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Where To File 2012 Federal Tax Return

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Where To File 2012 Federal Tax Return

Where to file 2012 federal tax return Publication 939 - Main Content Table of Contents General Information Taxation of Periodic PaymentsInvestment in the Contract Expected Return Computation Under the General Rule How To Use Actuarial TablesUnisex Annuity Tables Special Elections Worksheets for Determining Taxable Annuity Actuarial Tables Requesting a Ruling on Taxation of Annuity How To Get Tax HelpLow Income Taxpayer Clinics General Information Some of the terms used in this publication are defined in the following paragraphs. Where to file 2012 federal tax return A pension is generally a series of payments made to you after you retire from work. Where to file 2012 federal tax return Pension payments are made regularly and are for past services with an employer. Where to file 2012 federal tax return An annuity is a series of payments under a contract. Where to file 2012 federal tax return You can buy the contract alone or you can buy it with the help of your employer. Where to file 2012 federal tax return Annuity payments are made regularly for more than one full year. Where to file 2012 federal tax return Note. Where to file 2012 federal tax return Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. Where to file 2012 federal tax return Types of pensions and annuities. Where to file 2012 federal tax return   Particular types of pensions and annuities include: Fixed period annuities. Where to file 2012 federal tax return You receive definite amounts at regular intervals for a definite length of time. Where to file 2012 federal tax return Annuities for a single life. Where to file 2012 federal tax return You receive definite amounts at regular intervals for life. Where to file 2012 federal tax return The payments end at death. Where to file 2012 federal tax return Joint and survivor annuities. Where to file 2012 federal tax return The first annuitant receives a definite amount at regular intervals for life. Where to file 2012 federal tax return After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Where to file 2012 federal tax return The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Where to file 2012 federal tax return Variable annuities. Where to file 2012 federal tax return You receive payments that may vary in amount for a definite length of time or for life. Where to file 2012 federal tax return The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. Where to file 2012 federal tax return Disability pensions. Where to file 2012 federal tax return You are under minimum retirement age and receive payments because you retired on disability. Where to file 2012 federal tax return If, at the time of your retirement, you were permanently and totally disabled, you may be eligible for the credit for the elderly or the disabled discussed in Publication 524. Where to file 2012 federal tax return If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. Where to file 2012 federal tax return A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries. Where to file 2012 federal tax return This plan must meet Internal Revenue Code requirements. Where to file 2012 federal tax return It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. Where to file 2012 federal tax return However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. Where to file 2012 federal tax return A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Where to file 2012 federal tax return A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. Where to file 2012 federal tax return   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. Where to file 2012 federal tax return A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. Where to file 2012 federal tax return It does not qualify for most of the tax benefits of a qualified plan. Where to file 2012 federal tax return Annuity worksheets. Where to file 2012 federal tax return   The worksheets found near the end of the text of this publication may be useful to you in figuring the taxable part of your annuity. Where to file 2012 federal tax return Request for a ruling. Where to file 2012 federal tax return   If you are unable to determine the income tax treatment of your pension or annuity, you may ask the Internal Revenue Service to figure the taxable part of your annuity payments. Where to file 2012 federal tax return This is treated as a request for a ruling. Where to file 2012 federal tax return See Requesting a Ruling on Taxation of Annuity near the end of this publication. Where to file 2012 federal tax return Withholding tax and estimated tax. Where to file 2012 federal tax return   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. Where to file 2012 federal tax return If you choose not to have tax withheld from your pension or annuity, or if you do not have enough income tax withheld, you may have to make estimated tax payments. Where to file 2012 federal tax return Taxation of Periodic Payments This section explains how the periodic payments you receive under a pension or annuity plan are taxed under the General Rule. Where to file 2012 federal tax return Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Where to file 2012 federal tax return These payments are also known as amounts received as an annuity. Where to file 2012 federal tax return If you receive an amount from your plan that is a nonperiodic payment (amount not received as an annuity), see Taxation of Nonperiodic Payments in Publication 575. Where to file 2012 federal tax return In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. Where to file 2012 federal tax return The amount of each payment that is more than the part that represents your net cost is taxable. Where to file 2012 federal tax return Under the General Rule, the part of each annuity payment that represents your net cost is in the same proportion that your investment in the contract is to your expected return. Where to file 2012 federal tax return These terms are explained in the following discussions. Where to file 2012 federal tax return Investment in the Contract In figuring how much of your pension or annuity is taxable under the General Rule, you must figure your investment in the contract. Where to file 2012 federal tax return First, find your net cost of the contract as of the annuity starting date (defined later). Where to file 2012 federal tax return To find this amount, you must first figure the total premiums, contributions, or other amounts paid. Where to file 2012 federal tax return This includes the amounts your employer contributed if you were required to include these amounts in income. Where to file 2012 federal tax return It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). Where to file 2012 federal tax return From this total cost you subtract: Any refunded premiums, rebates, dividends, or unrepaid loans (any of which were not included in your income) that you received by the later of the annuity starting date or the date on which you received your first payment. Where to file 2012 federal tax return Any additional premiums paid for double indemnity or disability benefits. Where to file 2012 federal tax return Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). Where to file 2012 federal tax return The annuity starting date   is the later of the first day of the first period for which you receive payment under the contract or the date on which the obligation under the contract becomes fixed. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return On January 1 you completed all your payments required under an annuity contract providing for monthly payments starting on August 1, for the period beginning July 1. Where to file 2012 federal tax return The annuity starting date is July 1. Where to file 2012 federal tax return This is the date you use in figuring your investment in the contract and your expected return (discussed later). Where to file 2012 federal tax return Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. Where to file 2012 federal tax return Foreign employment. Where to file 2012 federal tax return   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. Where to file 2012 federal tax return The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (without regard to the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer on your behalf if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) if the contributions would be excludible from your gross income had they been paid directly to you. Where to file 2012 federal tax return Foreign employment contributions while a nonresident alien. Where to file 2012 federal tax return   In determining your cost, special rules apply if you are a U. Where to file 2012 federal tax return S. Where to file 2012 federal tax return citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. Where to file 2012 federal tax return Your contributions and your employer's contributions are not included in your cost if the contributions: Were made based on compensation which was for services performed outside the United States which you were a nonresident alien, and Were not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if they had been paid as cash compensation when the services were performed. Where to file 2012 federal tax return Death benefit exclusion. Where to file 2012 federal tax return   If you are the beneficiary of a deceased employee (or former employee), who died before August 21, 1996, you may qualify for a death benefit exclusion of up to $5,000. Where to file 2012 federal tax return The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. Where to file 2012 federal tax return How to adjust your total cost. Where to file 2012 federal tax return   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. Where to file 2012 federal tax return Add it to the cost or unrecovered cost of the annuity at the annuity starting date. Where to file 2012 federal tax return See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. Where to file 2012 federal tax return Net cost. Where to file 2012 federal tax return   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. Where to file 2012 federal tax return This is the unrecovered investment in the contract as of the annuity starting date. Where to file 2012 federal tax return If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. Where to file 2012 federal tax return Refund feature. Where to file 2012 federal tax return   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. Where to file 2012 federal tax return Your annuity contract has a refund feature if: The expected return ( discussed later) of an annuity depends entirely or partly on the life of one or more individuals, The contract provides that payments will be made to a beneficiary or the estate of an annuitant on or after the death of the annuitant if a stated amount or a stated number of payments has not been paid to the annuitant or annuitants before death, and The payments are a refund of the amount you paid for the annuity contract. Where to file 2012 federal tax return   If your annuity has a refund feature, you must reduce your net cost of the contract by the value of the refund feature (figured using Table III or VII at the end of this publication, also see How To Use Actuarial Tables , later) to find the investment in the contract. Where to file 2012 federal tax return Zero value of refund feature. Where to file 2012 federal tax return   For a joint and survivor annuity, the value of the refund feature is zero if: Both annuitants are age 74 or younger, The payments are guaranteed for less than 2½ years, and The survivor's annuity is at least 50% of the first annuitant's annuity. Where to file 2012 federal tax return   For a single-life annuity without survivor benefit, the value of the refund feature is zero if: The payments are guaranteed for less than 2½ years, and The annuitant is: Age 57 or younger (if using the new (unisex) annuity tables), Age 42 or younger (if male and using the old annuity tables), or Age 47 or younger (if female and using the old annuity tables). Where to file 2012 federal tax return   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. Where to file 2012 federal tax return Examples. Where to file 2012 federal tax return The first example shows how to figure the value of the refund feature when there is only one beneficiary. Where to file 2012 federal tax return Example 2 shows how to figure the value of the refund feature when the contract provides, in addition to a whole life annuity, one or more temporary life annuities for the lives of children. Where to file 2012 federal tax return In both examples, the taxpayer elects to use Tables V through VIII. Where to file 2012 federal tax return If you need the value of the refund feature for a joint and survivor annuity, write to the Internal Revenue Service as explained under Requesting a Ruling on Taxation of Annuity near the end of this publication. Where to file 2012 federal tax return Example 1. Where to file 2012 federal tax return At age 65, Barbara bought for $21,053 an annuity with a refund feature. Where to file 2012 federal tax return She will get $100 a month for life. Where to file 2012 federal tax return Barbara's contract provides that if she does not live long enough to recover the full $21,053, similar payments will be made to her surviving beneficiary until a total of $21,053 has been paid under the contract. Where to file 2012 federal tax return In this case, the contract cost and the total guaranteed return are the same ($21,053). Where to file 2012 federal tax return Barbara's investment in the contract is figured as follows: Net cost $21,053 Amount to be received annually $1,200   Number of years for which payment is guaranteed ($21,053 divided by $1,200) 17. Where to file 2012 federal tax return 54   Rounded to nearest whole number of years 18   Percentage from Actuarial Table VII for age 65 with 18 years of guaranteed payments 15%   Value of the refund feature (rounded to the nearest dollar)—15% of $21,053 3,158 Investment in the contract, adjusted for value of refund feature $17,895       If the total guaranteed return were less than the $21,053 net cost of the contract, Barbara would apply the appropriate percentage from the tables to the lesser amount. Where to file 2012 federal tax return For example, if the contract guaranteed the $100 monthly payments for 17 years to Barbara's estate or beneficiary if she were to die before receiving all the payments for that period, the total guaranteed return would be $20,400 ($100 × 12 × 17 years). Where to file 2012 federal tax return In this case, the value of the refund feature would be $2,856 (14% of $20,400) and Barbara's investment in the contract would be $18,197 ($21,053 minus $2,856) instead of $17,895. Where to file 2012 federal tax return Example 2. Where to file 2012 federal tax return John died while still employed. Where to file 2012 federal tax return His widow, Eleanor, age 48, receives $171 a month for the rest of her life. Where to file 2012 federal tax return John's son, Elmer, age 9, receives $50 a month until he reaches age 18. Where to file 2012 federal tax return John's contributions to the retirement fund totaled $7,559. Where to file 2012 federal tax return 45, with interest on those contributions of $1,602. Where to file 2012 federal tax return 53. Where to file 2012 federal tax return The guarantee or total refund feature of the contract is $9,161. Where to file 2012 federal tax return 98 ($7,559. Where to file 2012 federal tax return 45 plus $1,602. Where to file 2012 federal tax return 53). Where to file 2012 federal tax return The adjustment in the investment in the contract is figured as follows: A) Expected return:*       1) Widow's expected return:         Annual annuity ($171 × 12) $2,052       Multiplied by factor from Table V         (nearest age 48) 34. Where to file 2012 federal tax return 9 $71,614. Where to file 2012 federal tax return 80   2) Child's expected return:         Annual annuity ($50 × 12) $600       Multiplied by factor from         Table VIII (nearest age 9         for term of 9 years) 9. Where to file 2012 federal tax return 0 5,400. Where to file 2012 federal tax return 00   3) Total expected return   $77,014. Where to file 2012 federal tax return 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. Where to file 2012 federal tax return 45   2) Guaranteed amount (contributions of $7,559. Where to file 2012 federal tax return 45 plus interest of $1,602. Where to file 2012 federal tax return 53) $9,161. Where to file 2012 federal tax return 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. Where to file 2012 federal tax return 00   4) Net guaranteed amount $3,761. Where to file 2012 federal tax return 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. Where to file 2012 federal tax return 98 at $171 a month to nearest whole year)) 0%   6) Adjustment required for value of refund feature rounded to the nearest whole dollar  (0% × $3,761. Where to file 2012 federal tax return 98, the smaller of B(3) or B(6)) 0 *Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Where to file 2012 federal tax return See the discussion of expected return, later in this publication. Where to file 2012 federal tax return Free IRS help. Where to file 2012 federal tax return   If you need to request assistance to figure the value of the refund feature, see Requesting a Ruling on Taxation of Annuity near the end of this publication. Where to file 2012 federal tax return Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Where to file 2012 federal tax return The following discussions explain how to figure the expected return with each type of annuity. Where to file 2012 federal tax return A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. Where to file 2012 federal tax return Fixed period annuity. Where to file 2012 federal tax return   If you will get annuity payments for a fixed number of years, without regard to your life expectancy, you must figure your expected return based on that fixed number of years. Where to file 2012 federal tax return It is the total amount you will get beginning at the annuity starting date. Where to file 2012 federal tax return You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). Where to file 2012 federal tax return To figure your expected return, multiply the fixed number of months for which payments are to be made by the amount of the payment specified for each period. Where to file 2012 federal tax return Single life annuity. Where to file 2012 federal tax return   If you are to get annuity payments for the rest of your life, find your expected return as follows. Where to file 2012 federal tax return You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. Where to file 2012 federal tax return These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). Where to file 2012 federal tax return   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. Where to file 2012 federal tax return See Adjustments to Tables I, II, V, VI, and VIA following Table I. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return Henry bought an annuity contract that will give him an annuity of $500 a month for his life. Where to file 2012 federal tax return If at the annuity starting date Henry's nearest birthday is 66, the expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table V, age 66 × 19. Where to file 2012 federal tax return 2 Expected return $115,200 If the payments were to be made to Henry quarterly and the first payment was made one full month after the annuity starting date, Henry would adjust the 19. Where to file 2012 federal tax return 2 multiple by +. Where to file 2012 federal tax return 1. Where to file 2012 federal tax return His expected return would then be $115,800 ($6,000 × 19. Where to file 2012 federal tax return 3). Where to file 2012 federal tax return Annuity for shorter of life or specified period. Where to file 2012 federal tax return   With this type of annuity, you are to get annuity payments either for the rest of your life or until the end of a specified period, whichever period is shorter. Where to file 2012 federal tax return To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. Where to file 2012 federal tax return Find the proper multiple based on your sex (if using Table IV), your age at the annuity starting date, and the nearest whole number of years in the specified period. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. Where to file 2012 federal tax return She was age 65 at her birthday nearest the annuity starting date. Where to file 2012 federal tax return She figures the expected return as follows: Annual payment ($200 × 12 months) $2,400 Multiple shown in Table VIII, age 65, 5-year term × 4. Where to file 2012 federal tax return 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. Where to file 2012 federal tax return See Special Elections, later. Where to file 2012 federal tax return Joint and survivor annuities. Where to file 2012 federal tax return   If you have an annuity that pays you a periodic income for life and after your death provides an identical lifetime periodic income to your spouse (or some other person), you figure the expected return based on your combined life expectancies. Where to file 2012 federal tax return To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. Where to file 2012 federal tax return If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. Where to file 2012 federal tax return See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return John bought a joint and survivor annuity providing payments of $500 a month for his life, and, after his death, $500 a month for the remainder of his wife's life. Where to file 2012 federal tax return At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. Where to file 2012 federal tax return The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. Where to file 2012 federal tax return 0 Expected return $132,000 Different payments to survivor. Where to file 2012 federal tax return   If your contract provides that payments to a survivor annuitant will be different from the amount you receive, you must use a computation which accounts for both the joint lives of the annuitants and the life of the survivor. Where to file 2012 federal tax return Example 1. Where to file 2012 federal tax return Gerald bought a contract providing for payments to him of $500 a month for life and, after his death, payments to his wife, Mary, of $350 a month for life. Where to file 2012 federal tax return If, at the annuity starting date, Gerald's nearest birthday is 70 and Mary's is 67, the expected return under the contract is figured as follows: Combined multiple for Gerald and Mary, ages 70 and 67 (from Table VI)   22. Where to file 2012 federal tax return 0 Multiple for Gerald, age 70 (from Table V)   16. Where to file 2012 federal tax return 0 Difference: Multiple applicable to Mary   6. Where to file 2012 federal tax return 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. Where to file 2012 federal tax return 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. Where to file 2012 federal tax return 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. Where to file 2012 federal tax return Your husband died while still employed. Where to file 2012 federal tax return Under the terms of his employer's retirement plan, you are entitled to get an immediate annuity of $400 a month for the rest of your life or until you remarry. Where to file 2012 federal tax return Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. Where to file 2012 federal tax return You were 50 years old at the annuity starting date. Where to file 2012 federal tax return Marie was 16 and Jean was 14. Where to file 2012 federal tax return Using the multiples shown in Tables V and VIII at the end of this publication, the total expected return on the annuity starting date is $169,680, figured as follows: Widow, age 50 (multiple from Table V—33. Where to file 2012 federal tax return 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. Where to file 2012 federal tax return 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. Where to file 2012 federal tax return 0 × $1,800 annual payment) 7,200 Total expected return $169,680 No computation of expected return is made based on your husband's age at the date of death because he died before the annuity starting date. Where to file 2012 federal tax return Computation Under the General Rule Note. Where to file 2012 federal tax return Variable annuities use a different computation for determining the exclusion amounts. Where to file 2012 federal tax return See Variable annuities later. Where to file 2012 federal tax return Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. Where to file 2012 federal tax return   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. Where to file 2012 federal tax return See Death benefit exclusion , earlier. Where to file 2012 federal tax return Step 2. Where to file 2012 federal tax return   Figure your expected return. Where to file 2012 federal tax return Step 3. Where to file 2012 federal tax return   Divide Step 1 by Step 2 and round to three decimal places. Where to file 2012 federal tax return This will give you the exclusion percentage. Where to file 2012 federal tax return Step 4. Where to file 2012 federal tax return   Multiply the exclusion percentage by the first regular periodic payment. Where to file 2012 federal tax return The result is the tax-free part of each pension or annuity payment. Where to file 2012 federal tax return   The tax-free part remains the same even if the total payment increases due to variation in the annuity amount such as cost of living increases, or you outlive the life expectancy factor used. Where to file 2012 federal tax return However, if your annuity starting date is after 1986, the total amount of annuity income that is tax free over the years cannot exceed your net cost. Where to file 2012 federal tax return   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. Where to file 2012 federal tax return Step 5. Where to file 2012 federal tax return   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. Where to file 2012 federal tax return This will give you the tax-free part of the total payment for the year. Where to file 2012 federal tax return    In the first year of your annuity, your first payment or part of your first payment may be for a fraction of the payment period. Where to file 2012 federal tax return This fractional amount is multiplied by your exclusion percentage to get the tax-free part. Where to file 2012 federal tax return Step 6. Where to file 2012 federal tax return   Subtract the tax-free part from the total payment you received. Where to file 2012 federal tax return The rest is the taxable part of your pension or annuity. Where to file 2012 federal tax return Example 1. Where to file 2012 federal tax return You purchased an annuity with an investment in the contract of $10,800. Where to file 2012 federal tax return Under its terms, the annuity will pay you $100 a month for life. Where to file 2012 federal tax return The multiple for your age (age 65) is 20. Where to file 2012 federal tax return 0 as shown in Table V. Where to file 2012 federal tax return Your expected return is $24,000 (20 × 12 × $100). Where to file 2012 federal tax return Your cost of $10,800, divided by your expected return of $24,000, equals 45. Where to file 2012 federal tax return 0%. Where to file 2012 federal tax return This is the percentage you will not have to include in income. Where to file 2012 federal tax return Each year, until your net cost is recovered, $540 (45% of $1,200) will be tax free and you will include $660 ($1,200 − $540) in your income. Where to file 2012 federal tax return If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). Where to file 2012 federal tax return Example 2. Where to file 2012 federal tax return Gerald bought a joint and survivor annuity. Where to file 2012 federal tax return Gerald's investment in the contract is $62,712 and the expected return is $121,200. Where to file 2012 federal tax return The exclusion percentage is 51. Where to file 2012 federal tax return 7% ($62,712 ÷ $121,200). Where to file 2012 federal tax return Gerald will receive $500 a month ($6,000 a year). Where to file 2012 federal tax return Each year, until his net cost is recovered, $3,102 (51. Where to file 2012 federal tax return 7% of his total payments received of $6,000) will be tax free and $2,898 ($6,000 − $3,102) will be included in his income. Where to file 2012 federal tax return If Gerald dies, his wife will receive $350 a month ($4,200 a year). Where to file 2012 federal tax return If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. Where to file 2012 federal tax return 7%). Where to file 2012 federal tax return Each year, until the entire net cost is recovered, his wife will receive $2,171. Where to file 2012 federal tax return 40 (51. Where to file 2012 federal tax return 7% of her payments received of $4,200) tax free. Where to file 2012 federal tax return She will include $2,028. Where to file 2012 federal tax return 60 ($4,200 − $2,171. Where to file 2012 federal tax return 40) in her income tax return. Where to file 2012 federal tax return Example 3. Where to file 2012 federal tax return Using the same facts as Example 2 under Different payments to survivor, you are to receive an annual annuity of $4,800 until you die or remarry. Where to file 2012 federal tax return Your two daughters each receive annual annuities of $1,800 until they reach age 18. Where to file 2012 federal tax return Your husband contributed $25,576 to the plan. Where to file 2012 federal tax return You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. Where to file 2012 federal tax return Adjusted Investment in the Contract Contributions $25,576 Plus: Death benefit exclusion 5,000 Adjusted investment in the contract $30,576 The total expected return, as previously figured (in Example 2 under Different payments to survivor), is $169,680. Where to file 2012 federal tax return The exclusion percentage of 18. Where to file 2012 federal tax return 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. Where to file 2012 federal tax return Each full year $864 (18. Where to file 2012 federal tax return 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. Where to file 2012 federal tax return Each year, until age 18, $324 (18. Where to file 2012 federal tax return 0% × $1,800) of each of your daughters' payments will be tax free and each must include the balance, $1,476, as income on her own income tax return. Where to file 2012 federal tax return Part-year payments. Where to file 2012 federal tax return   If you receive payments for only part of a year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments received during the year. Where to file 2012 federal tax return   If you receive amounts during the year that represent 12 payments, one for each month in that year, and an amount that represents payments for months in a prior year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments the amounts received represent. Where to file 2012 federal tax return For instance, if you received amounts during the year that represent the 12 payments for that year plus an amount that represents three payments for a prior year, multiply that amount by the 15 (12 + 3) payments received that the year. Where to file 2012 federal tax return   If you received a fractional payment, follow Step 5, discussed earlier. Where to file 2012 federal tax return This gives you the tax-free part of your total payment. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. Where to file 2012 federal tax return The applicable multiple from Table V is 23. Where to file 2012 federal tax return 3 (age 61). Where to file 2012 federal tax return Her expected return is $34,950 ($125 × 12 × 23. Where to file 2012 federal tax return 3). Where to file 2012 federal tax return Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. Where to file 2012 federal tax return 1%. Where to file 2012 federal tax return Each payment received will consist of 63. Where to file 2012 federal tax return 1% return of cost and 36. Where to file 2012 federal tax return 9% taxable income, until her net cost of the contract is fully recovered. Where to file 2012 federal tax return During the first year, Mary received three payments of $125, or $375, of which $236. Where to file 2012 federal tax return 63 (63. Where to file 2012 federal tax return 1% × $375) is a return of cost. Where to file 2012 federal tax return The remaining $138. Where to file 2012 federal tax return 37 is included in income. Where to file 2012 federal tax return Increase in annuity payments. Where to file 2012 federal tax return   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. Where to file 2012 federal tax return All increases in the installment payments are fully taxable. Where to file 2012 federal tax return   However, if your annuity payments are scheduled to increase at a definite date in the future you must figure the expected return for that annuity using the method described in section 1. Where to file 2012 federal tax return 72-5(a)(5) of the regulations. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. Where to file 2012 federal tax return In figuring the taxable part, Joe elects to use Tables V through VIII. Where to file 2012 federal tax return The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. Where to file 2012 federal tax return His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. Where to file 2012 federal tax return 0 × $1,764 annual payment). Where to file 2012 federal tax return The exclusion percentage is $7,938 ÷ $35,280, or 22. Where to file 2012 federal tax return 5%. Where to file 2012 federal tax return During the year he received 11 monthly payments of $147, or $1,617. Where to file 2012 federal tax return Of this amount, 22. Where to file 2012 federal tax return 5% × $147 × 11 ($363. Where to file 2012 federal tax return 83) is tax free as a return of cost and the balance of $1,253. Where to file 2012 federal tax return 17 is taxable. Where to file 2012 federal tax return Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). Where to file 2012 federal tax return The tax-free part is still only 22. Where to file 2012 federal tax return 5% of the annuity payments as of the annuity starting date (22. Where to file 2012 federal tax return 5% × $147 × 12 = $396. Where to file 2012 federal tax return 90 for a full year). Where to file 2012 federal tax return The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. Where to file 2012 federal tax return Variable annuities. Where to file 2012 federal tax return   For variable annuity payments, figure the amount of each payment that is tax free by dividing your investment in the contract (adjusted for any refund feature) by the total number of periodic payments you expect to get under the contract. Where to file 2012 federal tax return   If the annuity is for a definite period, you determine the total number of payments by multiplying the number of payments to be made each year by the number of years you will receive payments. Where to file 2012 federal tax return If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return Frank purchased a variable annuity at age 65. Where to file 2012 federal tax return The total cost of the contract was $12,000. Where to file 2012 federal tax return The annuity starting date is January 1 of the year of purchase. Where to file 2012 federal tax return His annuity will be paid, starting July 1, in variable annual installments for his life. Where to file 2012 federal tax return The tax-free amount of each payment, until he has recovered his cost of his contract, is: Investment in the contract $12,000 Number of expected annual payments (multiple for age 65 from Table V) 20 Tax-free amount of each payment ($12,000 ÷ 20) $600 If Frank's first payment is $920, he includes only $320 ($920 − $600) in his gross income. Where to file 2012 federal tax return   If the tax-free amount for a year is more than the payments you receive in that year, you may choose, when you receive the next payment, to refigure the tax-free part. Where to file 2012 federal tax return Divide the amount of the periodic tax-free part that is more than the payment you received by the remaining number of payments you expect. Where to file 2012 federal tax return The result is added to the previously figured periodic tax-free part. Where to file 2012 federal tax return The sum is the amount of each future payment that will be tax free. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return Using the facts of the previous example about Frank, assume that after Frank's $920 payment, he received $500 in the following year, and $1,200 in the year after that. Where to file 2012 federal tax return Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. Where to file 2012 federal tax return Since the $500 payment is less than the $600 annual tax-free amount, he may choose to refigure his tax-free part when he receives his $1,200 (third year) payment, as follows: Amount tax free in second year $600. Where to file 2012 federal tax return 00 Amount received in second year 500. Where to file 2012 federal tax return 00 Difference $100. Where to file 2012 federal tax return 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. Where to file 2012 federal tax return 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. Where to file 2012 federal tax return 4) $5. Where to file 2012 federal tax return 43 Revised annual tax-free part for third and later years ($600 + $5. Where to file 2012 federal tax return 43) $605. Where to file 2012 federal tax return 43 Amount taxable in third year ($1,200 − $605. Where to file 2012 federal tax return 43) $594. Where to file 2012 federal tax return 57 If you choose to refigure your tax-free amount,   you must file a statement with your income tax return stating that you are refiguring the tax-free amount in accordance with the rules of section 1. Where to file 2012 federal tax return 72–4(d)(3) of the Income Tax Regulations. Where to file 2012 federal tax return The statement must also show the following information: The annuity starting date and your age on that date. Where to file 2012 federal tax return The first day of the first period for which you received an annuity payment in the current year. Where to file 2012 federal tax return Your investment in the contract as originally figured. Where to file 2012 federal tax return The total of all amounts received tax free under the annuity from the annuity starting date through the first day of the first period for which you received an annuity payment in the current tax year. Where to file 2012 federal tax return Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. Where to file 2012 federal tax return Exclusion limited to net cost. Where to file 2012 federal tax return   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a return of your cost cannot exceed your net cost (figured without any reduction for a refund feature). Where to file 2012 federal tax return This is the unrecovered investment in the contract as of the annuity starting date. Where to file 2012 federal tax return   If your annuity starting date is after July 1, 1986, any unrecovered net cost at your (or last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Where to file 2012 federal tax return This deduction is not subject to the 2%-of-adjusted-gross-income limit. Where to file 2012 federal tax return Example 1. Where to file 2012 federal tax return Your annuity starting date is after 1986. Where to file 2012 federal tax return Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. Where to file 2012 federal tax return There is no refund feature. Where to file 2012 federal tax return Your monthly annuity payment is $833. Where to file 2012 federal tax return 33. Where to file 2012 federal tax return Your exclusion ratio is 12% and you exclude $100 a month. Where to file 2012 federal tax return Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. Where to file 2012 federal tax return Thereafter, your annuity payments are fully taxable. Where to file 2012 federal tax return Example 2. Where to file 2012 federal tax return The facts are the same as in Example 1, except that there is a refund feature, and you die after 5 years with no surviving annuitant. Where to file 2012 federal tax return The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. Where to file 2012 federal tax return The exclusion ratio is 10. Where to file 2012 federal tax return 8%, and your monthly exclusion is $90. Where to file 2012 federal tax return After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). Where to file 2012 federal tax return An itemized deduction for the unrecovered net cost of $4,600 ($10,000 net cost minus $5,400) may be taken on your final income tax return. Where to file 2012 federal tax return Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. Where to file 2012 federal tax return Exclusion not limited to net cost. Where to file 2012 federal tax return   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. Where to file 2012 federal tax return If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. Where to file 2012 federal tax return The total exclusion may be more than your investment in the contract. Where to file 2012 federal tax return How To Use Actuarial Tables In figuring, under the General Rule, the taxable part of your annuity payments that you are to get for the rest of your life (rather than for a fixed number of years), you must use one or more of the actuarial tables in this publication. Where to file 2012 federal tax return Unisex Annuity Tables Effective July 1, 1986, the Internal Revenue Service adopted new annuity Tables V through VIII, in which your sex is not considered when determining the applicable factor. Where to file 2012 federal tax return These tables correspond to the old Tables I through IV. Where to file 2012 federal tax return In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. Where to file 2012 federal tax return If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. Where to file 2012 federal tax return However, if you received an annuity payment after June 30, 1986, you may elect to use Tables V through VIII (see Annuity received after June 30, 1986, later). Where to file 2012 federal tax return Special Elections Although you generally must use Tables V through VIII if you made contributions to the retirement plan after June 30, 1986, and Tables I through IV if you made no contributions after June 30, 1986, you can make the following special elections to select which tables to use. Where to file 2012 federal tax return Contributions made both before July 1986 and after June 1986. Where to file 2012 federal tax return   If you made contributions to the retirement plan both before July 1986 and after June 1986, you may elect to use Tables I through IV for the pre-July 1986 cost of the contract, and Tables V through VIII for the post-June 1986 cost. Where to file 2012 federal tax return (See the examples below. Where to file 2012 federal tax return )    Making the election. Where to file 2012 federal tax return Attach this statement to your income tax return for the first year in which you receive an annuity:    “I elect to apply the provisions of paragraph (d) of section 1. Where to file 2012 federal tax return 72–6 of the Income Tax Regulations. Where to file 2012 federal tax return ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. Where to file 2012 federal tax return   If your investment in the contract includes post-June 1986 contributions to the plan, and you do not make the election to use Tables I through IV and Tables V through VIII, then you can only use Tables V through VIII in figuring the taxable part of your annuity. Where to file 2012 federal tax return You must also use Tables V through VIII if you are unable or do not wish to determine the portions of your contributions which were made before July 1, 1986, and after June 30, 1986. Where to file 2012 federal tax return    Advantages of election. Where to file 2012 federal tax return In general, a lesser amount of each annual annuity payment is taxable if you separately figure your exclusion ratio for pre-July 1986 and post-June 1986 contributions. Where to file 2012 federal tax return    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. Where to file 2012 federal tax return If the death benefit exclusion applies (see discussion, earlier), you do not have to apportion it between the pre-July 1986 and the post-June 1986 investment in the contract. Where to file 2012 federal tax return   The following examples illustrate the separate computations required if you elect to use Tables I through IV for your pre-July 1986 investment in the contract and Tables V through VIII for your post-June 1986 investment in the contract. Where to file 2012 federal tax return Example 1. Where to file 2012 federal tax return Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. Where to file 2012 federal tax return Payment of the $42,000 contribution is guaranteed under a refund feature. Where to file 2012 federal tax return Bill is 55 years old as of the annuity starting date. Where to file 2012 federal tax return For figuring the taxable part of Bill's annuity, he chose to make separate computations for his pre-July 1986 investment in the contract of $41,300, and for his post-June 1986 investment in the contract of $700. Where to file 2012 federal tax return       Pre- July 1986   Post- June 1986 A. Where to file 2012 federal tax return Adjustment for refund feature         1) Net cost $41,300   $700   2) Annual annuity—$24,000  ($41,300/$42,000 × $24,000) $23,600       ($700/$42,000 × $24,000)     $400   3) Guarantee under contract $41,300   $700   4) No. Where to file 2012 federal tax return of years payments  guaranteed (rounded), A(3) ÷ A(2) 2   2   5) Applicable percentage from  Tables III and VII 1%   0%   6) Adjustment for value of refund  feature, A(5) × smaller of A(1)  or A(3) $413   $0 B. Where to file 2012 federal tax return Investment in the contract         1) Net cost $41,300   $700   2) Minus: Amount in A(6) 413   0   3) Investment in the contract $40,887   $700 C. Where to file 2012 federal tax return Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. Where to file 2012 federal tax return 7   28. Where to file 2012 federal tax return 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. Where to file 2012 federal tax return Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . Where to file 2012 federal tax return 079   . Where to file 2012 federal tax return 001   2) Tax-free part, C(1) × D(1) $1,896   $24 The tax-free part of Bill's total annuity is $1,920 ($1,896 plus $24). Where to file 2012 federal tax return The taxable part of his annuity is $22,080 ($24,000 minus $1,920). Where to file 2012 federal tax return If the annuity starting date is after 1986, the exclusion over the years cannot exceed the net cost (figured without any reduction for a refund feature). Where to file 2012 federal tax return Example 2. Where to file 2012 federal tax return Al is age 62 at his nearest birthday to the annuity starting date. Where to file 2012 federal tax return Al's wife is age 60 at her nearest birthday to the annuity starting date. Where to file 2012 federal tax return The joint and survivor annuity pays $1,000 per month to Al for life, and $500 per month to Al's surviving wife after his death. Where to file 2012 federal tax return The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. Where to file 2012 federal tax return Al makes the election described in Example 1 . Where to file 2012 federal tax return For purposes of this example, assume the refund feature adjustment is zero. Where to file 2012 federal tax return If an adjustment is required, IRS will figure the amount. Where to file 2012 federal tax return See Requesting a Ruling on Taxation of Annuity near the end of this publication. Where to file 2012 federal tax return       Pre-  July 1986   Post-  June 1986 A. Where to file 2012 federal tax return Adjustment for refund feature         1) Net cost $53,100   $7,000   2) Annual annuity—$12,000  ($53,100/$60,100 × $12,000) $10,602       ($7,000/$60,100 × $12,000)     $1,398   3) Guaranteed under the contract $53,100   $7,000   4) Number of years guaranteed,  rounded, A(3) ÷ A(2) 5   5   5) Applicable percentages 0%   0%   6) Refund feature adjustment, A(5) × smaller of A(1) or A(3) 0   0 B. Where to file 2012 federal tax return Investment in the contract         1) Net cost $53,100   $7,000   2) Refund feature adjustment 0   0   3) Investment in the contract adjusted for refund feature $53,100   $7,000 C. Where to file 2012 federal tax return Expected return         1) Multiple for both annuitants from Tables II and VI 25. Where to file 2012 federal tax return 4   28. Where to file 2012 federal tax return 8   2) Multiple for first annuitant from Tables I and V 16. Where to file 2012 federal tax return 9   22. Where to file 2012 federal tax return 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. Where to file 2012 federal tax return 5   6. Where to file 2012 federal tax return 3   4) Annual annuity to surviving annuitant $6,000   $6,000   5) Portion of expected return for surviving annuitant, C(4) × C(3) $51,000   $37,800   6) Annual annuity to first annuitant $12,000   $12,000   7) Plus: Portion of expected return for first annuitant, C(6) × C(2) $202,800   $270,000   8) Expected return for both annuitants, C(5) + C(7) $253,800   $307,800 D. Where to file 2012 federal tax return Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . Where to file 2012 federal tax return 209   . Where to file 2012 federal tax return 023   2) Retiree's tax-free part of annuity, C(6) × D(1) $2,508   $276   3) Survivor's tax-free part of annuity, C(4) × D(1) $1,254   $138 The tax-free part of Al's total annuity is $2,784 ($2,508 + $276). Where to file 2012 federal tax return The taxable part of his annuity is $9,216 ($12,000 − $2,784). Where to file 2012 federal tax return The exclusion over the years cannot exceed the net cost of the contract (figured without any reduction for a refund feature) if the annuity starting date is after 1986. Where to file 2012 federal tax return After Al's death, his widow will apply the same exclusion percentages (20. Where to file 2012 federal tax return 9% and 2. Where to file 2012 federal tax return 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. Where to file 2012 federal tax return Annuity received after June 30, 1986. Where to file 2012 federal tax return   If you receive an annuity payment after June 30, 1986, (regardless of your annuity starting date), you may elect to treat the entire cost of the contract as post-June 1986 cost (even if you made no post-June 1986 contributions to the plan) and use Tables V through VIII. Where to file 2012 federal tax return Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. Where to file 2012 federal tax return    Make the election by attaching the following statement to your income tax return. Where to file 2012 federal tax return    “I elect, under section 1. Where to file 2012 federal tax return 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. Where to file 2012 federal tax return ”   The statement must also include your name, address, and social security number. Where to file 2012 federal tax return   You should also indicate you are making this election if you are unable or do not wish to determine the parts of your contributions which were made before July 1, 1986, and after June 30, 1986. Where to file 2012 federal tax return Disqualifying form of payment or settlement. Where to file 2012 federal tax return   If your annuity starting date is after June 30, 1986, and the contract provides for a disqualifying form of payment or settlement, such as an option to receive a lump sum in full discharge of the obligation under the contract, the entire investment in the contract is treated as post-June 1986 investment in the contract. Where to file 2012 federal tax return See regulations section 1. Where to file 2012 federal tax return 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. Where to file 2012 federal tax return You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. Where to file 2012 federal tax return Worksheets for Determining Taxable Annuity Worksheets I and II. Where to file 2012 federal tax return   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. Where to file 2012 federal tax return 72–6(d)(6) Election. Where to file 2012 federal tax return Worksheet I For Determining Taxable Annuity Under Regulations Section 1. Where to file 2012 federal tax return 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. Where to file 2012 federal tax return   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Where to file 2012 federal tax return )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)   Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages* from Tables III and VII                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. Where to file 2012 federal tax return If not, the IRS will calculate the refund feature percentage. Where to file 2012 federal tax return             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Where to file 2012 federal tax return   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund feature:                   B(1) minus B(2)                             C. Where to file 2012 federal tax return   Expected Return             1)   Annual Annuity:                   12 times monthly annuity**             2)   Expected return multiples from Tables I and V             3)     Expected return:                   C(1) times C(2)                             D. Where to file 2012 federal tax return   Tax-Free Part of Annuity             1)     Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(3)             2)     Tax-free part of annuity:                   C(1) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. Where to file 2012 federal tax return     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. Where to file 2012 federal tax return 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. Where to file 2012 federal tax return   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Where to file 2012 federal tax return )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)     Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages*                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. Where to file 2012 federal tax return If not, the IRS will calculate the refund feature percentage. Where to file 2012 federal tax return             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Where to file 2012 federal tax return   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund future:                   B(1) minus B(2)                             C. Where to file 2012 federal tax return   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. Where to file 2012 federal tax return Tables I and VI             3)   Multiple for survivor:                   C(1) minus C(2)             4)   Annual annuity to survivor:                   12 times potential monthly rate for survivor**             5)   Expected return for survivor:                   C(3) times C(4)             6)   Annual annuity to retiree:                   12 times monthly rate for retiree**             7)   Expected return for retiree:                   C(2) times C(6)             8)   Total expected return:                   C(5) plus C(7)                             D. Where to file 2012 federal tax return   Tax-Free Part of Annuity             1)   Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(8)             2)   Retiree's tax-free part of annuity:                   C(6) times D(1)             3)   Survivor's tax-free part of annuity, if surviving after death of retiree:                   C(4) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. Where to file 2012 federal tax return   Actuarial Tables Please click here for the text description of the image. Where to file 2012 federal tax return Actuarial Tables Please click here for the text description of the image. Where to file 2012 federal tax return Actuarial Tables Please click here for the text description of the image. 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Where to file 2012 federal tax return   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. Where to file 2012 federal tax return You should call the IRS for the proper fee. Where to file 2012 federal tax return A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. Where to file 2012 federal tax return Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. Where to file 2012 federal tax return O. Where to file 2012 federal tax return Box 27063 McPherson Station Washington, DC 20038 The user fee is allowed as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit. Where to file 2012 federal tax return When to make the request. Where to file 2012 federal tax return   Please note that requests sent between February 1 and April 15 may experience some delay. Where to file 2012 federal tax return We process requests in the order received, and we will reply to your request as soon as we can process it. Where to file 2012 federal tax return If you do not receive your ruling by the required filing date, you may use Form 4868, Application for Automatic Extension of Time To File U. Where to file 2012 federal tax return S. Where to file 2012 federal tax return Individual Income Tax Return, to get an extension of time to file. Where to file 2012 federal tax return Information you must furnish. Where to file 2012 federal tax return   You must furnish the information listed below so the IRS can comply with your request. Where to file 2012 federal tax return Failure to furnish the information will result in a delay in processing your request. Where to file 2012 federal tax return Please send only copies of the following documents, as the IRS retains all material sent for its records: A letter explaining the question(s) you wish to have resolved or the information you need from the ruling. Where to file 2012 federal tax return Copies of any documents showing distributions, annuity rates, and annuity options available to you. Where to file 2012 federal tax return A copy of any Form 1099–R you received since your annuity began. Where to file 2012 federal tax return A statement indicating whether you have filed your return for the year for which you are making the request. Where to file 2012 federal tax return If you have requested an extension of time to file that return, please indicate the extension date. Where to file 2012 federal tax return Your daytime phone number. Where to file 2012 federal tax return Your current mailing address. Where to file 2012 federal tax return A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. Where to file 2012 federal tax return Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. Where to file 2012 federal tax return A completed Tax Information Sheet (or facsimile) shown on the next page. Where to file 2012 federal tax return Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. Where to file 2012 federal tax return This statement must be signed by the retiree or the survivor annuitant. Where to file 2012 federal tax return It cannot be signed by a representative. Where to file 2012 federal tax return Tax Information Sheet Please click here for the text description of the image. Where to file 2012 federal tax return Tax Information Sheet Please click here for the text description of the image. 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Where to file 2012 federal tax return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Where to file 2012 federal tax return It can take up to 3 weeks from the date you mailed it to show up in our system. Where to file 2012 federal tax return Make a payment using one of several safe and convenient electronic payment options available on IRS. Where to file 2012 federal tax return gov. Where to file 2012 federal tax return Select the Payment tab on the front page of IRS. Where to file 2012 federal tax return gov for more information. Where to file 2012 federal tax return Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Where to file 2012 federal tax return Figure your income tax withholding with the IRS Withholding Calculator on IRS. Where to file 2012 federal tax return gov. Where to file 2012 federal tax return Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Where to file 2012 federal tax return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Where to file 2012 federal tax return gov. Where to file 2012 federal tax return Request an Electronic Filing PIN by going to IRS. Where to file 2012 federal tax return gov and entering Electronic Filing PIN in the search box. Where to file 2012 federal tax return Download forms, instructions and publications, including accessible versions for people with disabilities. Where to file 2012 federal tax return Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Where to file 2012 federal tax return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 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Standard Mileage Rates for 2013

R-2012-95, Nov. 21, 2012

WASHINGTON — The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56.5 cents per mile for business miles driven.
  • 24 cents per mile driven for medical or moving purposes.
  • 14 cents per mile driven in service of charitable organizations.

The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51. Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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Page Last Reviewed or Updated: 22-Nov-2013

The Where To File 2012 Federal Tax Return

Where to file 2012 federal tax return 6. Where to file 2012 federal tax return   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. Where to file 2012 federal tax return Vehicles not considered highway vehicles. Where to file 2012 federal tax return Idling reduction device. Where to file 2012 federal tax return Separate purchase. Where to file 2012 federal tax return Leases. Where to file 2012 federal tax return Exported vehicle. Where to file 2012 federal tax return Tax on resale of tax-paid trailers and semitrailers. Where to file 2012 federal tax return Use treated as sale. Where to file 2012 federal tax return Sale. Where to file 2012 federal tax return Long-term lease. Where to file 2012 federal tax return Short-term lease. Where to file 2012 federal tax return Related person. Where to file 2012 federal tax return Exclusions from tax base. Where to file 2012 federal tax return Sales not at arm's length. Where to file 2012 federal tax return Installment sales. Where to file 2012 federal tax return Repairs and modifications. Where to file 2012 federal tax return Further manufacture. Where to file 2012 federal tax return Rail trailers and rail vans. Where to file 2012 federal tax return Parts and accessories. Where to file 2012 federal tax return Trash containers. Where to file 2012 federal tax return House trailers. Where to file 2012 federal tax return Camper coaches or bodies for self-propelled mobile homes. Where to file 2012 federal tax return Farm feed, seed, and fertilizer equipment. Where to file 2012 federal tax return Ambulances and hearses. Where to file 2012 federal tax return Truck-tractors. Where to file 2012 federal tax return Concrete mixers. Where to file 2012 federal tax return Registration requirement. Where to file 2012 federal tax return Further manufacture. Where to file 2012 federal tax return A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. Where to file 2012 federal tax return Truck chassis and bodies. Where to file 2012 federal tax return Truck trailer and semitrailer chassis and bodies. Where to file 2012 federal tax return Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Where to file 2012 federal tax return A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. Where to file 2012 federal tax return A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. Where to file 2012 federal tax return A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. Where to file 2012 federal tax return A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. Where to file 2012 federal tax return The seller is liable for the tax. Where to file 2012 federal tax return Chassis or body. Where to file 2012 federal tax return   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Where to file 2012 federal tax return Highway vehicle. Where to file 2012 federal tax return   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Where to file 2012 federal tax return Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Where to file 2012 federal tax return A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Where to file 2012 federal tax return A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Where to file 2012 federal tax return A special kind of cargo, goods, supplies, or materials. Where to file 2012 federal tax return Some off-highway task unrelated to highway transportation, except as discussed next. Where to file 2012 federal tax return Vehicles not considered highway vehicles. Where to file 2012 federal tax return   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. Where to file 2012 federal tax return Specially designed mobile machinery for nontransportation functions. Where to file 2012 federal tax return A self-propelled vehicle is not a highway vehicle if all the following apply. Where to file 2012 federal tax return The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Where to file 2012 federal tax return The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Where to file 2012 federal tax return The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Where to file 2012 federal tax return Vehicles specially designed for off-highway transportation. Where to file 2012 federal tax return A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. Where to file 2012 federal tax return To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Where to file 2012 federal tax return It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Where to file 2012 federal tax return Nontransportation trailers and semitrailers. Where to file 2012 federal tax return A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Where to file 2012 federal tax return For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Where to file 2012 federal tax return Gross vehicle weight. Where to file 2012 federal tax return   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. Where to file 2012 federal tax return It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. Where to file 2012 federal tax return Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. Where to file 2012 federal tax return   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. Where to file 2012 federal tax return Platform truck bodies 21 feet or less in length. Where to file 2012 federal tax return Dry freight and refrigerated truck van bodies 24 feet or less in length. Where to file 2012 federal tax return Dump truck bodies with load capacities of 8 cubic yards or less. Where to file 2012 federal tax return Refuse packer truck bodies with load capacities of 20 cubic yards or less. Where to file 2012 federal tax return For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. Where to file 2012 federal tax return R. Where to file 2012 federal tax return B. Where to file 2012 federal tax return 2005-14 at www. Where to file 2012 federal tax return irs. Where to file 2012 federal tax return gov/pub/irs-irbs/irb05-14. Where to file 2012 federal tax return pdf. Where to file 2012 federal tax return   The gross vehicle weight means the maximum total weight of a loaded vehicle. Where to file 2012 federal tax return Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. Where to file 2012 federal tax return The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. Where to file 2012 federal tax return The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. Where to file 2012 federal tax return See Regulations section 145. Where to file 2012 federal tax return 4051-1(e)(3) for more information. Where to file 2012 federal tax return Parts or accessories. Where to file 2012 federal tax return   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. Where to file 2012 federal tax return For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. Where to file 2012 federal tax return The tax applies in this case whether or not the retailer bills the parts or accessories separately. Where to file 2012 federal tax return   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. Where to file 2012 federal tax return The tax applies unless there is evidence to the contrary. Where to file 2012 federal tax return For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. Where to file 2012 federal tax return The tax does not apply to parts and accessories that are spares or replacements. Where to file 2012 federal tax return   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. Where to file 2012 federal tax return Idling reduction device. Where to file 2012 federal tax return   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. Where to file 2012 federal tax return The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. Where to file 2012 federal tax return The EPA discusses idling reduction technologies on its website at www. Where to file 2012 federal tax return epa. Where to file 2012 federal tax return gov/smartway/technology/idling. Where to file 2012 federal tax return htm. Where to file 2012 federal tax return Separate purchase. Where to file 2012 federal tax return   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. Where to file 2012 federal tax return The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. Where to file 2012 federal tax return The installation occurs within 6 months after the vehicle is first placed in service. Where to file 2012 federal tax return   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. Where to file 2012 federal tax return   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. Where to file 2012 federal tax return This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. Where to file 2012 federal tax return   The tax does not apply if the installed part or accessory is a replacement part or accessory. Where to file 2012 federal tax return The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. Where to file 2012 federal tax return However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. Where to file 2012 federal tax return Example. Where to file 2012 federal tax return You bought a taxable vehicle and placed it in service on April 8. Where to file 2012 federal tax return On May 3, you bought and installed parts and accessories at a cost of $850. Where to file 2012 federal tax return On July 15, you bought and installed parts and accessories for $300. Where to file 2012 federal tax return Tax of $138 (12% of $1,150) applies on July 15. Where to file 2012 federal tax return Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. Where to file 2012 federal tax return First retail sale defined. Where to file 2012 federal tax return   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. Where to file 2012 federal tax return There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). Where to file 2012 federal tax return The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). Where to file 2012 federal tax return The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. Where to file 2012 federal tax return There is no registration requirement. Where to file 2012 federal tax return Leases. Where to file 2012 federal tax return   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. Where to file 2012 federal tax return The tax is imposed on the lessor at the time of the lease. Where to file 2012 federal tax return   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. Where to file 2012 federal tax return The tax is imposed on the lessor at the time of the lease. Where to file 2012 federal tax return Exported vehicle. Where to file 2012 federal tax return   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. Where to file 2012 federal tax return Tax on resale of tax-paid trailers and semitrailers. Where to file 2012 federal tax return   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. Where to file 2012 federal tax return The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. Where to file 2012 federal tax return The credit cannot exceed the tax on the resale. Where to file 2012 federal tax return See Regulations section 145. Where to file 2012 federal tax return 4052-1(a)(4) for information on the conditions to allowance for the credit. Where to file 2012 federal tax return Use treated as sale. Where to file 2012 federal tax return   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. Where to file 2012 federal tax return Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. Where to file 2012 federal tax return The tax attaches when the use begins. Where to file 2012 federal tax return   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. Where to file 2012 federal tax return   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. Where to file 2012 federal tax return   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. Where to file 2012 federal tax return Presumptive retail sales price. Where to file 2012 federal tax return   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. Where to file 2012 federal tax return If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. Where to file 2012 federal tax return Table 6-1 outlines the appropriate tax base calculation for various transactions. Where to file 2012 federal tax return   The presumed markup percentage to be used for trucks and truck-tractors is 4%. Where to file 2012 federal tax return But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. Where to file 2012 federal tax return Sale. Where to file 2012 federal tax return   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. Where to file 2012 federal tax return Long-term lease. Where to file 2012 federal tax return   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. Where to file 2012 federal tax return Short-term lease. Where to file 2012 federal tax return   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. Where to file 2012 federal tax return   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. Where to file 2012 federal tax return   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. Where to file 2012 federal tax return Related person. Where to file 2012 federal tax return   A related person is any member of the same controlled group as the manufacturer, producer, or importer. Where to file 2012 federal tax return Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Where to file 2012 federal tax return Table 6-1. Where to file 2012 federal tax return Tax Base IF the transaction is a. Where to file 2012 federal tax return . Where to file 2012 federal tax return . Where to file 2012 federal tax return THEN figuring the base by using the. Where to file 2012 federal tax return . Where to file 2012 federal tax return . Where to file 2012 federal tax return Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. Where to file 2012 federal tax return   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. Where to file 2012 federal tax return   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. Where to file 2012 federal tax return However, you do add a markup if all the following apply. Where to file 2012 federal tax return You do not perform any significant activities relating to the processing of the sale of a taxable article. Where to file 2012 federal tax return The main reason for processing the sale through you is to avoid or evade the presumed markup. Where to file 2012 federal tax return You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Where to file 2012 federal tax return In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. Where to file 2012 federal tax return Determination of tax base. Where to file 2012 federal tax return   These rules apply to both normal retail sales price and presumptive retail sales price computations. Where to file 2012 federal tax return To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. Where to file 2012 federal tax return However, see Presumptive retail sales price, earlier. Where to file 2012 federal tax return Exclusions from tax base. Where to file 2012 federal tax return   Exclude from the tax base the retail excise tax imposed on the sale. Where to file 2012 federal tax return Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. Where to file 2012 federal tax return Also exclude the value of any used component of the article furnished by the first user of the article. Where to file 2012 federal tax return   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. Where to file 2012 federal tax return These expenses are those incurred in delivery from the retail dealer to the customer. Where to file 2012 federal tax return In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. Where to file 2012 federal tax return   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. Where to file 2012 federal tax return For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. Where to file 2012 federal tax return Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. Where to file 2012 federal tax return Sales not at arm's length. Where to file 2012 federal tax return   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. Where to file 2012 federal tax return   A sale is not at arm's length if either of the following apply. Where to file 2012 federal tax return One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. Where to file 2012 federal tax return The sale is made under special arrangements between a seller and a purchaser. Where to file 2012 federal tax return Installment sales. Where to file 2012 federal tax return   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. Where to file 2012 federal tax return The tax is figured on the entire sales price. Where to file 2012 federal tax return No part of the tax is deferred because the sales price is paid in installments. Where to file 2012 federal tax return Repairs and modifications. Where to file 2012 federal tax return   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. Where to file 2012 federal tax return This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. Where to file 2012 federal tax return However, this exception generally does not apply to an article that was not subject to the tax when it was new. Where to file 2012 federal tax return Further manufacture. Where to file 2012 federal tax return   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. Where to file 2012 federal tax return Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. Where to file 2012 federal tax return Combining an article with an item in this list does not give rise to taxability. Where to file 2012 federal tax return However, see Parts or accessories discussed earlier. Where to file 2012 federal tax return Articles exempt from tax. Where to file 2012 federal tax return   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. Where to file 2012 federal tax return Rail trailers and rail vans. Where to file 2012 federal tax return   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). Where to file 2012 federal tax return Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. Where to file 2012 federal tax return Parts and accessories. Where to file 2012 federal tax return   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. Where to file 2012 federal tax return Trash containers. Where to file 2012 federal tax return   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. Where to file 2012 federal tax return It is designed to be used as a trash container. Where to file 2012 federal tax return It is not designed to carry freight other than trash. Where to file 2012 federal tax return It is not designed to be permanently mounted on or affixed to a truck chassis or body. Where to file 2012 federal tax return House trailers. Where to file 2012 federal tax return   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. Where to file 2012 federal tax return Camper coaches or bodies for self-propelled mobile homes. Where to file 2012 federal tax return   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. Where to file 2012 federal tax return Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. Where to file 2012 federal tax return Farm feed, seed, and fertilizer equipment. Where to file 2012 federal tax return   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. Where to file 2012 federal tax return This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. Where to file 2012 federal tax return Ambulances and hearses. Where to file 2012 federal tax return   This is any ambulance, hearse, or combination ambulance-hearse. Where to file 2012 federal tax return Truck-tractors. Where to file 2012 federal tax return   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. Where to file 2012 federal tax return Concrete mixers. Where to file 2012 federal tax return   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. Where to file 2012 federal tax return This exemption does not apply to the chassis on which the article is mounted. Where to file 2012 federal tax return Sales exempt from tax. Where to file 2012 federal tax return   The following sales are ordinarily exempt from tax. Where to file 2012 federal tax return Sales to a state or local government for its exclusive use. Where to file 2012 federal tax return Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. Where to file 2012 federal tax return Sales to a nonprofit educational organization for its exclusive use. Where to file 2012 federal tax return Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Where to file 2012 federal tax return Sales for use by the purchaser for further manufacture of other taxable articles (see below). Where to file 2012 federal tax return Sales for export or for resale by the purchaser to a second purchaser for export. Where to file 2012 federal tax return Sales to the United Nations for official use. Where to file 2012 federal tax return Registration requirement. Where to file 2012 federal tax return   In general, the seller and buyer must be registered for a sale to be tax free. Where to file 2012 federal tax return See the Form 637 instructions for more information. Where to file 2012 federal tax return Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. Where to file 2012 federal tax return Further manufacture. Where to file 2012 federal tax return   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. Where to file 2012 federal tax return Credits or refunds. Where to file 2012 federal tax return   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. Where to file 2012 federal tax return The person using the article as a component part is eligible for the credit or refund. Where to file 2012 federal tax return   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Where to file 2012 federal tax return A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. Where to file 2012 federal tax return   See also Conditions to allowance in chapter 5. Where to file 2012 federal tax return Tire credit. Where to file 2012 federal tax return   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. Where to file 2012 federal tax return The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). Where to file 2012 federal tax return This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. Where to file 2012 federal tax return Prev  Up  Next   Home   More Online Publications