6. Vita taxes   7. Vita taxes Enter your expected adjustments to income. Vita taxes Do not include any student loan interest deduction 7. Vita taxes   8. Vita taxes Subtract line 7 from line 6. Vita taxes If zero or less, stop here. Vita taxes  Note. Vita taxes Do not include any social security or railroad retirement benefits in the amount on line 1 of your 2014 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 8. Vita taxes   9. Vita taxes Enter $25,000 ($32,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 9. Vita taxes   10. Vita taxes Subtract line 9 from line 8. Vita taxes If zero or less, stop here. Vita taxes  Note. Vita taxes Do not include any social security or railroad retirement benefits in the amount on line 1 of your Worksheet 2-1 (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 10. Vita taxes   11. Vita taxes Enter $9,000 ($12,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 11. Vita taxes   12. Vita taxes Subtract line 11 from line 10. Vita taxes If zero or less, enter -0- 12. Vita taxes   13. Vita taxes Enter the smaller of line 10 or line 11 13. Vita taxes   14. Vita taxes Enter one-half of line 13 14. Vita taxes   15
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Vita taxes 17. Vita taxes   Individual Retirement Arrangements (IRAs) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Traditional IRAsWho Can Open a Traditional IRA? When and How Can a Traditional IRA Be Opened? How Much Can Be Contributed? When Can Contributions Be Made? How Much Can You Deduct? Nondeductible Contributions Inherited IRAs Can You Move Retirement Plan Assets? When Can You Withdraw or Use IRA Assets? When Must You Withdraw IRA Assets? (Required Minimum Distributions) Are Distributions Taxable? What Acts Result in Penalties or Additional Taxes? Roth IRAsWhat Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA? Can You Move Amounts Into a Roth IRA? Are Distributions Taxable? What's New Traditional IRA contribution and deduction limit. Vita taxes  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Vita taxes If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Vita taxes For more information, see How Much Can Be Contributed? later. Vita taxes Roth IRA contribution limit. Vita taxes  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Vita taxes If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Vita taxes However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Vita taxes For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? later. Vita taxes Modified AGI limit for traditional IRA contributions increased. Vita taxes  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Vita taxes If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Vita taxes If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Vita taxes See How Much Can You Deduct , later. Vita taxes Modified AGI limit for Roth IRA contributions increased. Vita taxes  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Vita taxes Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Vita taxes You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Vita taxes Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Vita taxes You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Vita taxes Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Vita taxes You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Vita taxes See Can You Contribute to a Roth IRA , later. Vita taxes Net Investment Income Tax. Vita taxes   For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan including IRAs (for example; 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Vita taxes However, these distributions are taken into account when determining the modified adjusted gross income threshold. Vita taxes Distributions from a nonqualified retirement plan are included in net investment income. Vita taxes See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Vita taxes Name change. Vita taxes  All spousal IRAs have been renamed Kay Bailey Hutchison Spousal IRAs. Vita taxes There are no changes to the rules regarding these IRAs. Vita taxes See Kay Bailey Hutchison Spousal IRA Limit , later, for more information. Vita taxes Reminders 2014 limits. Vita taxes   You can find information about the 2014 contribution and AGI limits in Publication 590. Vita taxes Contributions to both traditional and Roth IRAs. Vita taxes   For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in Roth IRAs, later. Vita taxes Statement of required minimum distribution. Vita taxes  If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. Vita taxes The report or offer must include the date by which the amount must be distributed. Vita taxes The report is due January 31 of the year in which the minimum distribution is required. Vita taxes It can be provided with the year-end fair market value statement that you normally get each year. Vita taxes No report is required for IRAs of owners who have died. Vita taxes IRA interest. Vita taxes  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Vita taxes Tax on your traditional IRA is generally deferred until you take a distribution. Vita taxes Do not report this interest on your tax return as tax-exempt interest. Vita taxes Form 8606. Vita taxes   To designate contributions as nondeductible, you must file Form 8606, Nondeductible IRAs. Vita taxes The term “50 or older” is used several times in this chapter. Vita taxes It refers to an IRA owner who is age 50 or older by the end of the tax year. Vita taxes Introduction An individual retirement arrangement (IRA) is a personal savings plan that gives you tax advantages for setting aside money for your retirement. Vita taxes This chapter discusses the following topics. Vita taxes The rules for a traditional IRA (any IRA that is not a Roth or SIMPLE IRA). Vita taxes The Roth IRA, which features nondeductible contributions and tax-free distributions. Vita taxes Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs) are not discussed in this chapter. Vita taxes For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Publications 560 and 590. Vita taxes For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Publication 590. Vita taxes Useful Items - You may want to see: Publication 560 Retirement Plans for Small Business 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts 8606 Nondeductible IRAs Traditional IRAs In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Vita taxes ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Vita taxes Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Vita taxes Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. Vita taxes What is compensation?   Generally, compensation is what you earn from working. Vita taxes Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. Vita taxes The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Vita taxes   Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. Vita taxes   Compensation also includes commissions and taxable alimony and separate maintenance payments. Vita taxes Self-employment income. Vita taxes   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deductible part of your self-employment tax. Vita taxes   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Vita taxes Nontaxable combat pay. Vita taxes   For IRA purposes, if you were a member of the U. Vita taxes S. Vita taxes Armed Forces, your compensation includes any nontaxable combat pay you receive. Vita taxes What is not compensation?   Compensation does not include any of the following items. Vita taxes Earnings and profits from property, such as rental income, interest income, and dividend income. Vita taxes Pension or annuity income. Vita taxes Deferred compensation received (compensation payments postponed from a past year). Vita taxes Income from a partnership for which you do not provide services that are a material income-producing factor. Vita taxes Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Vita taxes Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Vita taxes When and How Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Vita taxes However, the time for making contributions for any year is limited. Vita taxes See When Can Contributions Be Made , later. Vita taxes You can open different kinds of IRAs with a variety of organizations. Vita taxes You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Vita taxes You can also open an IRA through your stockbroker. Vita taxes Any IRA must meet Internal Revenue Code requirements. Vita taxes Kinds of traditional IRAs. Vita taxes   Your traditional IRA can be an individual retirement account or annuity. Vita taxes It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Vita taxes How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Vita taxes These limits and other rules are explained below. Vita taxes Community property laws. Vita taxes   Except as discussed later under Kay Bailey Hutchison Spousal IRA limit , each spouse figures his or her limit separately, using his or her own compensation. Vita taxes This is the rule even in states with community property laws. Vita taxes Brokers' commissions. Vita taxes   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Vita taxes Trustees' fees. Vita taxes   Trustees' administrative fees are not subject to the contribution limit. Vita taxes Qualified reservist repayments. Vita taxes   If you are (or were) a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions you received. Vita taxes You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. Vita taxes To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or similar arrangement. Vita taxes   For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1 of Publication 590. Vita taxes Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Vita taxes (See Roth IRAs, later. Vita taxes ) General limit. Vita taxes   For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts. Vita taxes $5,500 ($6,500 if you are 50 or older). Vita taxes Your taxable compensation (defined earlier) for the year. Vita taxes This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. Vita taxes (See Nondeductible Contributions , later. Vita taxes ) Qualified reservist repayments do not affect this limit. Vita taxes Example 1. Vita taxes Betty, who is 34 years old and single, earned $24,000 in 2013. Vita taxes Her IRA contributions for 2013 are limited to $5,500. Vita taxes Example 2. Vita taxes John, an unmarried college student working part time, earned $3,500 in 2013. Vita taxes His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Vita taxes Kay Bailey Hutchison Spousal IRA limit. Vita taxes   For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following amounts. Vita taxes $5,500 ($6,500 if you are 50 or older). Vita taxes The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Vita taxes Your spouse's IRA contribution for the year to a traditional IRA. Vita taxes Any contribution for the year to a Roth IRA on behalf of your spouse. Vita taxes This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is 50 or older, or $13,000 if both of you are 50 or older). Vita taxes When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Vita taxes Contributions must be in the form of money (cash, check, or money order). Vita taxes Property cannot be contributed. Vita taxes Contributions must be made by due date. Vita taxes   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Vita taxes Age 70½ rule. Vita taxes   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Vita taxes   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Vita taxes If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Vita taxes Designating year for which contribution is made. Vita taxes   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. Vita taxes If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). Vita taxes Filing before a contribution is made. Vita taxes   You can file your return claiming a traditional IRA contribution before the contribution is actually made. Vita taxes Generally, the contribution must be made by the due date of your return, not including extensions. Vita taxes Contributions not required. Vita taxes   You do not have to contribute to your traditional IRA for every tax year, even if you can. Vita taxes How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if it applies). Vita taxes However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Vita taxes See Limit If Covered by Employer Plan , later. Vita taxes You may be able to claim a credit for contributions to your traditional IRA. Vita taxes For more information, see chapter 37. Vita taxes Trustees' fees. Vita taxes   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Vita taxes However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Vita taxes See chapter 28. Vita taxes Brokers' commissions. Vita taxes   Brokers' commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Vita taxes Full deduction. Vita taxes   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older in 2013). Vita taxes 100% of your compensation. Vita taxes This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Vita taxes Kay Bailey Hutchison Spousal IRA. Vita taxes   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of the following amounts. Vita taxes $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older in 2013). Vita taxes The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Vita taxes The IRA deduction for the year of the spouse with the greater compensation. Vita taxes Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Vita taxes Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Vita taxes This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation. Vita taxes Note. Vita taxes If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. Vita taxes After a divorce or legal separation, you can deduct only contributions to your own IRA. Vita taxes Your deductions are subject to the rules for single individuals. Vita taxes Covered by an employer retirement plan. Vita taxes   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. Vita taxes This is discussed later under Limit If Covered by Employer Plan . Vita taxes Limits on the amount you can deduct do not affect the amount that can be contributed. Vita taxes See Nondeductible Contributions , later. Vita taxes Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. Vita taxes The “Retirement plan” box should be checked if you were covered. Vita taxes Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered by an Employer Plan , later. Vita taxes If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Vita taxes Federal judges. Vita taxes   For purposes of the IRA deduction, federal judges are covered by an employer retirement plan. Vita taxes For Which Year(s) Are You Covered by an Employer Plan? Special rules apply to determine the tax years for which you are covered by an employer plan. Vita taxes These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Vita taxes Tax year. Vita taxes   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Vita taxes For almost all people, the tax year is the calendar year. Vita taxes Defined contribution plan. Vita taxes   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. Vita taxes   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Vita taxes Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Vita taxes Defined benefit plan. Vita taxes   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. Vita taxes This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. Vita taxes   A defined benefit plan is any plan that is not a defined contribution plan. Vita taxes Defined benefit plans include pension plans and annuity plans. Vita taxes No vested interest. Vita taxes   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. Vita taxes Situations in Which You Are Not Covered by an Employer Plan Unless you are covered under another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Vita taxes Social security or railroad retirement. Vita taxes   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Vita taxes Benefits from a previous employer's plan. Vita taxes   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Vita taxes Reservists. Vita taxes   If the only reason you participate in a plan is because you are a member of a reserve unit of the armed forces, you may not be covered by the plan. Vita taxes You are not covered by the plan if both of the following conditions are met. Vita taxes The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Vita taxes You did not serve more than 90 days on active duty during the year (not counting duty for training). Vita taxes Volunteer firefighters. Vita taxes   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Vita taxes You are not covered by the plan if both of the following conditions are met. Vita taxes The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Vita taxes Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Vita taxes Limit If Covered by Employer Plan If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Vita taxes Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. Vita taxes These amounts vary depending on your filing status. Vita taxes To determine if your deduction is subject to phaseout, you must determine your modified adjusted gross income (AGI) and your filing status. Vita taxes See Filing status and Modified adjusted gross income (AGI) , later. Vita taxes Then use Table 17-1 or 17-2 to determine if the phaseout applies. Vita taxes Social security recipients. Vita taxes   Instead of using Table 17-1 or Table 17-2, use the worksheets in Appendix B of Publication 590 if, for the year, all of the following apply. Vita taxes You received social security benefits. Vita taxes You received taxable compensation. Vita taxes Contributions were made to your traditional IRA. Vita taxes You or your spouse was covered by an employer retirement plan. Vita taxes Use those worksheets to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Vita taxes Deduction phaseout. Vita taxes   If you were covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI as shown in Table 17-1. Vita taxes Table 17-1. Vita taxes Effect of Modified AGI1 on Deduction if You Are Covered by Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Vita taxes IF your filing status is. Vita taxes . Vita taxes . Vita taxes   AND your modified AGI is. Vita taxes . Vita taxes . Vita taxes   THEN you can take. Vita taxes . Vita taxes . Vita taxes single   or  head of household   $59,000 or less   a full deduction. Vita taxes   more than $59,000 but less than $69,000   a partial deduction. Vita taxes   $69,000 or more   no deduction. Vita taxes married filing jointly   or  qualifying widow(er)   $95,000 or less   a full deduction. Vita taxes   more than $95,000 but less than $115,000   a partial deduction. Vita taxes   $115,000 or more   no deduction. Vita taxes married filing separately2   less than $10,000   a partial deduction. Vita taxes   $10,000 or more   no deduction. Vita taxes 1Modified AGI (adjusted gross income). Vita taxes See Modified adjusted gross income (AGI) . Vita taxes 2If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” column). Vita taxes If your spouse is covered. Vita taxes   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 17-2. Vita taxes Filing status. Vita taxes   Your filing status depends primarily on your marital status. Vita taxes For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. Vita taxes If you need more information on filing status, see chapter 2. Vita taxes Lived apart from spouse. Vita taxes   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. Vita taxes Table 17-2. Vita taxes Effect of Modified AGI1 on Deduction if You Are NOT Covered by Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Vita taxes IF your filing status is. Vita taxes . Vita taxes . Vita taxes   AND your modified AGI is. Vita taxes . Vita taxes . Vita taxes   THEN you can take. Vita taxes . Vita taxes . Vita taxes single, head of household, or qualifying widow(er)   any amount   a full deduction. Vita taxes married filing jointly or separately with a spouse who is not covered by a plan at work   any amount   a full deduction. Vita taxes married filing jointly with a spouse who is covered by a plan at work   $178,000 or less   a full deduction. Vita taxes   more than $178,000 but less than $188,000   a partial deduction. Vita taxes   $188,000 or more   no deduction. Vita taxes married filing separately with a spouse who is covered by a plan at work2   less than $10,000   a partial deduction. Vita taxes   $10,000 or more   no deduction. Vita taxes 1Modified AGI (adjusted gross income). Vita taxes See Modified adjusted gross income (AGI) . Vita taxes 2You are entitled to the full deduction if you did not live with your spouse at any time during the year. Vita taxes Modified adjusted gross income (AGI). Vita taxes   How you figure your modified AGI depends on whether you are filing Form 1040 or Form 1040A. Vita taxes If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Publication 590. Vita taxes You may be able to use Worksheet 17-1 to figure your modified AGI. Vita taxes    Do not assume that your modified AGI is the same as your compensation. Vita taxes Your modified AGI may include income in addition to your compensation (discussed earlier), such as interest, dividends, and income from IRA distributions. Vita taxes Form 1040. Vita taxes   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following eight amounts. Vita taxes IRA deduction. Vita taxes Student loan interest deduction. Vita taxes Tuition and fees deduction. Vita taxes Domestic production activities deduction. Vita taxes Foreign earned income exclusion. Vita taxes Foreign housing exclusion or deduction. Vita taxes Exclusion of qualified savings bond interest shown on Form 8815, Exclusion of Interest From Series EE and I U. Vita taxes S. Vita taxes Savings Bonds Issued After 1989. Vita taxes Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses. Vita taxes This is your modified AGI. Vita taxes Form 1040A. Vita taxes   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Vita taxes IRA deduction. Vita taxes Student loan interest deduction. Vita taxes Tuition and fees deduction. Vita taxes Exclusion of qualified savings bond interest shown on Form 8815. Vita taxes This is your modified AGI. Vita taxes Both contributions for 2013 and distributions in 2013. Vita taxes   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Vita taxes You received distributions in 2013 from one or more traditional IRAs. Vita taxes You made contributions to a traditional IRA for 2013. Vita taxes Some of those contributions may be nondeductible contributions. Vita taxes If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Vita taxes To do this, you can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, in Publication 590. Vita taxes   If at least one of the above does not apply, figure your modified AGI using Worksheet 17-1, later. Vita taxes    How to figure your reduced IRA deduction. Vita taxes   You can figure your reduced IRA deduction for either Form 1040 or Form 1040A by using the worksheets in chapter 1 of Publication 590. Vita taxes Also, the instructions for Form 1040 and Form 1040A include similar worksheets that you may be able to use instead. Vita taxes Worksheet 17-1. Vita taxes Figuring Your Modified AGI Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes. Vita taxes 1. Vita taxes Enter your adjusted gross income (AGI) from Form 1040, line 38, or Form 1040A, line 22, figured without taking into account the amount from Form 1040, line 32, or Form 1040A, line 17 1. Vita taxes   2. Vita taxes Enter any student loan interest deduction from Form 1040, line 33, or Form 1040A, line 18 2. Vita taxes   3. Vita taxes Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Vita taxes   4. Vita taxes Enter any domestic production activities deduction from Form 1040, line 35 4. Vita taxes   5. Vita taxes Enter any foreign earned income and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Vita taxes   6. Vita taxes Enter any foreign housing deduction from Form 2555, line 50 6. Vita taxes   7. Vita taxes Enter any excludable savings bond interest from Form 8815, line 14 7. Vita taxes   8. Vita taxes Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Vita taxes   9. Vita taxes Add lines 1 through 8. Vita taxes This is your Modified AGI for traditional IRA purposes 9. Vita taxes   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Vita taxes If you file Form 1040A, enter your IRA deduction on line 17. Vita taxes You cannot deduct IRA contributions on Form 1040EZ. Vita taxes Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Vita taxes The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Vita taxes Example. Vita taxes Mike is 28 years old and single. Vita taxes In 2013, he was covered by a retirement plan at work. Vita taxes His salary was $57,312. Vita taxes His modified AGI was $70,000. Vita taxes Mike made a $5,500 IRA contribution for 2013. Vita taxes Because he was covered by a retirement plan and his modified AGI was over $69,000, he cannot deduct his $5,500 IRA contribution. Vita taxes He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. Vita taxes Form 8606. Vita taxes   To designate contributions as nondeductible, you must file Form 8606. Vita taxes   You do not have to designate a contribution as nondeductible until you file your tax return. Vita taxes When you file, you can even designate otherwise deductible contributions as nondeductible. Vita taxes   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Vita taxes A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. Vita taxes In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Vita taxes See Form 8606 under Distributions Fully or Partly Taxable, later. Vita taxes Failure to report nondeductible contributions. Vita taxes   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated as deductible contributions when withdrawn. Vita taxes All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Vita taxes Penalty for overstatement. Vita taxes   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. Vita taxes Penalty for failure to file Form 8606. Vita taxes   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. Vita taxes    Tax on earnings on nondeductible contributions. Vita taxes   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. Vita taxes See When Can You Withdraw or Use IRA Assets , later. Vita taxes Cost basis. Vita taxes   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Vita taxes Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Vita taxes Inherited IRAs If you inherit a traditional IRA, you are called a beneficiary. Vita taxes A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Vita taxes Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Vita taxes Inherited from spouse. Vita taxes   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Vita taxes You can: Treat it as your own IRA by designating yourself as the account owner. Vita taxes Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). Vita taxes Treat yourself as the beneficiary rather than treating the IRA as your own. Vita taxes Treating it as your own. Vita taxes   You will be considered to have chosen to treat the IRA as your own if: Contributions (including rollover contributions) are made to the inherited IRA, or You do not take the required minimum distribution for a year as a beneficiary of the IRA. Vita taxes You will only be considered to have chosen to treat the IRA as your own if: You are the sole beneficiary of the IRA, and You have an unlimited right to withdraw amounts from it. Vita taxes   However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. Vita taxes Inherited from someone other than spouse. Vita taxes   If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. Vita taxes This means that you cannot make any contributions to the IRA. Vita taxes It also means you cannot roll over any amounts into or out of the inherited IRA. Vita taxes However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. Vita taxes For more information, see the discussion of inherited IRAs under Rollover From One IRA Into Another, later. Vita taxes Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. Vita taxes You can make the following kinds of transfers. Vita taxes Transfers from one trustee to another. Vita taxes Rollovers. Vita taxes Transfers incident to a divorce. Vita taxes Transfers to Roth IRAs. Vita taxes   Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. Vita taxes You can also move assets from a qualified retirement plan to a Roth IRA. Vita taxes See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later. Vita taxes Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Vita taxes Because there is no distribution to you, the transfer is tax free. Vita taxes Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another . Vita taxes For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Publication 590. Vita taxes Rollovers Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. Vita taxes The contribution to the second retirement plan is called a “rollover contribution. Vita taxes ” Note. Vita taxes An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. Vita taxes Kinds of rollovers to a traditional IRA. Vita taxes   You can roll over amounts from the following plans into a traditional IRA: A traditional IRA, An employer's qualified retirement plan for its employees, A deferred compensation plan of a state or local government (section 457 plan), or A tax-sheltered annuity plan (section 403(b) plan). Vita taxes Treatment of rollovers. Vita taxes   You cannot deduct a rollover contribution, but you must report the rollover distribution on your tax return as discussed later under Reporting rollovers from IRAs and under Reporting rollovers from employer plans . Vita taxes Kinds of rollovers from a traditional IRA. Vita taxes   You may be able to roll over, tax free, a distribution from your traditional IRA into a qualified plan. Vita taxes These plans include the federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). Vita taxes The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Vita taxes Qualified plans may, but are not required to, accept such rollovers. Vita taxes Time limit for making a rollover contribution. Vita taxes   You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan. Vita taxes The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Vita taxes For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes Extension of rollover period. Vita taxes   If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, special rules extend the rollover period. Vita taxes For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes More information. Vita taxes   For more information on rollovers, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Vita taxes Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. Vita taxes Waiting period between rollovers. Vita taxes   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. Vita taxes You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. Vita taxes   The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. Vita taxes Example. Vita taxes You have two traditional IRAs, IRA-1 and IRA-2. Vita taxes You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). Vita taxes You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. Vita taxes However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. Vita taxes This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. Vita taxes Exception. Vita taxes   For an exception for distributions from failed financial institutions, see Rollover From One IRA Into Another under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes Partial rollovers. Vita taxes   If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. Vita taxes The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). Vita taxes The amount you keep may be subject to the 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Additional Taxes? . Vita taxes Required distributions. Vita taxes   Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. Vita taxes Inherited IRAs. Vita taxes   If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own. Vita taxes See Treating it as your own , earlier. Vita taxes Not inherited from spouse. Vita taxes   If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. Vita taxes You must withdraw the IRA assets within a certain period. Vita taxes For more information, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Vita taxes Reporting rollovers from IRAs. Vita taxes   Report any rollover from one traditional IRA to the same or another traditional IRA on lines 15a and 15b, Form 1040, or lines 11a and 11b, Form 1040A, as follows. Vita taxes   Enter the total amount of the distribution on Form 1040, line 15a, or Form 1040A, line 11a. Vita taxes If the total amount on Form 1040, line 15a, or Form 1040A, line 11a, was rolled over, enter zero on Form 1040, line 15b, or Form 1040A, line 11b. Vita taxes If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b, or Form 1040A, line 11b. Vita taxes Put “Rollover” next to Form 1040, line 15b, or Form 1040A, line 11b. Vita taxes See your tax return instructions. Vita taxes   If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2014, attach a statement explaining what you did. Vita taxes Rollover From Employer's Plan Into an IRA You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan; Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Vita taxes A qualified plan is one that meets the requirements of the Internal Revenue Code. Vita taxes Eligible rollover distribution. Vita taxes   Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. Vita taxes A required minimum distribution (explained later under When Must You Withdraw IRA Assets? (Required Minimum Distributions) ). Vita taxes A hardship distribution. Vita taxes Any of a series of substantially equal periodic distributions paid at least once a year over: Your lifetime or life expectancy, The lifetimes or life expectancies of you and your beneficiary, or A period of 10 years or more. Vita taxes Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. Vita taxes A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. Vita taxes Dividends on employer securities. Vita taxes The cost of life insurance coverage. Vita taxes Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Vita taxes To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Vita taxes See Form 8606 under Distributions Fully or Partly Taxable, later. Vita taxes Rollover by nonspouse beneficiary. Vita taxes   A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. Vita taxes The IRA is treated as an inherited IRA. Vita taxes For more information about inherited IRAs, see Inherited IRAs , earlier. Vita taxes Reporting rollovers from employer plans. Vita taxes    Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a, or Form 1040A, line 12a. Vita taxes This amount should be shown in box 1 of Form 1099-R. Vita taxes From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. Vita taxes From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. Vita taxes Enter the remaining amount, even if zero, on Form 1040, line 16b, or Form 1040A, line 12b. Vita taxes Also, enter "Rollover" next to Form 1040, line 16b, or Form 1040A, line 12b. Vita taxes Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. Vita taxes The transfer is tax free. Vita taxes For detailed information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes Converting From Any Traditional IRA to a Roth IRA Allowable conversions. Vita taxes   You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. Vita taxes The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. Vita taxes If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. Vita taxes However, a part or all of the conversion contribution from your traditional IRA is included in your gross income. Vita taxes Required distributions. Vita taxes   You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70½) under the required distribution rules (discussed later). Vita taxes Income. Vita taxes   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Vita taxes These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Vita taxes   You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later. Vita taxes   You must file Form 8606 to report 2013 conversions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2013 (unless you recharacterized the entire amount) and to figure the amount to include in income. Vita taxes   If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Vita taxes See chapter 4. Vita taxes Recharacterizations You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. Vita taxes This is called recharacterizing the contribution. Vita taxes See Can You Move Retirement Plan Assets? in chapter 1 of Publication 590 for more detailed information. Vita taxes How to recharacterize a contribution. Vita taxes   To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. Vita taxes If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. Vita taxes If you recharacterize your contribution, you must do all three of the following. Vita taxes Include in the transfer any net income allocable to the contribution. Vita taxes If there was a loss, the net income you must transfer may be a negative amount. Vita taxes Report the recharacterization on your tax return for the year during which the contribution was made. Vita taxes Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. Vita taxes No deduction allowed. Vita taxes   You cannot deduct the contribution to the first IRA. Vita taxes Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA. Vita taxes Required notifications. Vita taxes   To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. Vita taxes You must make the notifications by the date of the transfer. Vita taxes Only one notification is required if both IRAs are maintained by the same trustee. Vita taxes The notification(s) must include all of the following information. Vita taxes The type and amount of the contribution to the first IRA that is to be recharacterized. Vita taxes The date on which the contribution was made to the first IRA and the year for which it was made. Vita taxes A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. Vita taxes The name of the trustee of the first IRA and the name of the trustee of the second IRA. Vita taxes Any additional information needed to make the transfer. Vita taxes Reporting a recharacterization. Vita taxes   If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. Vita taxes You must treat the contribution as having been made to the second IRA. Vita taxes When Can You Withdraw or Use IRA Assets? There are rules limiting use of your IRA assets and distributions from it. Vita taxes Violation of the rules generally results in additional taxes in the year of violation. Vita taxes See What Acts Result in Penalties or Additional Taxes , later. Vita taxes Contributions returned before the due date of return. Vita taxes   If you made IRA contributions in 2013, you can withdraw them tax free by the due date of your return. Vita taxes If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. Vita taxes You can do this if, for each contribution you withdraw, both of the following conditions apply. Vita taxes You did not take a deduction for the contribution. Vita taxes You withdraw any interest or other income earned on the contribution. Vita taxes You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Vita taxes If there was a loss, the net income earned on the contribution may be a negative amount. Vita taxes Note. Vita taxes To calculate the amount you must withdraw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Publication 590. Vita taxes Earnings includible in income. Vita taxes   You must include in income any earnings on the contributions you withdraw. Vita taxes Include the earnings in income for the year in which you made the contributions, not in the year in which you withdraw them. Vita taxes Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. Vita taxes Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes?, later. Vita taxes    Early distributions tax. Vita taxes   The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. Vita taxes However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. Vita taxes When Must You Withdraw IRA Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. Vita taxes Eventually they must be distributed. Vita taxes If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. Vita taxes See Excess Accumulations (Insufficient Distributions) , later. Vita taxes The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the beneficiary of a decedent's IRA. Vita taxes Required minimum distribution. Vita taxes   The amount that must be distributed each year is referred to as the required minimum distribution. Vita taxes Required distributions not eligible for rollover. Vita taxes   Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. Vita taxes IRA owners. Vita taxes   If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Vita taxes April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. Vita taxes Distributions by the required beginning date. Vita taxes   You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). Vita taxes If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year. Vita taxes   If an IRA owner dies after reaching age 70½, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. Vita taxes Even if you begin receiving distributions before you attain age 70½, you must begin calculating and receiving required minimum distributions by your required beginning date. Vita taxes Distributions after the required beginning date. Vita taxes   The required minimum distribution for any year after the year you turn 70½ must be made by December 31 of that later year. Vita taxes    Beneficiaries. Vita taxes   If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions. Vita taxes More information. Vita taxes   For more information, including how to figure your minimum required distribution each year and how to figure your required distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Vita taxes Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. Vita taxes Exceptions. Vita taxes   Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: Rollovers, Qualified charitable distributions (QCD), discussed later, Tax-free withdrawals of contributions, discussed earlier, and The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable . Vita taxes    Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Vita taxes Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Vita taxes Qualified charitable distributions (QCD). Vita taxes   A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax-deductible contributions. Vita taxes Special rules apply if you made a qualified charitable distribution in January 2013 that you elected to treat as made in 2012. Vita taxes See Qualified Charitable Distributions in Publication 590 for more information. Vita taxes Ordinary income. Vita taxes   Distributions from traditional IRAs that you include in income are taxed as ordinary income. Vita taxes No special treatment. Vita taxes   In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. Vita taxes Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. Vita taxes Fully taxable. Vita taxes   If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Vita taxes Because you have no basis in your IRA, any distributions are fully taxable when received. Vita taxes See Reporting taxable distributions on your return , later. Vita taxes Partly taxable. Vita taxes    If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. Vita taxes These nondeductible contributions are not taxed when they are distributed to you. Vita taxes They are a return of your investment in your IRA. Vita taxes   Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. Vita taxes If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Vita taxes Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. Vita taxes Form 8606. Vita taxes   You must complete Form 8606 and attach it to your return if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Vita taxes Using the form, you will figure the nontaxable distributions for 2013 and your total IRA basis for 2013 and earlier years. Vita taxes Note. Vita taxes If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 8606. Vita taxes Send it to the IRS at the time and place you would otherwise file an income tax return. Vita taxes Distributions reported on Form 1099-R. Vita taxes   If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Vita taxes , or a similar statement. Vita taxes IRA distributions are shown in boxes 1 and 2a of Form 1099-R. Vita taxes A number or letter code in box 7 tells you what type of distribution you received from your IRA. Vita taxes Withholding. Vita taxes   Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. Vita taxes See chapter 4. Vita taxes IRA distributions delivered outside the United States. Vita taxes   In general, if you are a U. Vita taxes S. Vita taxes citizen or resident alien and your home address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. Vita taxes Reporting taxable distributions on your return. Vita taxes    Report fully taxable distributions, including early distributions on Form 1040, line 15b, or Form 1040A, line 11b (no entry is required on Form 1040, line 15a, or Form 1040A, line 11a). Vita taxes If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a, or Form 1040A, line 11a, and the taxable part on Form 1040, line 15b, or Form 1040A, line 11b. Vita taxes You cannot report distributions on Form 1040EZ. Vita taxes What Acts Result in Penalties or Additional Taxes? The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. Vita taxes There are additions to the regular tax for using your IRA funds in prohibited transactions. Vita taxes There are also additional taxes for the following activities. Vita taxes Investing in collectibles. Vita taxes Making excess contributions. Vita taxes Taking early distributions. Vita taxes Allowing excess amounts to accumulate (failing to take required distributions). Vita taxes There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required. Vita taxes Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. Vita taxes Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). Vita taxes The following are examples of prohibited transactions with a traditional IRA. Vita taxes Borrowing money from it. Vita taxes Selling property to it. Vita taxes Receiving unreasonable compensation for managing it. Vita taxes Using it as security for a loan. Vita taxes Buying property for personal use (present or future) with IRA funds. Vita taxes Effect on an IRA account. Vita taxes   Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. Vita taxes Effect on you or your beneficiary. Vita taxes   If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. Vita taxes If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. Vita taxes For information on figuring your gain and reporting it in income, see Are Distributions Taxable , earlier. Vita taxes The distribution may be subject to additional taxes or penalties. Vita taxes Taxes on prohibited transactions. Vita taxes   If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. Vita taxes In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction is not corrected. Vita taxes More information. Vita taxes   For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Publication 590. Vita taxes Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. Vita taxes You may have to pay the 10% additional tax on early distributions, discussed later. Vita taxes Collectibles. Vita taxes   These include: Artworks, Rugs, Antiques, Metals, Gems, Stamps, Coins, Alcoholic beverages, and Certain other tangible personal property. Vita taxes Exception. Vita taxes    Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U. Vita taxes S. Vita taxes gold coins, or one-ounce silver coins minted by the Treasury Department. Vita taxes It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. Vita taxes Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of: The maximum deductible amount for the year. Vita taxes For 2013, this is $5,500 ($6,500 if you are 50 or older), or Your taxable compensation for the year. Vita taxes Tax on excess contributions. Vita taxes   In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. Vita taxes You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. Vita taxes The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. Vita taxes Excess contributions withdrawn by due date of return. Vita taxes   You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribution. Vita taxes You must complete your withdrawal by the date your tax return for that year is due, including extensions. Vita taxes How to treat withdrawn contributions. Vita taxes   Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both the following conditions are met. Vita taxes No deduction was allowed for the excess contribution. Vita taxes You withdraw the interest or other income earned on the excess contribution. Vita taxes You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Vita taxes If there was a loss, the net income you must withdraw may be a negative amount. Vita taxes How to treat withdrawn interest or other income. Vita taxes   You must include in your gross income the interest or other income that was earned on the excess contribution. Vita taxes Report it on your return for the year in which the excess contribution was made. Vita taxes Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discus