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1040ez Tax Form 2013

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1040ez Tax Form 2013

1040ez tax form 2013 12. 1040ez tax form 2013   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. 1040ez tax form 2013 Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. 1040ez tax form 2013 Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. 1040ez tax form 2013 Method 2. 1040ez tax form 2013 RoyaltiesDepletion. 1040ez tax form 2013 Coal and iron ore. 1040ez tax form 2013 Sale of property interest. 1040ez tax form 2013 Part of future production sold. 1040ez tax form 2013 Unemployment BenefitsTypes of unemployment compensation. 1040ez tax form 2013 Governmental program. 1040ez tax form 2013 Repayment of unemployment compensation. 1040ez tax form 2013 Tax withholding. 1040ez tax form 2013 Repayment of benefits. 1040ez tax form 2013 Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. 1040ez tax form 2013 Deduction for costs involved in unlawful discrimination suits. 1040ez tax form 2013 Energy conservation measure. 1040ez tax form 2013 Dwelling unit. 1040ez tax form 2013 Current income required to be distributed. 1040ez tax form 2013 Current income not required to be distributed. 1040ez tax form 2013 How to report. 1040ez tax form 2013 Losses. 1040ez tax form 2013 Grantor trust. 1040ez tax form 2013 Nonemployee compensation. 1040ez tax form 2013 Corporate director. 1040ez tax form 2013 Personal representatives. 1040ez tax form 2013 Manager of trade or business for bankruptcy estate. 1040ez tax form 2013 Notary public. 1040ez tax form 2013 Election precinct official. 1040ez tax form 2013 Difficulty-of-care payments. 1040ez tax form 2013 Maintaining space in home. 1040ez tax form 2013 Reporting taxable payments. 1040ez tax form 2013 Lotteries and raffles. 1040ez tax form 2013 Form W-2G. 1040ez tax form 2013 Reporting winnings and recordkeeping. 1040ez tax form 2013 Inherited pension or IRA. 1040ez tax form 2013 Employee awards or bonuses. 1040ez tax form 2013 Pulitzer, Nobel, and similar prizes. 1040ez tax form 2013 Payment for services. 1040ez tax form 2013 VA payments. 1040ez tax form 2013 Prizes. 1040ez tax form 2013 Strike and lockout benefits. 1040ez tax form 2013 Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. 1040ez tax form 2013 Some items, however, are only partly excluded from income. 1040ez tax form 2013 This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. 1040ez tax form 2013 Income that is taxable must be reported on your tax return and is subject to tax. 1040ez tax form 2013 Income that is nontaxable may have to be shown on your tax return but is not taxable. 1040ez tax form 2013 This chapter begins with discussions of the following income items. 1040ez tax form 2013 Bartering. 1040ez tax form 2013 Canceled debts. 1040ez tax form 2013 Sales parties at which you are the host or hostess. 1040ez tax form 2013 Life insurance proceeds. 1040ez tax form 2013 Partnership income. 1040ez tax form 2013 S Corporation income. 1040ez tax form 2013 Recoveries (including state income tax refunds). 1040ez tax form 2013 Rents from personal property. 1040ez tax form 2013 Repayments. 1040ez tax form 2013 Royalties. 1040ez tax form 2013 Unemployment benefits. 1040ez tax form 2013 Welfare and other public assistance benefits. 1040ez tax form 2013 These discussions are followed by brief discussions of other income items. 1040ez tax form 2013 Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. 1040ez tax form 2013 You must include in your income, at the time received, the fair market value of property or services you receive in bartering. 1040ez tax form 2013 If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. 1040ez tax form 2013 Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. 1040ez tax form 2013 However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. 1040ez tax form 2013 Example 1. 1040ez tax form 2013 You are a self-employed attorney who performs legal services for a client, a small corporation. 1040ez tax form 2013 The corporation gives you shares of its stock as payment for your services. 1040ez tax form 2013 You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. 1040ez tax form 2013 Example 2. 1040ez tax form 2013 You are self-employed and a member of a barter club. 1040ez tax form 2013 The club uses “credit units” as a means of exchange. 1040ez tax form 2013 It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. 1040ez tax form 2013 The club subtracts credit units from your account when you receive goods or services from other members. 1040ez tax form 2013 You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. 1040ez tax form 2013 Example 3. 1040ez tax form 2013 You own a small apartment building. 1040ez tax form 2013 In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. 1040ez tax form 2013 You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. 1040ez tax form 2013 Form 1099-B from barter exchange. 1040ez tax form 2013   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. 1040ez tax form 2013 It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. 1040ez tax form 2013 The IRS also will receive a copy of Form 1099-B. 1040ez tax form 2013 Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. 1040ez tax form 2013 You have no income from the canceled debt if it is intended as a gift to you. 1040ez tax form 2013 A debt includes any indebtedness for which you are liable or which attaches to property you hold. 1040ez tax form 2013 If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. 1040ez tax form 2013 If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). 1040ez tax form 2013 Form 1099-C. 1040ez tax form 2013   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 1040ez tax form 2013 The amount of the canceled debt is shown in box 2. 1040ez tax form 2013 Interest included in canceled debt. 1040ez tax form 2013   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. 1040ez tax form 2013 Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. 1040ez tax form 2013 See Deductible debt under Exceptions, later. 1040ez tax form 2013   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. 1040ez tax form 2013 If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). 1040ez tax form 2013 Discounted mortgage loan. 1040ez tax form 2013   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. 1040ez tax form 2013 You must include the canceled amount in your income. 1040ez tax form 2013 Mortgage relief upon sale or other disposition. 1040ez tax form 2013   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. 1040ez tax form 2013 To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. 1040ez tax form 2013 Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. 1040ez tax form 2013    You may be able to exclude part of the mortgage relief on your principal residence. 1040ez tax form 2013 See Excluded debt, later. 1040ez tax form 2013   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. 1040ez tax form 2013 You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. 1040ez tax form 2013 Report any gain on nonbusiness property as a capital gain. 1040ez tax form 2013   See Publication 4681 for more information. 1040ez tax form 2013 Stockholder debt. 1040ez tax form 2013   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. 1040ez tax form 2013 For more information, see Publication 542, Corporations. 1040ez tax form 2013   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. 1040ez tax form 2013 This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. 1040ez tax form 2013 Repayment of canceled debt. 1040ez tax form 2013   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. 1040ez tax form 2013 You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. 1040ez tax form 2013 The statute of limitations generally does not end until 3 years after the due date of your original return. 1040ez tax form 2013 Exceptions There are several exceptions to the inclusion of canceled debt in income. 1040ez tax form 2013 These are explained next. 1040ez tax form 2013 Student loans. 1040ez tax form 2013   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. 1040ez tax form 2013   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. 1040ez tax form 2013 To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). 1040ez tax form 2013   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. 1040ez tax form 2013 Education loan repayment assistance. 1040ez tax form 2013   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. 1040ez tax form 2013    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. 1040ez tax form 2013 If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. 1040ez tax form 2013 See Form 1040X and its instructions for details on filing. 1040ez tax form 2013 Deductible debt. 1040ez tax form 2013   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. 1040ez tax form 2013 This exception applies only if you use the cash method of accounting. 1040ez tax form 2013 For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. 1040ez tax form 2013 Price reduced after purchase. 1040ez tax form 2013   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. 1040ez tax form 2013 The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. 1040ez tax form 2013 Excluded debt. 1040ez tax form 2013   Do not include a canceled debt in your gross income in the following situations. 1040ez tax form 2013 The debt is canceled in a bankruptcy case under title 11 of the U. 1040ez tax form 2013 S. 1040ez tax form 2013 Code. 1040ez tax form 2013 See Publication 908, Bankruptcy Tax Guide. 1040ez tax form 2013 The debt is canceled when you are insolvent. 1040ez tax form 2013 However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. 1040ez tax form 2013 See Publication 908. 1040ez tax form 2013 The debt is qualified farm debt and is canceled by a qualified person. 1040ez tax form 2013 See chapter 3 of Publication 225, Farmer's Tax Guide. 1040ez tax form 2013 The debt is qualified real property business debt. 1040ez tax form 2013 See chapter 5 of Publication 334. 1040ez tax form 2013 The cancellation is intended as a gift. 1040ez tax form 2013 The debt is qualified principal residence indebtedness. 1040ez tax form 2013 See Publication 525 for additional information. 1040ez tax form 2013 Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. 1040ez tax form 2013 You must report this item as income at its fair market value. 1040ez tax form 2013 Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. 1040ez tax form 2013 These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. 1040ez tax form 2013 For more information about the 50% limit for meal and entertainment expenses, see chapter 26. 1040ez tax form 2013 Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. 1040ez tax form 2013 This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 1040ez tax form 2013 However, interest income received as a result of life insurance proceeds may be taxable. 1040ez tax form 2013 Proceeds not received in installments. 1040ez tax form 2013   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. 1040ez tax form 2013 If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. 1040ez tax form 2013 Proceeds received in installments. 1040ez tax form 2013   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 1040ez tax form 2013   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. 1040ez tax form 2013 Include anything over this excluded part in your income as interest. 1040ez tax form 2013 Surviving spouse. 1040ez tax form 2013   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. 1040ez tax form 2013 If you remarry, you can continue to take the exclusion. 1040ez tax form 2013 Surrender of policy for cash. 1040ez tax form 2013   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. 1040ez tax form 2013 In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. 1040ez tax form 2013    You should receive a Form 1099-R showing the total proceeds and the taxable part. 1040ez tax form 2013 Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. 1040ez tax form 2013 More information. 1040ez tax form 2013   For more information, see Life Insurance Proceeds in Publication 525. 1040ez tax form 2013 Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. 1040ez tax form 2013 Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. 1040ez tax form 2013 To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. 1040ez tax form 2013 Include the part of the lump sum payment that is more than your cost in your income. 1040ez tax form 2013 Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. 1040ez tax form 2013 Viatical settlement. 1040ez tax form 2013   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. 1040ez tax form 2013 A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. 1040ez tax form 2013 Exclusion for terminal illness. 1040ez tax form 2013    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. 1040ez tax form 2013 This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. 1040ez tax form 2013 Exclusion for chronic illness. 1040ez tax form 2013    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 1040ez tax form 2013 Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. 1040ez tax form 2013 This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. 1040ez tax form 2013 For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. 1040ez tax form 2013 Exception. 1040ez tax form 2013   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. 1040ez tax form 2013 Form 8853. 1040ez tax form 2013   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. 1040ez tax form 2013 You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. 1040ez tax form 2013 Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. 1040ez tax form 2013 For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. 1040ez tax form 2013 For more information, see Publication 559, Survivors, Executors, and Administrators. 1040ez tax form 2013 Partnership Income A partnership generally is not a taxable entity. 1040ez tax form 2013 The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. 1040ez tax form 2013 Schedule K-1 (Form 1065). 1040ez tax form 2013    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. 1040ez tax form 2013 S. 1040ez tax form 2013 Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. 1040ez tax form 2013 In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. 1040ez tax form 2013 Keep Schedule K-1 (Form 1065) for your records. 1040ez tax form 2013 Do not attach it to your Form 1040, unless you are specifically required to do so. 1040ez tax form 2013 For more information on partnerships, see Publication 541, Partnerships. 1040ez tax form 2013 Qualified joint venture. 1040ez tax form 2013   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 1040ez tax form 2013 To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 1040ez tax form 2013 For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. 1040ez tax form 2013 S Corporation Income In most cases, an S corporation does not pay tax on its income. 1040ez tax form 2013 Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. 1040ez tax form 2013 Schedule K-1 (Form 1120S). 1040ez tax form 2013   An S corporation must file a return on Form 1120S, U. 1040ez tax form 2013 S. 1040ez tax form 2013 Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. 1040ez tax form 2013 In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. 1040ez tax form 2013 Keep Schedule K-1 (Form 1120S) for your records. 1040ez tax form 2013 Do not attach it to your Form 1040, unless you are specifically required to do so. 1040ez tax form 2013 For more information on S corporations and their shareholders, see the Instructions for Form 1120S. 1040ez tax form 2013 Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. 1040ez tax form 2013 The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). 1040ez tax form 2013 You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. 1040ez tax form 2013 Tax benefit rule. 1040ez tax form 2013   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. 1040ez tax form 2013 For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. 1040ez tax form 2013 For more information, see Publication 525. 1040ez tax form 2013 Federal income tax refund. 1040ez tax form 2013   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. 1040ez tax form 2013 State tax refund. 1040ez tax form 2013   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. 1040ez tax form 2013 The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. 1040ez tax form 2013 The IRS also will receive a copy of the Form 1099-G. 1040ez tax form 2013 If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. 1040ez tax form 2013 See Publication 525 for when you must use another worksheet. 1040ez tax form 2013   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. 1040ez tax form 2013 For examples, see Publication 525. 1040ez tax form 2013 Mortgage interest refund. 1040ez tax form 2013    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. 1040ez tax form 2013 Do not subtract the refund amount from the interest you paid in 2013. 1040ez tax form 2013 You may have to include it in your income under the rules explained in the following discussions. 1040ez tax form 2013 Interest on recovery. 1040ez tax form 2013   Interest on any of the amounts you recover must be reported as interest income in the year received. 1040ez tax form 2013 For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. 1040ez tax form 2013 Recovery and expense in same year. 1040ez tax form 2013   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. 1040ez tax form 2013 Recovery for 2 or more years. 1040ez tax form 2013   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. 1040ez tax form 2013 This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. 1040ez tax form 2013 For information on how to compute the allocation, see Recoveries in Publication 525. 1040ez tax form 2013 Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. 1040ez tax form 2013 Where to report. 1040ez tax form 2013   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. 1040ez tax form 2013 You cannot use Form 1040A or Form 1040EZ. 1040ez tax form 2013 Standard deduction limit. 1040ez tax form 2013   You generally are allowed to claim the standard deduction if you do not itemize your deductions. 1040ez tax form 2013 Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). 1040ez tax form 2013 If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. 1040ez tax form 2013 Example. 1040ez tax form 2013 For 2012, you filed a joint return. 1040ez tax form 2013 Your taxable income was $60,000 and you were not entitled to any tax credits. 1040ez tax form 2013 Your standard deduction was $11,900, and you had itemized deductions of $14,000. 1040ez tax form 2013 In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. 1040ez tax form 2013 The difference between the state and local income tax you deducted and your local general sales tax was more than $400. 1040ez tax form 2013 Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. 1040ez tax form 2013 Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. 1040ez tax form 2013 Standard deduction for earlier years. 1040ez tax form 2013   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. 1040ez tax form 2013 Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. 1040ez tax form 2013 Example. 1040ez tax form 2013 You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. 1040ez tax form 2013 Your itemized deductions were $12,350. 1040ez tax form 2013 The standard deduction that you could have claimed was $11,900. 1040ez tax form 2013 In 2013, you recovered $2,100 of your 2012 itemized deductions. 1040ez tax form 2013 None of the recoveries were more than the actual deductions for 2012. 1040ez tax form 2013 Include $450 of the recoveries in your 2013 income. 1040ez tax form 2013 This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). 1040ez tax form 2013 Recovery limited to deduction. 1040ez tax form 2013   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. 1040ez tax form 2013 The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. 1040ez tax form 2013 Example. 1040ez tax form 2013 During 2012 you paid $1,700 for medical expenses. 1040ez tax form 2013 From this amount you subtracted $1,500, which was 7. 1040ez tax form 2013 5% of your adjusted gross income. 1040ez tax form 2013 Your actual medical expense deduction was $200. 1040ez tax form 2013 In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. 1040ez tax form 2013 The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. 1040ez tax form 2013 Other recoveries. 1040ez tax form 2013   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. 1040ez tax form 2013 Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. 1040ez tax form 2013 In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. 1040ez tax form 2013 See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. 1040ez tax form 2013 Reporting business income and expenses. 1040ez tax form 2013    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 The form instructions have information on how to complete them. 1040ez tax form 2013 Reporting nonbusiness income. 1040ez tax form 2013   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. 1040ez tax form 2013 List the type and amount of the income on the dotted line next to line 21. 1040ez tax form 2013 Reporting nonbusiness expenses. 1040ez tax form 2013   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. 1040ez tax form 2013 Also enter the amount and “PPR” on the dotted line next to line 36. 1040ez tax form 2013   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. 1040ez tax form 2013 See Activity not for profit , under Other Income, later. 1040ez tax form 2013 Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. 1040ez tax form 2013 Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. 1040ez tax form 2013 Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. 1040ez tax form 2013 Type of deduction. 1040ez tax form 2013   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. 1040ez tax form 2013 You generally deduct the repayment on the same form or schedule on which you previously reported it as income. 1040ez tax form 2013 For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). 1040ez tax form 2013 If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). 1040ez tax form 2013 If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). 1040ez tax form 2013 Repaid social security benefits. 1040ez tax form 2013   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. 1040ez tax form 2013 Repayment of $3,000 or less. 1040ez tax form 2013   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. 1040ez tax form 2013 If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. 1040ez tax form 2013 Repayment over $3,000. 1040ez tax form 2013   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). 1040ez tax form 2013 However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. 1040ez tax form 2013 This means that at the time you included the income, it appeared that you had an unrestricted right to it. 1040ez tax form 2013 If you qualify for this choice, figure your tax under both methods and compare the results. 1040ez tax form 2013 Use the method (deduction or credit) that results in less tax. 1040ez tax form 2013 When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. 1040ez tax form 2013 Each instance of repayment is not considered separately. 1040ez tax form 2013 Method 1. 1040ez tax form 2013   Figure your tax for 2013 claiming a deduction for the repaid amount. 1040ez tax form 2013 If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 1040ez tax form 2013 Method 2. 1040ez tax form 2013   Figure your tax for 2013 claiming a credit for the repaid amount. 1040ez tax form 2013 Follow these steps. 1040ez tax form 2013 Figure your tax for 2013 without deducting the repaid amount. 1040ez tax form 2013 Refigure your tax from the earlier year without including in income the amount you repaid in 2013. 1040ez tax form 2013 Subtract the tax in (2) from the tax shown on your return for the earlier year. 1040ez tax form 2013 This is the credit. 1040ez tax form 2013 Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). 1040ez tax form 2013   If method 1 results in less tax, deduct the amount repaid. 1040ez tax form 2013 If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. 1040ez tax form 2013 R. 1040ez tax form 2013 C. 1040ez tax form 2013 1341” in the column to the right of line 71. 1040ez tax form 2013   An example of this computation can be found in Publication 525. 1040ez tax form 2013 Repaid wages subject to social security and Medicare taxes. 1040ez tax form 2013   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. 1040ez tax form 2013 If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. 1040ez tax form 2013 File a claim for refund using Form 843, Claim for Refund and Request for Abatement. 1040ez tax form 2013 Repaid wages subject to Additional Medicare Tax. 1040ez tax form 2013   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. 1040ez tax form 2013 If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. 1040ez tax form 2013 To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. 1040ez tax form 2013 S. 1040ez tax form 2013 Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. 1040ez tax form 2013 See the Instructions for Form 1040X. 1040ez tax form 2013 Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. 1040ez tax form 2013 In most cases you report royalties in Part I of Schedule E (Form 1040). 1040ez tax form 2013 However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. 1040ez tax form 2013 , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 Copyrights and patents. 1040ez tax form 2013   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. 1040ez tax form 2013 Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. 1040ez tax form 2013 Oil, gas, and minerals. 1040ez tax form 2013   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. 1040ez tax form 2013 The royalties are based on units, such as barrels, tons, etc. 1040ez tax form 2013 , and are paid to you by a person or company who leases the property from you. 1040ez tax form 2013 Depletion. 1040ez tax form 2013   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. 1040ez tax form 2013 For information on this subject, see chapter 9 of Publication 535. 1040ez tax form 2013 Coal and iron ore. 1040ez tax form 2013   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. 1040ez tax form 2013 For information about gain or loss from the sale of coal and iron ore, see Publication 544. 1040ez tax form 2013 Sale of property interest. 1040ez tax form 2013   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. 1040ez tax form 2013 Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). 1040ez tax form 2013 For more information on selling section 1231 property, see chapter 3 of Publication 544. 1040ez tax form 2013   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. 1040ez tax form 2013 Part of future production sold. 1040ez tax form 2013   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. 1040ez tax form 2013 Do not include it in your income or take depletion based on it. 1040ez tax form 2013   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. 1040ez tax form 2013 Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. 1040ez tax form 2013 Unemployment compensation. 1040ez tax form 2013   You must include in income all unemployment compensation you receive. 1040ez tax form 2013 You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. 1040ez tax form 2013 In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040ez tax form 2013 Types of unemployment compensation. 1040ez tax form 2013   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. 1040ez tax form 2013 It includes the following benefits. 1040ez tax form 2013 Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. 1040ez tax form 2013 State unemployment insurance benefits. 1040ez tax form 2013 Railroad unemployment compensation benefits. 1040ez tax form 2013 Disability payments from a government program paid as a substitute for unemployment compensation. 1040ez tax form 2013 (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. 1040ez tax form 2013 See chapter 5 for more information. 1040ez tax form 2013 ) Trade readjustment allowances under the Trade Act of 1974. 1040ez tax form 2013 Unemployment assistance under the Disaster Relief and Emergency Assistance Act. 1040ez tax form 2013 Unemployment assistance under the Airline Deregulation Act of 1974 Program. 1040ez tax form 2013 Governmental program. 1040ez tax form 2013   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. 1040ez tax form 2013 If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. 1040ez tax form 2013 Repayment of unemployment compensation. 1040ez tax form 2013   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040ez tax form 2013 On the dotted line next to your entry enter “Repaid” and the amount you repaid. 1040ez tax form 2013 If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. 1040ez tax form 2013 If the amount is more than $3,000, see Repayments , earlier. 1040ez tax form 2013 Tax withholding. 1040ez tax form 2013   You can choose to have federal income tax withheld from your unemployment compensation. 1040ez tax form 2013 To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. 1040ez tax form 2013 Tax will be withheld at 10% of your payment. 1040ez tax form 2013    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. 1040ez tax form 2013 If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. 1040ez tax form 2013 For more information on estimated tax, see chapter 4. 1040ez tax form 2013 Supplemental unemployment benefits. 1040ez tax form 2013   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. 1040ez tax form 2013 They are taxable as wages and are subject to withholding for income tax. 1040ez tax form 2013 They may be subject to social security and Medicare taxes. 1040ez tax form 2013 For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. 1040ez tax form 2013 Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040ez tax form 2013 Repayment of benefits. 1040ez tax form 2013   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. 1040ez tax form 2013 If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. 1040ez tax form 2013 If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. 1040ez tax form 2013   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. 1040ez tax form 2013 (You cannot use Form 1040A or Form 1040EZ. 1040ez tax form 2013 ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. 1040ez tax form 2013 If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. 1040ez tax form 2013 For more information on this, see Repayments , earlier. 1040ez tax form 2013 Private unemployment fund. 1040ez tax form 2013   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. 1040ez tax form 2013 Report the taxable amount on Form 1040, line 21. 1040ez tax form 2013 Payments by a union. 1040ez tax form 2013   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. 1040ez tax form 2013 However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. 1040ez tax form 2013 Guaranteed annual wage. 1040ez tax form 2013   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. 1040ez tax form 2013 Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040ez tax form 2013 State employees. 1040ez tax form 2013   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. 1040ez tax form 2013 Although the payments are fully taxable, do not report them as unemployment compensation. 1040ez tax form 2013 Report these payments on Form 1040, line 21. 1040ez tax form 2013 Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. 1040ez tax form 2013 Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. 1040ez tax form 2013 Do not deduct medical expenses that are reimbursed by such a fund. 1040ez tax form 2013 You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. 1040ez tax form 2013 Reemployment Trade Adjustment Assistance (RTAA) payments. 1040ez tax form 2013   RTAA payments received from a state must be included in your income. 1040ez tax form 2013 The state must send you Form 1099-G to advise you of the amount you should include in income. 1040ez tax form 2013 The amount should be reported on Form 1040, line 21. 1040ez tax form 2013 Persons with disabilities. 1040ez tax form 2013   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. 1040ez tax form 2013 However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. 1040ez tax form 2013 Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. 1040ez tax form 2013 Disaster relief grants. 1040ez tax form 2013    Do not include post-disaster grants received under the Robert T. 1040ez tax form 2013 Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. 1040ez tax form 2013 Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. 1040ez tax form 2013 If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. 1040ez tax form 2013 See Recoveries , earlier. 1040ez tax form 2013 Unemployment assistance payments under the Act are taxable unemployment compensation. 1040ez tax form 2013 See Unemployment compensation under Unemployment Benefits, earlier. 1040ez tax form 2013 Disaster relief payments. 1040ez tax form 2013   You can exclude from income any amount you receive that is a qualified disaster relief payment. 1040ez tax form 2013 A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. 1040ez tax form 2013 You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. 1040ez tax form 2013 The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. 1040ez tax form 2013   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. 1040ez tax form 2013   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. 1040ez tax form 2013 Disaster mitigation payments. 1040ez tax form 2013   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. 1040ez tax form 2013 Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. 1040ez tax form 2013 However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. 1040ez tax form 2013 They are paid to you through state and local governments based on the provisions of the Robert T. 1040ez tax form 2013 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. 1040ez tax form 2013   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. 1040ez tax form 2013 Home Affordable Modification Program (HAMP). 1040ez tax form 2013   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. 1040ez tax form 2013 Mortgage assistance payments under section 235 of the National Housing Act. 1040ez tax form 2013   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. 1040ez tax form 2013 Interest paid for the homeowner under the mortgage assistance program cannot be deducted. 1040ez tax form 2013 Medicare. 1040ez tax form 2013   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. 1040ez tax form 2013 This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). 1040ez tax form 2013 Old-age, survivors, and disability insurance benefits (OASDI). 1040ez tax form 2013   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. 1040ez tax form 2013 This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. 1040ez tax form 2013 Nutrition Program for the Elderly. 1040ez tax form 2013    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. 1040ez tax form 2013 If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. 1040ez tax form 2013 Payments to reduce cost of winter energy. 1040ez tax form 2013   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. 1040ez tax form 2013 Other Income The following brief discussions are arranged in alphabetical order. 1040ez tax form 2013 Other income items briefly discussed below are referenced to publications which provide more topical information. 1040ez tax form 2013 Activity not for profit. 1040ez tax form 2013   You must include on your return income from an activity from which you do not expect to make a profit. 1040ez tax form 2013 An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. 1040ez tax form 2013 Enter this income on Form 1040, line 21. 1040ez tax form 2013 Deductions for expenses related to the activity are limited. 1040ez tax form 2013 They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). 1040ez tax form 2013 See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. 1040ez tax form 2013 Alaska Permanent Fund dividend. 1040ez tax form 2013   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040ez tax form 2013 The state of Alaska sends each recipient a document that shows the amount of the payment with the check. 1040ez tax form 2013 The amount also is reported to IRS. 1040ez tax form 2013 Alimony. 1040ez tax form 2013   Include in your income on Form 1040, line 11, any alimony payments you receive. 1040ez tax form 2013 Amounts you receive for child support are not income to you. 1040ez tax form 2013 Alimony and child support payments are discussed in chapter 18. 1040ez tax form 2013 Bribes. 1040ez tax form 2013   If you receive a bribe, include it in your income. 1040ez tax form 2013 Campaign contributions. 1040ez tax form 2013   These contributions are not income to a candidate unless they are diverted to his or her personal use. 1040ez tax form 2013 To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. 1040ez tax form 2013 However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. 1040ez tax form 2013 S. 1040ez tax form 2013 Income Tax Return for Certain Political Organizations. 1040ez tax form 2013 Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. 1040ez tax form 2013 Car pools. 1040ez tax form 2013   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. 1040ez tax form 2013 These amounts are considered reimbursement for your expenses. 1040ez tax form 2013 However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. 1040ez tax form 2013 Cash rebates. 1040ez tax form 2013   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. 1040ez tax form 2013 Example. 1040ez tax form 2013 You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. 1040ez tax form 2013 The $2,000 is not income to you. 1040ez tax form 2013 Your basis in the car is $22,000. 1040ez tax form 2013 This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. 1040ez tax form 2013 Casualty insurance and other reimbursements. 1040ez tax form 2013   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. 1040ez tax form 2013 See chapter 25 for more information. 1040ez tax form 2013 Child support payments. 1040ez tax form 2013   You should not report these payments on your return. 1040ez tax form 2013 See chapter 18 for more information. 1040ez tax form 2013 Court awards and damages. 1040ez tax form 2013   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. 1040ez tax form 2013 The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. 1040ez tax form 2013 Include the following as ordinary income. 1040ez tax form 2013 Interest on any award. 1040ez tax form 2013 Compensation for lost wages or lost profits in most cases. 1040ez tax form 2013 Punitive damages, in most cases. 1040ez tax form 2013 It does not matter if they relate to a physical injury or physical sickness. 1040ez tax form 2013 Amounts received in settlement of pension rights (if you did not contribute to the plan). 1040ez tax form 2013 Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. 1040ez tax form 2013 Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. 1040ez tax form 2013 Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. 1040ez tax form 2013   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). 1040ez tax form 2013 Emotional distress. 1040ez tax form 2013   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. 1040ez tax form 2013 Do not include them in your income. 1040ez tax form 2013   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. 1040ez tax form 2013 Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. 1040ez tax form 2013 Deduction for costs involved in unlawful discrimination suits. 1040ez tax form 2013   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. 1040ez tax form 2013 For more information, see Publication 525. 1040ez tax form 2013 Credit card insurance. 1040ez tax form 2013   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. 1040ez tax form 2013 These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. 1040ez tax form 2013 Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. 1040ez tax form 2013 Down payment assistance. 1040ez tax form 2013   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. 1040ez tax form 2013 If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. 1040ez tax form 2013 If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. 1040ez tax form 2013 Employment agency fees. 1040ez tax form 2013   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. 1040ez tax form 2013 However, if you pay it and your employer reimburses you for it, it is includible in your income. 1040ez tax form 2013 Energy conservation subsidies. 1040ez tax form 2013   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. 1040ez tax form 2013 Energy conservation measure. 1040ez tax form 2013   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. 1040ez tax form 2013 Dwelling unit. 1040ez tax form 2013   This includes a house, apartment, condominium, mobile home, boat, or similar property. 1040ez tax form 2013 If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. 1040ez tax form 2013 Estate and trust income. 1040ez tax form 2013    An estate or trust, unlike a partnership, may have to pay federal income tax. 1040ez tax form 2013 If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. 1040ez tax form 2013 However, there is never a double tax. 1040ez tax form 2013 Estates and trusts file their returns on Form 1041, U. 1040ez tax form 2013 S. 1040ez tax form 2013 Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). 1040ez tax form 2013 Current income required to be distributed. 1040ez tax form 2013   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. 1040ez tax form 2013 Current income not required to be distributed. 1040ez tax form 2013    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. 1040ez tax form 2013 How to report. 1040ez tax form 2013   Treat each item of income the same way that the estate or trust would treat it. 1040ez tax form 2013 For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. 1040ez tax form 2013 The same rule applies to distributions of tax-exempt interest and capital gains. 1040ez tax form 2013   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. 1040ez tax form 2013 Losses. 1040ez tax form 2013   Losses of estates and trusts generally are not deductible by the beneficiaries. 1040ez tax form 2013 Grantor trust. 1040ez tax form 2013   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. 1040ez tax form 2013 (The grantor is the one who transferred property to the trust. 1040ez tax form 2013 ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. 1040ez tax form 2013   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. 1040ez tax form 2013 Expenses paid by another. 1040ez tax form 2013   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. 1040ez tax form 2013 But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. 1040ez tax form 2013 Fees for services. 1040ez tax form 2013   Include all fees for your services in your income. 1040ez tax form 2013 Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. 1040ez tax form 2013 Nonemployee compensation. 1040ez tax form 2013   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. 1040ez tax form 2013 You may need to report your fees as self-employment income. 1040ez tax form 2013 See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. 1040ez tax form 2013 Corporate director. 1040ez tax form 2013   Corporate director fees are self-employment income. 1040ez tax form 2013 Report these payments on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 Personal representatives. 1040ez tax form 2013   All personal representatives must include in their gross income fees paid to them from an estate. 1040ez tax form 2013 If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. 1040ez tax form 2013 If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 The fee is not includible in income if it is waived. 1040ez tax form 2013 Manager of trade or business for bankruptcy estate. 1040ez tax form 2013   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. 1040ez tax form 2013 Report this income on Form 1040, line 21. 1040ez tax form 2013 Notary public. 1040ez tax form 2013    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 These payments are not subject to self-employment tax. 1040ez tax form 2013 See the separate instructions for Schedule SE (Form 1040) for details. 1040ez tax form 2013 Election precinct official. 1040ez tax form 2013    You should receive a Form W-2 showing payments for services performed as an election official or election worker. 1040ez tax form 2013 Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040ez tax form 2013 Foster care providers. 1040ez tax form 2013   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. 1040ez tax form 2013 However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. 1040ez tax form 2013   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. 1040ez tax form 2013 Difficulty-of-care payments. 1040ez tax form 2013   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. 1040ez tax form 2013 A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. 1040ez tax form 2013   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. 1040ez tax form 2013 Maintaining space in home. 1040ez tax form 2013   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. 1040ez tax form 2013 Reporting taxable payments. 1040ez tax form 2013    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. 1040ez tax form 2013 Report the payments on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. 1040ez tax form 2013 Found property. 1040ez tax form 2013   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. 1040ez tax form 2013 Free tour. 1040ez tax form 2013   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. 1040ez tax form 2013 Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. 1040ez tax form 2013 You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. 1040ez tax form 2013 If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). 1040ez tax form 2013 Gambling winnings. 1040ez tax form 2013   You must include your gambling winnings in income on Form 1040, line 21. 1040ez tax form 2013 If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. 1040ez tax form 2013 Lotteries and raffles. 1040ez tax form 2013   Winnings from lotteries and raffles are gambling winnings. 1040ez tax form 2013 In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. 1040ez tax form 2013    If you win a state lottery prize payable in installments, see Publication 525 for more information. 1040ez tax form 2013 Form W-2G. 1040ez tax form 2013   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. 1040ez tax form 2013 Include the amount from box 1 on Form 1040, line 21. 1040ez tax form 2013 Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. 1040ez tax form 2013 Reporting winnings and recordkeeping. 1040ez tax form 2013   For more information on reporting gam
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Consider Your Options

The choices for phone services have never been greater. Most consumers are now able to buy local and long-distance phone service from their telephone company, cable or satellite TV provider, or Internet service provider. Services such as voice-mail, call waiting, caller ID, paging and wireless service may be offered as a package deal or sold separately. Before you buy, compare services and prices, and think about what you really need.

  • Whom do you call most often?
  • What time of day or day of the week do you call?
  • Do you want to get messages. If so, do you need voicemail or will an answering machine do?
  • Do you want call waiting and/or caller ID?
  • How important is it for you to have your telephone with you when you are away from home?

Find out how each company prices its services. Are there minimum-use, time-of-day or distance requirements, flat monthly fees; or special plans? For example, wireless service may be cheaper than regular local service if you don't make many calls.

Make sure you're comparing prices on similar plans and features. Understand that many service providers offer contracts for specific periods. Read the fine print and ask questions if there is anything you're not clear about.

The FCC offers consumer information about choosing a long distance carrier, understanding new phone fees and taxes, and more. The National Consumers League also maintains a web page to help you understand phone charges and recognize fraud.

The 1040ez Tax Form 2013

1040ez tax form 2013 3. 1040ez tax form 2013   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. 1040ez tax form 2013 Traditional IRA mistakenly moved to SIMPLE IRA. 1040ez tax form 2013 When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). 1040ez tax form 2013 It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. 1040ez tax form 2013 Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). 1040ez tax form 2013 This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. 1040ez tax form 2013 See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. 1040ez tax form 2013 If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. 1040ez tax form 2013 See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. 1040ez tax form 2013 What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. 1040ez tax form 2013 See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. 1040ez tax form 2013 A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. 1040ez tax form 2013 These contributions are called salary reduction contributions. 1040ez tax form 2013 All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. 1040ez tax form 2013 The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. 1040ez tax form 2013 Contributions are made on behalf of eligible employees. 1040ez tax form 2013 (See Eligible Employees below. 1040ez tax form 2013 ) Contributions are also subject to various limits. 1040ez tax form 2013 (See How Much Can Be Contributed on Your Behalf , later. 1040ez tax form 2013 ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. 1040ez tax form 2013 See How Are Contributions Made , later. 1040ez tax form 2013 You may be able to claim a credit for contributions to your SIMPLE plan. 1040ez tax form 2013 For more information, see chapter 4. 1040ez tax form 2013 Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. 1040ez tax form 2013 Self-employed individual. 1040ez tax form 2013   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. 1040ez tax form 2013 Excludable employees. 1040ez tax form 2013   Your employer can exclude the following employees from participating in the SIMPLE plan. 1040ez tax form 2013 Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). 1040ez tax form 2013 Employees who are nonresident aliens and received no earned income from sources within the United States. 1040ez tax form 2013 Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. 1040ez tax form 2013 Compensation. 1040ez tax form 2013   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. 1040ez tax form 2013 Wages, tips, and other pay from your employer that is subject to income tax withholding. 1040ez tax form 2013 Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. 1040ez tax form 2013 Self-employed individual compensation. 1040ez tax form 2013   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. 1040ez tax form 2013   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. 1040ez tax form 2013 How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. 1040ez tax form 2013 They are made on your behalf by your employer. 1040ez tax form 2013 Your employer must also make either matching contributions or nonelective contributions. 1040ez tax form 2013 Salary reduction contributions. 1040ez tax form 2013   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). 1040ez tax form 2013 You can choose to cancel the election at any time during the year. 1040ez tax form 2013   Salary reduction contributions are also referred to as “elective deferrals. 1040ez tax form 2013 ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. 1040ez tax form 2013 Matching contributions. 1040ez tax form 2013   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. 1040ez tax form 2013 See How Much Can Be Contributed on Your Behalf below. 1040ez tax form 2013 These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. 1040ez tax form 2013 These contributions are referred to as matching contributions. 1040ez tax form 2013   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. 1040ez tax form 2013 Nonelective contributions. 1040ez tax form 2013   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. 1040ez tax form 2013 These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. 1040ez tax form 2013   One of the requirements your employer must satisfy is notifying the employees that the election was made. 1040ez tax form 2013 For other requirements that your employer must satisfy, see chapter 3 of Publication 560. 1040ez tax form 2013 How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. 1040ez tax form 2013 Salary reduction contributions limit. 1040ez tax form 2013   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. 1040ez tax form 2013 The limitation remains at $12,000 for 2014. 1040ez tax form 2013 If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. 1040ez tax form 2013 You, not your employer, are responsible for monitoring compliance with these limits. 1040ez tax form 2013 Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. 1040ez tax form 2013 The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. 1040ez tax form 2013 $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. 1040ez tax form 2013 The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. 1040ez tax form 2013 The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. 1040ez tax form 2013 Matching employer contributions limit. 1040ez tax form 2013   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. 1040ez tax form 2013 These matching contributions cannot be more than 3% of your compensation for the calendar year. 1040ez tax form 2013 See Matching contributions less than 3% below. 1040ez tax form 2013 Example 1. 1040ez tax form 2013 In 2013, Joshua was a participant in his employer's SIMPLE plan. 1040ez tax form 2013 His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). 1040ez tax form 2013 Instead of taking it all in cash, Joshua elected to have 12. 1040ez tax form 2013 5% of his weekly pay ($100) contributed to his SIMPLE IRA. 1040ez tax form 2013 For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. 1040ez tax form 2013 Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. 1040ez tax form 2013 Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). 1040ez tax form 2013 Example 2. 1040ez tax form 2013 Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. 1040ez tax form 2013 94% of his weekly pay contributed to his SIMPLE IRA. 1040ez tax form 2013 In this example, Joshua's salary reduction contributions for the year (2. 1040ez tax form 2013 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). 1040ez tax form 2013 Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. 1040ez tax form 2013 In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. 1040ez tax form 2013 Matching contributions less than 3%. 1040ez tax form 2013   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. 1040ez tax form 2013   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. 1040ez tax form 2013 If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. 1040ez tax form 2013 Nonelective employer contributions limit. 1040ez tax form 2013   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. 1040ez tax form 2013 For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. 1040ez tax form 2013   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. 1040ez tax form 2013 Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. 1040ez tax form 2013 This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. 1040ez tax form 2013 Example 3. 1040ez tax form 2013 Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. 1040ez tax form 2013 Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. 1040ez tax form 2013 In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). 1040ez tax form 2013 Traditional IRA mistakenly moved to SIMPLE IRA. 1040ez tax form 2013   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. 1040ez tax form 2013 For more information, see Recharacterizations in chapter 1. 1040ez tax form 2013 Recharacterizing employer contributions. 1040ez tax form 2013   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. 1040ez tax form 2013 SEPs are discussed in chapter 2 of Publication 560. 1040ez tax form 2013 SIMPLE plans are discussed in this chapter. 1040ez tax form 2013 Converting from a SIMPLE IRA. 1040ez tax form 2013   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . 1040ez tax form 2013    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. 1040ez tax form 2013 When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. 1040ez tax form 2013 These rules are discussed in chapter 1. 1040ez tax form 2013 Your employer cannot restrict you from taking distributions from a SIMPLE IRA. 1040ez tax form 2013 Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. 1040ez tax form 2013 If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. 1040ez tax form 2013 See Additional Tax on Early Distributions, later. 1040ez tax form 2013 Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. 1040ez tax form 2013 Two-year rule. 1040ez tax form 2013   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. 1040ez tax form 2013 The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. 1040ez tax form 2013   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). 1040ez tax form 2013 Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. 1040ez tax form 2013 If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. 1040ez tax form 2013 If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. 1040ez tax form 2013 Prev  Up  Next   Home   More Online Publications