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Where To File 2012 Form 1040

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Where To File 2012 Form 1040

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The Where To File 2012 Form 1040

Where to file 2012 form 1040 Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. Where to file 2012 form 1040 Gross monthly rate. Where to file 2012 form 1040 Your cost. Where to file 2012 form 1040 Choosing a survivor annuity after retirement. Where to file 2012 form 1040 Canceling a survivor annuity after retirement. Where to file 2012 form 1040 Annuity starting date after 1986. Where to file 2012 form 1040 Annuity starting date before 1987. Where to file 2012 form 1040 Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. Where to file 2012 form 1040 Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. Where to file 2012 form 1040 The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. Where to file 2012 form 1040 If the refund includes only your contributions, none of the refund is taxable. Where to file 2012 form 1040 If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). Where to file 2012 form 1040 If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Where to file 2012 form 1040 See Rollover Rules in Part II for information on how to make a rollover. Where to file 2012 form 1040 Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. Where to file 2012 form 1040 Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. Where to file 2012 form 1040 If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Where to file 2012 form 1040 If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. Where to file 2012 form 1040 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Where to file 2012 form 1040 A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. Where to file 2012 form 1040 Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. Where to file 2012 form 1040 OPM will tell you how to make the choice. Where to file 2012 form 1040 The choice for no withholding remains in effect until you change it. Where to file 2012 form 1040 These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. Where to file 2012 form 1040 If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments. Where to file 2012 form 1040 You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. Where to file 2012 form 1040 Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. Where to file 2012 form 1040 For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. Where to file 2012 form 1040 Form CSA 1099R. Where to file 2012 form 1040   Form CSA 1099R is mailed to you by OPM each year. Where to file 2012 form 1040 It will show any tax you had withheld. Where to file 2012 form 1040 File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. Where to file 2012 form 1040    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. Where to file 2012 form 1040 servicesonline. Where to file 2012 form 1040 opm. Where to file 2012 form 1040 gov. Where to file 2012 form 1040 To log in, you will need your retirement CSA claim number and your personal identification number. Where to file 2012 form 1040 Choosing no withholding on payments outside the United States. Where to file 2012 form 1040   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. Where to file 2012 form 1040   To choose no withholding if you are a U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. Where to file 2012 form 1040 Otherwise, OPM has to withhold tax. Where to file 2012 form 1040 For example, OPM must withhold if you provide a U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 home address. Where to file 2012 form 1040   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 citizen, a U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 resident alien, or someone who left the United States to avoid tax. Where to file 2012 form 1040 But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Where to file 2012 form 1040 For details, see Publication 519, U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Tax Guide for Aliens. Where to file 2012 form 1040 Withholding certificate. Where to file 2012 form 1040   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. Where to file 2012 form 1040 The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. Where to file 2012 form 1040 If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. Where to file 2012 form 1040 To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Where to file 2012 form 1040 C. Where to file 2012 form 1040 calling area must call 202-606-0500). Where to file 2012 form 1040 No special form is needed. Where to file 2012 form 1040 You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. Where to file 2012 form 1040 If you have TTY/TDD equipment, call 1-855–887–4957. Where to file 2012 form 1040 If you need a PIN, call OPM's Retirement Information Office. Where to file 2012 form 1040 You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. Where to file 2012 form 1040 servicesonline. Where to file 2012 form 1040 opm. Where to file 2012 form 1040 gov. Where to file 2012 form 1040 You will need your retirement CSA or CSF claim number and your PIN. Where to file 2012 form 1040 Withholding from certain lump-sum payments. Where to file 2012 form 1040   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. Where to file 2012 form 1040 Tax will be withheld at a 20% rate on the interest distributed. Where to file 2012 form 1040 However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. Where to file 2012 form 1040 If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. Where to file 2012 form 1040 Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. Where to file 2012 form 1040 See Rollover Rules in Part II. Where to file 2012 form 1040 If you receive only your contributions, no tax will be withheld. Where to file 2012 form 1040 Withholding from Thrift Savings Plan payments. Where to file 2012 form 1040   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. Where to file 2012 form 1040 The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. Where to file 2012 form 1040  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. Where to file 2012 form 1040 By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. Where to file 2012 form 1040   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. Where to file 2012 form 1040 The above document is also available in the “Forms & Publications” section of the TSP website at www. Where to file 2012 form 1040 tsp. Where to file 2012 form 1040 gov. Where to file 2012 form 1040 Estimated tax. Where to file 2012 form 1040   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). Where to file 2012 form 1040 The return must cover all 12 months. Where to file 2012 form 1040   You do not have to pay estimated tax for 2014 if you were a U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. Where to file 2012 form 1040   Publication 505 contains information that you can use to help you figure your estimated tax payments. Where to file 2012 form 1040 Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. Where to file 2012 form 1040 The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. Where to file 2012 form 1040 Children. Where to file 2012 form 1040   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. Where to file 2012 form 1040   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. Where to file 2012 form 1040 Form CSF 1099R. Where to file 2012 form 1040   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. Where to file 2012 form 1040 It will show the total amount of the annuity you received in the past year. Where to file 2012 form 1040 It also should show, separately, the survivor annuity for a child or children. Where to file 2012 form 1040 Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. Where to file 2012 form 1040   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. Where to file 2012 form 1040    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. Where to file 2012 form 1040 servicesonline. Where to file 2012 form 1040 opm. Where to file 2012 form 1040 gov. Where to file 2012 form 1040 To log in you will need your retirement CSF claim number and personal identification number. Where to file 2012 form 1040    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Where to file 2012 form 1040 C. Where to file 2012 form 1040 calling area must call 202-606-0500). Where to file 2012 form 1040 You will need your CSF claim number and your social security number when you call. Where to file 2012 form 1040 Taxable part of annuity. Where to file 2012 form 1040   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. Where to file 2012 form 1040 To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. Where to file 2012 form 1040 Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. Where to file 2012 form 1040 If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. Where to file 2012 form 1040 However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. Where to file 2012 form 1040 Annuity statement. Where to file 2012 form 1040   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). Where to file 2012 form 1040 You will use this information to figure the tax-free recovery of your cost. Where to file 2012 form 1040 Annuity starting date. Where to file 2012 form 1040   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. Where to file 2012 form 1040 If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. Where to file 2012 form 1040 Gross monthly rate. Where to file 2012 form 1040   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. Where to file 2012 form 1040 Your cost. Where to file 2012 form 1040   Your monthly annuity payment contains an amount on which you have previously paid income tax. Where to file 2012 form 1040 This amount represents part of your contributions to the retirement plan. Where to file 2012 form 1040 Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. Where to file 2012 form 1040   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. Where to file 2012 form 1040 If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. Where to file 2012 form 1040 (See Lump-sum credit under Alternative Annuity Option, later. Where to file 2012 form 1040 )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. Where to file 2012 form 1040 You cannot claim an interest deduction for any interest payments. Where to file 2012 form 1040 You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. Where to file 2012 form 1040 Recovering your cost tax free. Where to file 2012 form 1040   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. Where to file 2012 form 1040 If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. Where to file 2012 form 1040 If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). Where to file 2012 form 1040 If your annuity starting date is after November 18, 1996, you must use the Simplified Method. Where to file 2012 form 1040   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). Where to file 2012 form 1040 The tax-free part is a fixed dollar amount. Where to file 2012 form 1040 It remains the same, even if your annuity is increased. Where to file 2012 form 1040 Generally, this rule applies as long as you receive your annuity. Where to file 2012 form 1040 However, see Exclusion limit , later. Where to file 2012 form 1040 Choosing a survivor annuity after retirement. Where to file 2012 form 1040    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. Where to file 2012 form 1040   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. Where to file 2012 form 1040 To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. Where to file 2012 form 1040 Figure the expected return as of the date the reduced annuity begins. Where to file 2012 form 1040 For details on the General Rule, see Publication 939. Where to file 2012 form 1040 Canceling a survivor annuity after retirement. Where to file 2012 form 1040   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. Where to file 2012 form 1040 The increased annuity does not change the cost recovery you figured at the annuity starting date. Where to file 2012 form 1040 The tax-free part of each annuity payment remains the same. Where to file 2012 form 1040    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Where to file 2012 form 1040 C. Where to file 2012 form 1040 calling area must call 202-606-0500). Where to file 2012 form 1040 Exclusion limit. Where to file 2012 form 1040   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Where to file 2012 form 1040 Annuity starting date after 1986. Where to file 2012 form 1040   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. Where to file 2012 form 1040 Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. Where to file 2012 form 1040 Example. Where to file 2012 form 1040 Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. Where to file 2012 form 1040 If your cost is $12,000, the exclusion ends after 10 years (120 months). Where to file 2012 form 1040 Thereafter, your entire annuity is generally fully taxable. Where to file 2012 form 1040 Annuity starting date before 1987. Where to file 2012 form 1040   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. Where to file 2012 form 1040 If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. Where to file 2012 form 1040 The total exclusion may be more than your cost. Where to file 2012 form 1040 Deduction of unrecovered cost. Where to file 2012 form 1040   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. Where to file 2012 form 1040 The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). Where to file 2012 form 1040 If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. Where to file 2012 form 1040 Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. Where to file 2012 form 1040 (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. Where to file 2012 form 1040 ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. Where to file 2012 form 1040 The Simplified Method does not apply if your annuity starting date is before July 2, 1986. Where to file 2012 form 1040 Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. Where to file 2012 form 1040 This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Where to file 2012 form 1040 If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. Where to file 2012 form 1040 Worksheet A. Where to file 2012 form 1040   Use Worksheet A. Where to file 2012 form 1040 Simplified Method (near the end of this publication), to figure your taxable annuity. Where to file 2012 form 1040 Be sure to keep the completed worksheet. Where to file 2012 form 1040 It will help you figure your taxable amounts for later years. Where to file 2012 form 1040 Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. Where to file 2012 form 1040 However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. Where to file 2012 form 1040 Line 2. Where to file 2012 form 1040   See Your cost , earlier, for an explanation of your cost in the plan. Where to file 2012 form 1040 If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. Where to file 2012 form 1040 Line 3. Where to file 2012 form 1040   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. Where to file 2012 form 1040 If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. Where to file 2012 form 1040 If your annuity starting date is before 1998, use Table 1. Where to file 2012 form 1040 Line 6. Where to file 2012 form 1040   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. Where to file 2012 form 1040 If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. Where to file 2012 form 1040 Example. Where to file 2012 form 1040 Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. Where to file 2012 form 1040 His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. Where to file 2012 form 1040 He must use the Simplified Method to figure the tax-free part of his annuity benefits. Where to file 2012 form 1040 Bill's monthly annuity benefit is $1,000. Where to file 2012 form 1040 He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. Where to file 2012 form 1040 At his annuity starting date, he was 65 and Kathy was 57. Where to file 2012 form 1040 Bill's completed Worksheet A is shown later. Where to file 2012 form 1040 To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). Where to file 2012 form 1040 Bill keeps a copy of the completed worksheet for his records. Where to file 2012 form 1040 It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. Where to file 2012 form 1040 Bill's tax-free monthly amount is $100. Where to file 2012 form 1040 (See line 4 of the worksheet. Where to file 2012 form 1040 ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. Where to file 2012 form 1040 If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. Where to file 2012 form 1040 If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. Where to file 2012 form 1040 General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. Where to file 2012 form 1040 If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. Where to file 2012 form 1040 If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. Where to file 2012 form 1040 Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. Where to file 2012 form 1040 Figuring this percentage is complex and requires the use of actuarial tables. Where to file 2012 form 1040 For these tables and other information about using the General Rule, see Publication 939. Where to file 2012 form 1040 Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. Where to file 2012 form 1040 Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. Where to file 2012 form 1040 After your cost was recovered, all payments became fully taxable. Where to file 2012 form 1040 You cannot use another rule to again exclude amounts from income. Where to file 2012 form 1040 The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. Where to file 2012 form 1040 Worksheet A. Where to file 2012 form 1040 Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. Where to file 2012 form 1040 1. Where to file 2012 form 1040 Enter the total pension or annuity payments received this year. Where to file 2012 form 1040 Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Where to file 2012 form 1040 $ 8,000 2. Where to file 2012 form 1040 Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Where to file 2012 form 1040 See Your cost in Part II, Rules for Retirees, earlier 2. Where to file 2012 form 1040 31,000 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Where to file 2012 form 1040 Otherwise, go to line 3. Where to file 2012 form 1040   3. Where to file 2012 form 1040 Enter the appropriate number from Table 1 below. Where to file 2012 form 1040 But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Where to file 2012 form 1040 3. Where to file 2012 form 1040 310 4. Where to file 2012 form 1040 Divide line 2 by the number on line 3 4. Where to file 2012 form 1040 100 5. Where to file 2012 form 1040 Multiply line 4 by the number of months for which this year's payments were made. Where to file 2012 form 1040 If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Where to file 2012 form 1040 Otherwise, go to line 6 5. Where to file 2012 form 1040 800 6. Where to file 2012 form 1040 Enter any amounts previously recovered tax free in years after 1986. Where to file 2012 form 1040 This is the amount shown on line 10 of your worksheet for last year 6. Where to file 2012 form 1040 0 7. Where to file 2012 form 1040 Subtract line 6 from line 2 7. Where to file 2012 form 1040 31,000 8. Where to file 2012 form 1040 Enter the smaller of line 5 or line 7 8. Where to file 2012 form 1040 800 9. Where to file 2012 form 1040 Taxable amount for year. Where to file 2012 form 1040 Subtract line 8 from line 1. Where to file 2012 form 1040 Enter the result, but not less than zero. Where to file 2012 form 1040 Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Where to file 2012 form 1040 If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Where to file 2012 form 1040 If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Where to file 2012 form 1040 If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Where to file 2012 form 1040 $7,200 10. Where to file 2012 form 1040 Was your annuity starting date before 1987?   Yes. Where to file 2012 form 1040 Do not complete the rest of this worksheet. Where to file 2012 form 1040    No. Where to file 2012 form 1040 Add lines 6 and 8. Where to file 2012 form 1040 This is the amount you have recovered tax free through 2013. Where to file 2012 form 1040 You will need this number if you need to fill out this worksheet next year 10. Where to file 2012 form 1040 800 11. Where to file 2012 form 1040 Balance of cost to be recovered. Where to file 2012 form 1040 Subtract line 10 from line 2. Where to file 2012 form 1040 If zero, you will not have to complete this worksheet next year. Where to file 2012 form 1040 The payments you receive next year will generally be fully taxable 11. Where to file 2012 form 1040 $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Where to file 2012 form 1040 Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. Where to file 2012 form 1040 If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. Where to file 2012 form 1040 You are eligible to make this choice if you meet all of the following requirements. Where to file 2012 form 1040 You are retiring, but not on disability. Where to file 2012 form 1040 You have a life-threatening illness or other critical medical condition. Where to file 2012 form 1040 You do not have a former spouse entitled to court ordered benefits based on your service. Where to file 2012 form 1040 If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. Where to file 2012 form 1040 Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. Where to file 2012 form 1040 The tax-free part represents part of your cost. Where to file 2012 form 1040 The taxable part represents part of the earnings on your annuity contract. Where to file 2012 form 1040 Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. Where to file 2012 form 1040 Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. Where to file 2012 form 1040 Your taxable amount may therefore be more than the lump-sum payment you receive. Where to file 2012 form 1040 You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. Where to file 2012 form 1040 If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Where to file 2012 form 1040 See Rollover Rules , later, for information on how to make a rollover. Where to file 2012 form 1040 OPM can make a direct rollover only up to the amount of the lump-sum payment. Where to file 2012 form 1040 Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. Where to file 2012 form 1040 The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Where to file 2012 form 1040 It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. Where to file 2012 form 1040 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Where to file 2012 form 1040 Worksheet B. Where to file 2012 form 1040   Use Worksheet B. Where to file 2012 form 1040 Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. Where to file 2012 form 1040 Be sure to keep the completed worksheet for your records. Where to file 2012 form 1040   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. Where to file 2012 form 1040 Lump-sum credit. Where to file 2012 form 1040   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). Where to file 2012 form 1040 However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. Where to file 2012 form 1040 Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. Where to file 2012 form 1040 Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. Where to file 2012 form 1040 You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. Where to file 2012 form 1040 Present value of your annuity contract. Where to file 2012 form 1040   The present value of your annuity contract is figured using actuarial tables provided by the IRS. Where to file 2012 form 1040 If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. Where to file 2012 form 1040 Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. Where to file 2012 form 1040 , NW Washington, DC 20224-0002 Example. Where to file 2012 form 1040 David Brown retired from the federal government in 2013, one month after his 55th birthday. Where to file 2012 form 1040 He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. Where to file 2012 form 1040 The present value of his annuity contract was $155,000. Where to file 2012 form 1040 The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. Where to file 2012 form 1040 The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. Where to file 2012 form 1040 See Reduced Annuity , later. Where to file 2012 form 1040 Worksheet B. Where to file 2012 form 1040 Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . Where to file 2012 form 1040  1. Where to file 2012 form 1040 Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. Where to file 2012 form 1040 $ 31,000 2. Where to file 2012 form 1040 Enter the present value of your annuity contract 2. Where to file 2012 form 1040 155,000 3. Where to file 2012 form 1040 Divide line 1 by line 2 3. Where to file 2012 form 1040 . Where to file 2012 form 1040 20 4. Where to file 2012 form 1040 Tax-free amount. Where to file 2012 form 1040 Multiply line 1 by line 3. Where to file 2012 form 1040 (Caution: Do not include this amount on line 6 of Worksheet A in this publication. Where to file 2012 form 1040 ) 4. Where to file 2012 form 1040 $6,200 5. Where to file 2012 form 1040 Taxable amount (net cost in the plan). Where to file 2012 form 1040 Subtract line 4 from line 1. Where to file 2012 form 1040 Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Where to file 2012 form 1040 Also, enter this amount on line 2 of Worksheet A in this publication. Where to file 2012 form 1040 5. Where to file 2012 form 1040 $24,800   Lump-sum payment in installments. Where to file 2012 form 1040   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. Where to file 2012 form 1040 You will receive the first installment after you make the choice upon retirement. Where to file 2012 form 1040 The second installment will be paid to you, with interest, in the next calendar year. Where to file 2012 form 1040 (Exceptions to the installment rule are provided for cases of critical medical need. Where to file 2012 form 1040 )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. Where to file 2012 form 1040 If the payment has a tax-free part, you must treat the taxable part as received first. Where to file 2012 form 1040 How to report. Where to file 2012 form 1040   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Where to file 2012 form 1040 Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. Where to file 2012 form 1040    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. Where to file 2012 form 1040 Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. Where to file 2012 form 1040 These annuity payments each will have a tax-free and a taxable part. Where to file 2012 form 1040 To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). Where to file 2012 form 1040 For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. Where to file 2012 form 1040 To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. Where to file 2012 form 1040 Enter as your net cost on line 2 the amount from Worksheet B, line 5. Where to file 2012 form 1040 Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Where to file 2012 form 1040 Example. Where to file 2012 form 1040 The facts are the same as in the example for David Brown in the preceding discussion. Where to file 2012 form 1040 In addition, David received 10 annuity payments in 2013 of $1,200 each. Where to file 2012 form 1040 Using Worksheet A, he figures the taxable part of his annuity payments. Where to file 2012 form 1040 He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. Where to file 2012 form 1040 His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). Where to file 2012 form 1040 He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. Where to file 2012 form 1040 David's filled-in Worksheet A is shown on the next page. Where to file 2012 form 1040 Worksheet A. Where to file 2012 form 1040 Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . Where to file 2012 form 1040 1. Where to file 2012 form 1040 Enter the total pension or annuity payments received this year. Where to file 2012 form 1040 Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Where to file 2012 form 1040 $ 12,000 2. Where to file 2012 form 1040 Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Where to file 2012 form 1040 See Your cost in Part II, Rules for Retirees, earlier 2. Where to file 2012 form 1040 24,800 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Where to file 2012 form 1040 Otherwise, go to line 3. Where to file 2012 form 1040   3. Where to file 2012 form 1040 Enter the appropriate number from Table 1 below. Where to file 2012 form 1040 But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Where to file 2012 form 1040 3. Where to file 2012 form 1040 360 4. Where to file 2012 form 1040 Divide line 2 by the number on line 3 4. Where to file 2012 form 1040 68. Where to file 2012 form 1040 89 5. Where to file 2012 form 1040 Multiply line 4 by the number of months for which this year's payments were made. Where to file 2012 form 1040 If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Where to file 2012 form 1040 Otherwise, go to line 6 5. Where to file 2012 form 1040 688. Where to file 2012 form 1040 90 6. Where to file 2012 form 1040 Enter any amounts previously recovered tax free in years after 1986. Where to file 2012 form 1040 This is the amount shown on line 10 of your worksheet for last year 6. Where to file 2012 form 1040 0 7. Where to file 2012 form 1040 Subtract line 6 from line 2 7. Where to file 2012 form 1040 24,800 8. Where to file 2012 form 1040 Enter the smaller of line 5 or line 7 8. Where to file 2012 form 1040 688. Where to file 2012 form 1040 90 9. Where to file 2012 form 1040 Taxable amount for year. Where to file 2012 form 1040 Subtract line 8 from line 1. Where to file 2012 form 1040 Enter the result, but not less than zero. Where to file 2012 form 1040 Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Where to file 2012 form 1040 If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Where to file 2012 form 1040 If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Where to file 2012 form 1040 If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Where to file 2012 form 1040 $11,311. Where to file 2012 form 1040 10 10. Where to file 2012 form 1040 Was your annuity starting date before 1987?   Yes. Where to file 2012 form 1040 Do not complete the rest of this worksheet. Where to file 2012 form 1040    No. Where to file 2012 form 1040 Add lines 6 and 8. Where to file 2012 form 1040 This is the amount you have recovered tax free through 2013. Where to file 2012 form 1040 You will need this number if you need to fill out this worksheet next year 10. Where to file 2012 form 1040 688. Where to file 2012 form 1040 90 11. Where to file 2012 form 1040 Balance of cost to be recovered. Where to file 2012 form 1040 Subtract line 10 from line 2. Where to file 2012 form 1040 If zero, you will not have to complete this worksheet next year. Where to file 2012 form 1040 The payments you receive next year will generally be fully taxable 11. Where to file 2012 form 1040 $24,111. Where to file 2012 form 1040 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Where to file 2012 form 1040 Reemployment after choosing the alternative annuity option. Where to file 2012 form 1040 If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. Where to file 2012 form 1040 If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. Where to file 2012 form 1040 Annuity starting date before November 19, 1996. Where to file 2012 form 1040   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. Where to file 2012 form 1040 Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. Where to file 2012 form 1040 However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Where to file 2012 form 1040 Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. Where to file 2012 form 1040 The gift may be taxable for gift tax purposes. Where to file 2012 form 1040 The value of the gift is equal to the value of the annuity. Where to file 2012 form 1040 Joint and survivor annuity. Where to file 2012 form 1040   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. Where to file 2012 form 1040 This will eliminate any gift tax liability with regard to that gift. Where to file 2012 form 1040   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. Where to file 2012 form 1040 This may result in a taxable gift. Where to file 2012 form 1040 More information. Where to file 2012 form 1040   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. Where to file 2012 form 1040 Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. Where to file 2012 form 1040 Annual leave. Where to file 2012 form 1040   A payment for accrued annual leave received on retirement is a salary payment. Where to file 2012 form 1040 It is taxable as wages in the tax year you receive it. Where to file 2012 form 1040 Voluntary contributions. Where to file 2012 form 1040   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. Where to file 2012 form 1040 They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. Where to file 2012 form 1040 Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. Where to file 2012 form 1040 See Thrift Savings Plan , later. Where to file 2012 form 1040 Additional annuity benefit. Where to file 2012 form 1040   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. Where to file 2012 form 1040 This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. Where to file 2012 form 1040 It does not matter that you receive only one monthly check covering both benefits. Where to file 2012 form 1040 Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. Where to file 2012 form 1040   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. Where to file 2012 form 1040 Refund of voluntary contributions. Where to file 2012 form 1040   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. Where to file 2012 form 1040 If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. Where to file 2012 form 1040 See Rollover Rules , later. Where to file 2012 form 1040 The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Where to file 2012 form 1040 It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. Where to file 2012 form 1040 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Where to file 2012 form 1040 Community property laws. Where to file 2012 form 1040   State community property laws apply to your annuity. Where to file 2012 form 1040 These laws will affect your income tax only if you file a return separately from your spouse. Where to file 2012 form 1040   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. Where to file 2012 form 1040 Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. Where to file 2012 form 1040   At any time, you have only one domicile even though you may have more than one home. Where to file 2012 form 1040 Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Where to file 2012 form 1040 The question of your domicile is mainly a matter of your intentions as indicated by your actions. Where to file 2012 form 1040   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. Where to file 2012 form 1040 The division is based on your periods of service and domicile in community and noncommunity property states while you were married. Where to file 2012 form 1040   For more information, see Publication 555, Community Property. Where to file 2012 form 1040 Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. Where to file 2012 form 1040 The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. Where to file 2012 form 1040 This amount is taxable as wages. Where to file 2012 form 1040 Your annuity will continue to be taxed just as it was before. Where to file 2012 form 1040 If you are still recovering your cost, you continue to do so. Where to file 2012 form 1040 If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. Where to file 2012 form 1040 Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. Where to file 2012 form 1040 A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Where to file 2012 form 1040 Special rule for figuring your total contributions. Where to file 2012 form 1040   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. Where to file 2012 form 1040 You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. Where to file 2012 form 1040 For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. Where to file 2012 form 1040 Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. Where to file 2012 form 1040   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. Where to file 2012 form 1040 Limit on taxable amount. Where to file 2012 form 1040   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. Where to file 2012 form 1040 Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. Where to file 2012 form 1040 The numerator of the fraction is the retiree's total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay, other than tax-exempt pay for services performed outside the United States. Where to file 2012 form 1040 The denominator is the retiree's total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay for all services. Where to file 2012 form 1040    Basic pay includes regular pay plus any standby differential. Where to file 2012 form 1040 It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. Where to file 2012 form 1040   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. Where to file 2012 form 1040 (For an annuity, first complete Worksheet A in this publication. Where to file 2012 form 1040 ) Worksheet C. Where to file 2012 form 1040 Limited Taxable Amount for Nonresident Alien 1. Where to file 2012 form 1040 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Where to file 2012 form 1040   2. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay other than tax-exempt pay for services performed outside the United States 2. Where to file 2012 form 1040   3. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay for all services 3. Where to file 2012 form 1040   4. Where to file 2012 form 1040 Divide line 2 by line 3 4. Where to file 2012 form 1040   5. Where to file 2012 form 1040 Limited taxable amount. Where to file 2012 form 1040 Multiply line 1 by line 4. Where to file 2012 form 1040 Enter this amount on Form 1040NR, line 17b 5. Where to file 2012 form 1040   Example 1. Where to file 2012 form 1040 You are a nonresident alien who performed all services for the U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government abroad as a nonresident alien. Where to file 2012 form 1040 You retired and began to receive a monthly annuity of $200. Where to file 2012 form 1040 Your total basic pay for all services for the U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government was $100,000. Where to file 2012 form 1040 All of your basic pay was tax exempt because it was not U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 source income. Where to file 2012 form 1040 The taxable amount of your annuity using Worksheet A in this publication is $720. Where to file 2012 form 1040 You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Where to file 2012 form 1040 Worksheet C. Where to file 2012 form 1040 Limited Taxable Amount for Nonresident Alien — Example 1 1. Where to file 2012 form 1040 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Where to file 2012 form 1040 $ 720 2. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay other than tax-exempt pay for services performed outside the United States 2. Where to file 2012 form 1040 0 3. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay for all services 3. Where to file 2012 form 1040 100,000 4. Where to file 2012 form 1040 Divide line 2 by line 3 4. Where to file 2012 form 1040 0 5. Where to file 2012 form 1040 Limited taxable amount. Where to file 2012 form 1040 Multiply line 1 by line 4. Where to file 2012 form 1040 Enter this amount on Form 1040NR, line 17b 5. Where to file 2012 form 1040 0 Example 2. Where to file 2012 form 1040 You are a nonresident alien who performed services for the U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government as a nonresident alien both within the United States and abroad. Where to file 2012 form 1040 You retired and began to receive a monthly annuity of $240. Where to file 2012 form 1040 Your total basic pay for your services for the U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. Where to file 2012 form 1040 The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 source income. Where to file 2012 form 1040 The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. Where to file 2012 form 1040 You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Where to file 2012 form 1040 Worksheet C. Where to file 2012 form 1040 Limited Taxable Amount for Nonresident Alien — Example 2 1. Where to file 2012 form 1040 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Where to file 2012 form 1040 $ 1,980 2. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay other than tax-exempt pay for services performed outside the United States 2. Where to file 2012 form 1040 40,000 3. Where to file 2012 form 1040 Enter the total U. Where to file 2012 form 1040 S. Where to file 2012 form 1040 Government basic pay for all services 3. Where to file 2012 form 1040 120,000 4. Where to file 2012 form 1040 Divide line 2 by line 3 4. Where to file 2012 form 1040 . Where to file 2012 form 1040 333 5. Where to file 2012 form 1040 Limited taxable amount. Where to file 2012 form 1040 Multiply line 1 by line 4. Where to file 2012 form 1040 Enter this amount on Form 1040NR, line 17b 5. Where to file 2012 form 1040 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. Where to file 2012 form 1040 (However, see Roth TSP balance and Uniformed services TSP accounts, next. Where to file 2012 form 1040 ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. Where to file 2012 form 1040 The way that you withdraw your account balance determines when you must pay the tax. Where to file 2012 form 1040 Roth TSP balance. Where to file 2012 form 1040   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. Where to file 2012 form 1040 This means Roth TSP contributions are included in your income. Where to file 2012 form 1040 The contribution limits are the same as the traditional TSP. Where to file 2012 form 1040 You can elect to have part or all of your TSP contributions designated as a Roth TSP. Where to file 2012 form 1040 Agency contributions will be part of your traditional TSP balance. Where to file 2012 form 1040 Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. Where to file 2012 form 1040   Qualified distributions from your Roth TSP are not included in income. Where to file 2012 form 1040 This applies to both your cost in the account and income earned on that account. Where to file 2012 form 1040 A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Where to file 2012 form 1040   For more information, go to the TSP website, www. Where to file 2012 form 1040 tsp. Where to file 2012 form 1040 gov, or the TSP Service Office. Where to file 2012 form 1040 See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. Where to file 2012 form 1040 Uniformed services TSP accounts. Where to file 2012 form 1040   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. Where to file 2012 form 1040 However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. Where to file 2012 form 1040 See Roth TSP balance discussed previously to get more information about Roth contributions. Where to file 2012 form 1040 The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Where to file 2012 form 1040 You can get more information from the TSP website, www. Where to file 2012 form 1040 tsp. Where to file 2012 form 1040 gov, or the TSP Service Office. Where to file 2012 form 1040 Direct rollover by the TSP. Where to file 2012 form 1040   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. Where to file 2012 form 1040 However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Where to file 2012 form 1040 Also, see Rollover Rules , later. Where to file 2012 form 1040 Direct rollover by the TSP to a Roth IRA. Where to file 2012 form 1040   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. Where to file 2012 form 1040 However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Where to file 2012 form 1040 Also, see Rollovers to Roth IRAs for more information, later. Where to file 2012 form 1040 Note. Where to file 2012 form 1040 A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. Where to file 2012 form 1040 This is because you already paid tax on those contributions. Where to file 2012 form 1040 You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. Where to file 2012 form 1040 TSP annuity. Where to file 2012 form 1040   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. Where to file 2012 form 1040 The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. Where to file 2012 form 1040 However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. Where to file 2012 form 1040 See Roth TSP balance , earlier. Where to file 2012 form 1040 This is because you already paid tax on those contributions. Where to file 2012 form 1040 Cash withdrawals. Where to file 2012 form 1040   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. Where to file 2012 form 1040 (See Rollover Rules , later. Where to file 2012 form 1040 ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. Where to file 2012 form 1040 See Lump-Sum Distributions in Publication 575 for details. Where to file 2012 form 1040 However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. Where to file 2012 form 1040 See Roth TSP balance , earlier. Where to file 2012 form 1040    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. Where to file 2012 form 1040   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. Where to file 2012 form 1040 If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. Where to file 2012 form 1040 See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. Where to file 2012 form 1040 However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. Where to file 2012 form 1040 See Roth TSP balance , earlier, for a discussion of those conditions. Where to file 2012 form 1040 Tax on early distributions. Where to file 2012 form 1040   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. Where to file 2012 form 1040 However, this additional tax does not apply in certain situations, including any of the following. Where to file 2012 form 1040 You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. Where to file 2012 form 1040 You choose to receive your account balance in monthly payments based on your life expectancy. Where to file 2012 form 1040 You are totally and permanently disabled. Where to file 2012 form 1040 You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). Where to file 2012 form 1040 The earnings may be subject to the 10% tax depending on whether you met certain conditions. Where to file 2012 form 1040 See Roth TSP balance , earlier. Where to file 2012 form 1040   For more information, see Tax on Early Distributions in Publication 575. Where to file 2012 form 1040 Outstanding loan. Where to file 2012 form 1040   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. Where to file 2012 form 1040 The distribution also may be subject to the additional 10% tax on early distributions. Where to file 2012 form 1040 However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. Where to file 2012 form 1040 See Rollover Rules , later. Where to file 2012 form 1040   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. Where to file 2012 form 1040 However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. Where to file 2012 form 1040 See Roth TSP balance , earlier. Where to file 2012 form 1040 More information. Where to file 2012 form 1040   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. Where to file 2012 form 1040 Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). Where to file 2012 form 1040    The above documents are also available on the TSP website at www. Where to file 2012 form 1040 tsp. Where to file 2012 form 1040 gov. Where to file 2012 form 1040 Select “Forms & Publications. Where to file 2012 form 1040 ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. Where to file 2012 form 1040 You do not include the amount rolled over in your income, and you cannot take a deduction for it. Where to file 2012 form 1040 The amount rolled over is taxed later as the new program pays that amount to you. Where to file 2012 form 1040 If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. Where to file 2012 form 1040 However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. Where to file 2012 form 1040 To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. Where to file 2012 form 1040 You can also roll over a distribution from a qualified retirement plan into a Roth IRA. Where to file 2012 form 1040 Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. Where to file 2012 form 1040 See Rollovers to Roth IRAs , later, for more information. Where to file 2012 form 1040 Qualified retirement plan. Where to file 2012 form 1040   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. Where to file 2012 form 1040 The CSRS, FERS, and TSP are considered qualified retirement plans. Where to file 2012 form 1040 Distributions eligible for rollover treatment. Where to file 2012 form 1040   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. Where to file 2012 form 1040 You cannot roll over any part of your CSRS or FERS annuity payments. Where to file 2012 form 1040   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. Where to file 2012 form 1040   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. Where to file 2012 form 1040 However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. Where to file 2012 form 1040 Direct rollover option. Where to file 2012 form 1040   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. Where to file 2012 form 1040   There is an automatic rollover requirement for mandatory distributions. Where to file 2012 form 1040 A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. Where to file 2012 form 1040 The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. Where to file 2012 form 1040 You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. Where to file 2012 form 1040 If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. Where to file 2012 form 1040 No tax withheld. Where to file 2012 form 1040   If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. Where to file 2012 form 1040 However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. Where to file 2012 form 1040 Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. Where to file 2012 form 1040 Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. Where to file 2012 form 1040 Payment to you option. Where to file 2012 form 1040   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. Where to file 2012 form 1040 However, the full amount is treated as distributed to you even though you actually receive only 80%. Where to file 2012 form 1040 You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. Where to file 2012 form 1040 Rollovers to Roth IRAs are generally included in income. Where to file 2012 form 1040 Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. Where to file 2012 form 1040 If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. Where to file 2012 form 1040 However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). Where to file 2012 form 1040 Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. Where to file 2012 form 1040 See Roth TSP balance , earlier. Where to file 2012 form 1040 Also, see Tax on Early Distributions in Publication 575. Where to file 2012 form 1040 Exception to withholding. Where to file 2012 form 1040   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. Where to file 2012 form 1040 Partial rollovers. Where to file 2012 form 1040   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. Where to file 2012 form 1040 See Lump-Sum Distributions in Publication 575. Where to file 2012 form 1040 However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. Where to file 2012 form 1040 Rolling over more than amount received. Where to file 2012 form 1040   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). Where to file 2012 form 1040 Example. Where to file 2012 form 1040 You left government service at age 53. Where to file 2012 form 1040 On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you