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2011 Tax Act

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2011 Tax Act

2011 tax act Publication 926 - Main Content Table of Contents Do You Have a Household Employee? Can Your Employee Legally Work in the United States? Do You Need To Pay Employment Taxes?Social Security and Medicare Taxes Federal Unemployment (FUTA) Tax Do You Need To Withhold Federal Income Tax? What Do You Need To Know About the Earned Income Credit? How Do You Make Tax Payments? What Forms Must You File?Employee who leaves during the year. 2011 tax act Filing options when no return is required. 2011 tax act What Records Must You Keep? Can You Claim a Credit for Child and Dependent Care Expenses? How Can You Correct Schedule H?Adjust the overpayment. 2011 tax act Claim for refund process. 2011 tax act How To Get Tax HelpLow Income Taxpayer Clinics Do You Have a Household Employee? You have a household employee if you hired someone to do household work and that worker is your employee. 2011 tax act The worker is your employee if you can control not only what work is done, but how it is done. 2011 tax act If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. 2011 tax act It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job. 2011 tax act Example. 2011 tax act You pay Betty Shore to babysit your child and do light housework 4 days a week in your home. 2011 tax act Betty follows your specific instructions about household and child care duties. 2011 tax act You provide the household equipment and supplies that Betty needs to do her work. 2011 tax act Betty is your household employee. 2011 tax act Household work. 2011 tax act   Household work is work done in or around your home. 2011 tax act Some examples of workers who do household work are: Babysitters, Caretakers, House cleaning workers, Domestic workers, Drivers, Health aides, Housekeepers, Maids, Nannies, Private nurses, and Yard workers. 2011 tax act Workers who are not your employees. 2011 tax act   If only the worker can control how the work is done, the worker is not your employee but is self-employed. 2011 tax act A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. 2011 tax act   A worker who performs child care services for you in his or her home generally is not your employee. 2011 tax act   If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee. 2011 tax act Example. 2011 tax act You made an agreement with John Peters to care for your lawn. 2011 tax act John runs a lawn care business and offers his services to the general public. 2011 tax act He provides his own tools and supplies, and he hires and pays any helpers he needs. 2011 tax act Neither John nor his helpers are your household employees. 2011 tax act More information. 2011 tax act   More information about who is an employee is in Publication 15-A, Employer's Supplemental Tax Guide. 2011 tax act Can Your Employee Legally Work in the United States? It is unlawful for you knowingly to hire or continue to employ an alien who cannot legally work in the United States. 2011 tax act When you hire a household employee to work for you on a regular basis, you and the employee must complete the U. 2011 tax act S. 2011 tax act Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. 2011 tax act No later than the first day of work, the employee must complete the employee section of the form by providing certain required information and attesting to his or her current work eligibility status in the United States. 2011 tax act You must complete the employer section by examining documents presented by the employee as evidence of his or her identity and employment eligibility. 2011 tax act Acceptable documents to establish identity and employment eligibility are listed on Form I-9. 2011 tax act You should keep the completed Form I-9 in your own records. 2011 tax act Do not submit it to the IRS, the USCIS, or any other government or other entity. 2011 tax act The form must be kept available for review upon notice by an authorized U. 2011 tax act S. 2011 tax act Government official. 2011 tax act Two copies of Form I-9 are contained in the Handbook for Employers (Form M-274) published by the USCIS. 2011 tax act Call the USCIS at 1-800-870-3676 to order the Handbook for Employers; or you may download the handbook at www. 2011 tax act uscis. 2011 tax act gov. 2011 tax act If you have questions about the employment eligibility verification process or other immigration-related employment matters, contact the USCIS Office of Business Liaison at 1-800-357-2099. 2011 tax act You also can visit the USCIS website at www. 2011 tax act uscis. 2011 tax act gov to get Form I-9. 2011 tax act For more information, see Employee's Social Security Number (SSN) in Publication 15 (Circular E), Employer's Tax Guide. 2011 tax act Do You Need To Pay Employment Taxes? If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. 2011 tax act To find out, read Table 1. 2011 tax act You do not need to withhold federal income tax from your household employee's wages. 2011 tax act But if your employee asks you to withhold it, you can. 2011 tax act See Do You Need To Withhold Federal Income Tax, later. 2011 tax act If you need to pay social security, Medicare, or federal unemployment tax or choose to withhold federal income tax, read Table 2 for an overview of what you may need to do. 2011 tax act If you do not need to pay social security, Medicare, or federal unemployment tax and do not choose to withhold federal income tax, read State employment taxes, next. 2011 tax act The rest of this publication does not apply to you. 2011 tax act State employment taxes. 2011 tax act   You should contact your state unemployment tax agency to find out whether you need to pay state unemployment tax for your household employee. 2011 tax act For a list of state unemployment tax agencies, visit the U. 2011 tax act S. 2011 tax act Department of Labor's website at www. 2011 tax act workforcesecurity. 2011 tax act doleta. 2011 tax act gov/unemploy/agencies. 2011 tax act asp. 2011 tax act You should also determine if you need to pay or collect other state employment taxes or carry workers' compensation insurance. 2011 tax act    Table 1. 2011 tax act Do You Need To Pay Employment Taxes? IF you . 2011 tax act . 2011 tax act . 2011 tax act THEN you need to . 2011 tax act . 2011 tax act . 2011 tax act A– Pay cash wages of $1,900 or more in 2014 to any one household employee. 2011 tax act Withhold and pay social security and Medicare taxes. 2011 tax act The taxes are 15. 2011 tax act 3%1 of cash wages. 2011 tax act Your employee's share is 7. 2011 tax act 65%1. 2011 tax act   (You can choose to pay it yourself and not withhold it. 2011 tax act ) Your share is 7. 2011 tax act 65%. 2011 tax act   Do not count wages you pay to— Your spouse, Your child under the age of 21, Your parent (see Wages not counted, later, for an exception), or Any employee under the age of 18 at any time in 2014 (see Wages not counted, later, for an exception). 2011 tax act B– Pay total cash wages of $1,000 or more in any calendar quarter of 2013 or 2014 to household employees. 2011 tax act Pay federal unemployment tax. 2011 tax act The tax is 6% of cash wages. 2011 tax act Wages over $7,000 a year per employee are not taxed. 2011 tax act You also may owe state unemployment tax. 2011 tax act   Do not count wages you pay to— Your spouse, Your child under the age of 21, or Your parent. 2011 tax act 1In addition to withholding Medicare tax at 1. 2011 tax act 45%, you must withhold a 0. 2011 tax act 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2011 tax act You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 2011 tax act Additional Medicare Tax is only imposed on the employee. 2011 tax act There is no employer share of Additional Medicare Tax. 2011 tax act All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2011 tax act Note. 2011 tax act If neither A nor B above applies, you do not need to pay any federal employment taxes. 2011 tax act But you may still need to pay state employment taxes. 2011 tax act Table 2. 2011 tax act Household Employer's Checklist You may need to do the following things when you have a household employee. 2011 tax act   When you hire a household employee: □ Find out if the person can legally work in the United States. 2011 tax act  □ Find out if you need to pay state taxes. 2011 tax act When you pay your household employee: □ Withhold social security and Medicare taxes. 2011 tax act  □ Withhold federal income tax. 2011 tax act  □ Decide how you will make tax payments. 2011 tax act  □ Keep records. 2011 tax act By February 2, 2015: □ Get an employer identification number (EIN). 2011 tax act  □ Give your employee Copies B, C, and 2 of Form W-2, Wage and Tax Statement. 2011 tax act By March 2, 2015 (March 31, 2015, if you file Form W-2 electronically): □ Send Copy A of Form W-2 to the Social Security Administration (SSA). 2011 tax act By April 15, 2015: □ File Schedule H (Form 1040), Household Employment Taxes, with your 2014 federal income tax return (Form 1040, 1040NR, 1040-SS, or Form 1041). 2011 tax act  If you do not have to file a return, file Schedule H by itself. 2011 tax act Social Security and Medicare Taxes The social security tax pays for old-age, survivors, and disability benefits for workers and their families. 2011 tax act The Medicare tax pays for hospital insurance. 2011 tax act Both you and your household employee may owe social security and Medicare taxes. 2011 tax act Your share is 7. 2011 tax act 65% (6. 2011 tax act 2% for social security tax and 1. 2011 tax act 45% for Medicare tax) of the employee's social security and Medicare wages. 2011 tax act Your employee's share is also 7. 2011 tax act 65% (6. 2011 tax act 2% for social security tax and 1. 2011 tax act 45% for Medicare tax). 2011 tax act In addition to withholding Medicare tax at 1. 2011 tax act 45%, you must withhold a 0. 2011 tax act 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2011 tax act You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 2011 tax act Additional Medicare Tax is only imposed on the employee. 2011 tax act There is no employer share of Additional Medicare Tax. 2011 tax act All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2011 tax act For more information on Additional Medicare Tax, visit IRS. 2011 tax act gov and enter “Additional Medicare Tax” in the search box. 2011 tax act Generally, you can use Table 3 to figure the amount of social security and Medicare taxes to withhold from each wage payment. 2011 tax act You are responsible for payment of your employee's share of the taxes as well as your own. 2011 tax act You can either withhold your employee's share from the employee's wages or pay it from your own funds. 2011 tax act If you decide to pay the employee's share from your own funds, see Not withholding the employee's share, later. 2011 tax act Pay the taxes as discussed under How Do You Make Tax Payments, later. 2011 tax act Also, see What Forms Must You File, later. 2011 tax act Social security and Medicare wages. 2011 tax act   You figure social security and Medicare taxes on the social security and Medicare wages you pay your employee. 2011 tax act   If you pay your household employee cash wages of $1,900 or more in 2014, all cash wages you pay to that employee in 2014 (regardless of when the wages were earned) up to $117,000 are social security wages and all cash wages are Medicare wages. 2011 tax act However, any noncash wages you pay do not count as social security and Medicare wages. 2011 tax act   If you pay the employee less than $1,900 in cash wages in 2014, none of the wages you pay the employee are social security or Medicare wages and neither you nor your employee will owe social security or Medicare tax on those wages. 2011 tax act Cash wages. 2011 tax act   Cash wages include wages you pay by check, money order, etc. 2011 tax act Cash wages do not include the value of food, lodging, clothing, and other noncash items you give your household employee. 2011 tax act However, cash you give your employee in place of these items is included in cash wages. 2011 tax act State disability payments treated as wages. 2011 tax act   Certain state disability plan payments that your household employee may receive are treated as social security and Medicare wages. 2011 tax act For more information about these payments, see the Instructions for Schedule H (Form 1040) and the notice issued by the state. 2011 tax act Wages not counted. 2011 tax act   Do not count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $1,900 or more during the year. 2011 tax act Your spouse. 2011 tax act Your child who is under the age of 21. 2011 tax act Your parent. 2011 tax act Exception: Count these wages if both the following conditions apply. 2011 tax act Your parent cares for your child who is either of the following. 2011 tax act Under the age of 18, or Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed. 2011 tax act Your marital status is one of the following. 2011 tax act You are divorced and have not remarried, You are a widow or widower, or You are living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed. 2011 tax act An employee who is under the age of 18 at any time during the year. 2011 tax act Exception: Count these wages if providing household services is the employee's principal occupation. 2011 tax act If the employee is a student, providing household services is not considered to be his or her principal occupation. 2011 tax act Also, if your employee's cash wages reach $117,000 (maximum wages subject to social security tax) in 2014, do not count any wages you pay that employee during the rest of the year as social security wages to figure social security tax. 2011 tax act Continue to count the employee's cash wages as Medicare wages to figure Medicare tax. 2011 tax act If you provide your employee transit passes to commute to your home, do not count the value of the transit passes (up to $130 per month for 2014) as wages. 2011 tax act A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. 2011 tax act If you provide your employee parking at or near your home or at or near a location from which your employee commutes to your home, do not count the value of parking (up to $250 per month for 2014) as wages. 2011 tax act If you reimburse your employee for transit passes or parking, you may be able to exclude the reimbursement amounts. 2011 tax act See Publication 15-B, Employer's Tax Guide to Fringe Benefits, for special requirements for this exclusion. 2011 tax act Withholding the employee's share. 2011 tax act   You should withhold the employee's share of social security and Medicare taxes if you expect to pay your household employee cash wages of $1,900 or more in 2014. 2011 tax act However, if you prefer to pay the employee's share yourself, see Not withholding the employee's share, later. 2011 tax act   You can withhold the employee's share of the taxes even if you are not sure your employee's cash wages will be $1,900 or more in 2014. 2011 tax act If you withhold the taxes but then actually pay the employee less than $1,900 in cash wages for the year, you should repay the employee. 2011 tax act   Withhold 7. 2011 tax act 65% (6. 2011 tax act 2% for social security tax and 1. 2011 tax act 45% for Medicare tax) from each payment of social security and Medicare wages. 2011 tax act Generally, you can use Table 3 to figure the proper amount to withhold. 2011 tax act You will pay the amount withheld to the IRS with your share of the taxes. 2011 tax act Do not withhold any social security tax after your employee's social security wages for the year reach $117,000. 2011 tax act Table 3. 2011 tax act Employee Social Security (6. 2011 tax act 2%) and Medicare (1. 2011 tax act 45%1) Tax Withholding Table (See Publication 15 (Circular E) for income tax withholding tables. 2011 tax act ) Use this table to figure the amount of social security and Medicare taxes to withhold from each wage payment. 2011 tax act For example, on a wage payment of $180, the employee social security tax is $11. 2011 tax act 16 ($6. 2011 tax act 20 tax on $100 plus $4. 2011 tax act 96 on $80 wages). 2011 tax act The employee Medicare tax is $2. 2011 tax act 61 ($1. 2011 tax act 45 tax on $100 plus $1. 2011 tax act 16 on $80 wages). 2011 tax act If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: $ 1. 2011 tax act 00 . 2011 tax act $ . 2011 tax act 06 $ . 2011 tax act 01 $ 51. 2011 tax act 00 . 2011 tax act $ 3. 2011 tax act 16 $ . 2011 tax act 74 2. 2011 tax act 00 . 2011 tax act . 2011 tax act 12 . 2011 tax act 03 52. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 22 . 2011 tax act 75 3. 2011 tax act 00 . 2011 tax act . 2011 tax act 19 . 2011 tax act 04 53. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 29 . 2011 tax act 77 4. 2011 tax act 00 . 2011 tax act . 2011 tax act 25 . 2011 tax act 06 54. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 35 . 2011 tax act 78 5. 2011 tax act 00 . 2011 tax act . 2011 tax act 31 . 2011 tax act 07 55. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 41 . 2011 tax act 80 6. 2011 tax act 00 . 2011 tax act . 2011 tax act 37 . 2011 tax act 09 56. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 47 . 2011 tax act 81 7. 2011 tax act 00 . 2011 tax act . 2011 tax act 43 . 2011 tax act 10 57. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 53 . 2011 tax act 83 8. 2011 tax act 00 . 2011 tax act . 2011 tax act 50 . 2011 tax act 12 58. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 60 . 2011 tax act 84 9. 2011 tax act 00 . 2011 tax act . 2011 tax act 56 . 2011 tax act 13 59. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 66 . 2011 tax act 86 10. 2011 tax act 00 . 2011 tax act . 2011 tax act 62 . 2011 tax act 15 60. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 72 . 2011 tax act 87 11. 2011 tax act 00 . 2011 tax act . 2011 tax act 68 . 2011 tax act 16 61. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 78 . 2011 tax act 88 12. 2011 tax act 00 . 2011 tax act . 2011 tax act 74 . 2011 tax act 17 62. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 84 . 2011 tax act 90 13. 2011 tax act 00 . 2011 tax act . 2011 tax act 81 . 2011 tax act 19 63. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 91 . 2011 tax act 91 14. 2011 tax act 00 . 2011 tax act . 2011 tax act 87 . 2011 tax act 20 64. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 97 . 2011 tax act 93 15. 2011 tax act 00 . 2011 tax act . 2011 tax act 93 . 2011 tax act 22 65. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 03 . 2011 tax act 94 16. 2011 tax act 00 . 2011 tax act . 2011 tax act 99 . 2011 tax act 23 66. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 09 . 2011 tax act 96 17. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 05 . 2011 tax act 25 67. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 15 . 2011 tax act 97 18. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 12 . 2011 tax act 26 68. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 22 . 2011 tax act 99 19. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 18 . 2011 tax act 28 69. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 28 1. 2011 tax act 00 20. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 24 . 2011 tax act 29 70. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 34 1. 2011 tax act 02 21. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 30 . 2011 tax act 30 71. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 40 1. 2011 tax act 03 22. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 36 . 2011 tax act 32 72. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 46 1. 2011 tax act 04 23. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 43 . 2011 tax act 33 73. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 53 1. 2011 tax act 06 24. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 49 . 2011 tax act 35 74. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 59 1. 2011 tax act 07 25. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 55 . 2011 tax act 36 75. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 65 1. 2011 tax act 09 26. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 61 . 2011 tax act 38 76. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 71 1. 2011 tax act 10 27. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 67 . 2011 tax act 39 77. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 77 1. 2011 tax act 12 28. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 74 . 2011 tax act 41 78. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 84 1. 2011 tax act 13 29. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 80 . 2011 tax act 42 79. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 90 1. 2011 tax act 15 30. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 86 . 2011 tax act 44 80. 2011 tax act 00 . 2011 tax act 4. 2011 tax act 96 1. 2011 tax act 16 31. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 92 . 2011 tax act 45 81. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 02 1. 2011 tax act 17 32. 2011 tax act 00 . 2011 tax act 1. 2011 tax act 98 . 2011 tax act 46 82. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 08 1. 2011 tax act 19 33. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 05 . 2011 tax act 48 83. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 15 1. 2011 tax act 20 34. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 11 . 2011 tax act 49 84. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 21 1. 2011 tax act 22 35. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 17 . 2011 tax act 51 85. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 27 1. 2011 tax act 23 36. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 23 . 2011 tax act 52 86. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 33 1. 2011 tax act 25 37. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 29 . 2011 tax act 54 87. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 39 1. 2011 tax act 26 38. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 36 . 2011 tax act 55 88. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 46 1. 2011 tax act 28 39. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 42 . 2011 tax act 57 89. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 52 1. 2011 tax act 29 40. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 48 . 2011 tax act 58 90. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 58 1. 2011 tax act 31 41. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 54 . 2011 tax act 59 91. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 64 1. 2011 tax act 32 42. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 60 . 2011 tax act 61 92. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 70 1. 2011 tax act 33 43. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 67 . 2011 tax act 62 93. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 77 1. 2011 tax act 35 44. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 73 . 2011 tax act 64 94. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 83 1. 2011 tax act 36 45. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 79 . 2011 tax act 65 95. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 89 1. 2011 tax act 38 46. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 85 . 2011 tax act 67 96. 2011 tax act 00 . 2011 tax act 5. 2011 tax act 95 1. 2011 tax act 39 47. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 91 . 2011 tax act 68 97. 2011 tax act 00 . 2011 tax act 6. 2011 tax act 01 1. 2011 tax act 41 48. 2011 tax act 00 . 2011 tax act 2. 2011 tax act 98 . 2011 tax act 70 98. 2011 tax act 00 . 2011 tax act 6. 2011 tax act 08 1. 2011 tax act 42 49. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 04 . 2011 tax act 71 99. 2011 tax act 00 . 2011 tax act 6. 2011 tax act 14 1. 2011 tax act 44 50. 2011 tax act 00 . 2011 tax act 3. 2011 tax act 10 . 2011 tax act 73 100. 2011 tax act 00 . 2011 tax act 6. 2011 tax act 20 1. 2011 tax act 45 1In addition to withholding Medicare tax at 1. 2011 tax act 45%, you must withhold a 0. 2011 tax act 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2011 tax act You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 2011 tax act Additional Medicare Tax is only imposed on the employee. 2011 tax act There is no employer share of Additional Medicare Tax. 2011 tax act All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2011 tax act   If you make an error by withholding too little, you should withhold additional taxes from a later payment. 2011 tax act If you withhold too much, you should repay the employee. 2011 tax act    In addition to withholding Medicare tax at 1. 2011 tax act 45%, you must withhold a 0. 2011 tax act 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2011 tax act You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 2011 tax act Additional Medicare Tax is only imposed on the employee. 2011 tax act There is no employer share of Additional Medicare Tax. 2011 tax act All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2011 tax act For more information on Additional Medicare Tax, visit IRS. 2011 tax act gov and enter “Additional Medicare Tax” in the search box. 2011 tax act Example. 2011 tax act On February 13, 2014, Mary Brown hired Jane R. 2011 tax act Oak (who is an unrelated individual over age 18) to care for her child and agreed to pay cash wages of $50 every Friday. 2011 tax act Jane worked for the remainder of the year (a total of 46 weeks). 2011 tax act Mary did not give Jane a Form W-4 to request federal or state tax withholding. 2011 tax act The following is the information Mary will need to complete Schedule H, Form W-2, and Form W-3. 2011 tax act See the completed examples of Form W-2 and Form W-3 for 2014 at the end of this publication. 2011 tax act Total cash wages paid to Jane $2,300. 2011 tax act 00 ($50 x 46 weeks)       Jane's share of:     Social security tax $142. 2011 tax act 60 ($2,300 x 6. 2011 tax act 2% (. 2011 tax act 062))         Medicare tax $33. 2011 tax act 35       ($2,300 x 1. 2011 tax act 45% (. 2011 tax act 0145)) Mary's share of:     Social security tax $142. 2011 tax act 60  ($2,300 x 6. 2011 tax act 2% (. 2011 tax act 062))           Medicare tax $33. 2011 tax act 35  ($2,300 x 1. 2011 tax act 45% (. 2011 tax act 0145)) Amount reported on Form W-2 and Form W-3:   Box 1:Wages, tips $2,300. 2011 tax act 00   Box 4: Social security tax withheld 142. 2011 tax act 60   Box 6: Medicare tax withheld 33. 2011 tax act 35 For information on withholding and reporting federal income taxes, see Publication 15 (Circular E). 2011 tax act Not withholding the employee's share. 2011 tax act   If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. 2011 tax act The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. 2011 tax act However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. 2011 tax act Example. 2011 tax act In 2014 you hire a household employee (who is an unrelated individual over age 18) to care for your child and agree to pay cash wages of $100 every Friday. 2011 tax act You expect to pay your employee $1,900 or more for the year. 2011 tax act You decide to pay your employee's share of social security and Medicare taxes from your own funds. 2011 tax act You pay your employee $100 every Friday without withholding any social security or Medicare taxes. 2011 tax act For social security and Medicare tax purposes, your employee's wages each payday are $100. 2011 tax act For each wage payment, you will pay $15. 2011 tax act 30 when you pay the taxes. 2011 tax act This is $7. 2011 tax act 65 ($6. 2011 tax act 20 for social security tax + $1. 2011 tax act 45 for Medicare tax) to cover your employee's share plus $7. 2011 tax act 65 ($6. 2011 tax act 20 for social security tax + $1. 2011 tax act 45 for Medicare tax) for your share. 2011 tax act For income tax purposes, your employee's wages each payday are $107. 2011 tax act 65 ($100 + the $7. 2011 tax act 65 you will pay to cover your employee's share of social security and Medicare taxes). 2011 tax act Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. 2011 tax act Like most employers, you may owe both the federal unemployment tax (the FUTA tax) and a state unemployment tax. 2011 tax act Or, you may owe only the FUTA tax or only the state unemployment tax. 2011 tax act To find out whether you will owe state unemployment tax, contact your state's unemployment tax agency. 2011 tax act For a list of state unemployment tax agencies, visit the U. 2011 tax act S. 2011 tax act Department of Labor's website at www. 2011 tax act workforcesecurity. 2011 tax act doleta. 2011 tax act gov/unemploy/agencies. 2011 tax act asp. 2011 tax act You should also find out if you need to pay or collect other state employment taxes or carry workers' compensation insurance. 2011 tax act The FUTA tax is 6. 2011 tax act 0% of your employee's FUTA wages. 2011 tax act However, you may be able to take a credit of up to 5. 2011 tax act 4% against the FUTA tax, resulting in a net tax rate of 0. 2011 tax act 6%. 2011 tax act Your credit for 2014 is limited unless you pay all the required contributions for 2014 to your state unemployment fund by April 15, 2015. 2011 tax act The credit you can take for any contributions for 2014 that you pay after April 15, 2015, is limited to 90% of the credit that would have been allowable if the contributions were paid by April 15, 2015. 2011 tax act (If you did not pay all the required contributions for 2013 by April 15, 2014, see Credit for 2013, later. 2011 tax act ) Note. 2011 tax act   If a due date falls on a Saturday, Sunday, or legal holiday, payments are considered timely if made by the next business day. 2011 tax act The term “legal holiday” means any legal holiday in the District of Columbia. 2011 tax act Pay the tax as discussed under How Do You Make Tax Payments, later. 2011 tax act Also, see What Forms Must You File, later. 2011 tax act Note. 2011 tax act   The 5. 2011 tax act 4% credit is reduced for wages paid in a credit reduction state. 2011 tax act See the Instructions for Schedule H (Form 1040). 2011 tax act Do not withhold the FUTA tax from your employee's wages. 2011 tax act You must pay it from your own funds. 2011 tax act FUTA wages. 2011 tax act   Figure the FUTA tax on the FUTA wages you pay. 2011 tax act If you pay cash wages to all of your household employees totaling $1,000 or more in any calendar quarter of 2013 or 2014, the first $7,000 of cash wages you pay to each household employee in 2014 is FUTA wages. 2011 tax act (A calendar quarter is January through March, April through June, July through September, or October through December. 2011 tax act ) If your employee's cash wages reach $7,000 during the year, do not figure the FUTA tax on any wages you pay that employee during the rest of the year. 2011 tax act For an explanation of cash wages, see the discussion on Social security and Medicare wages under Social Security and Medicare Taxes, earlier. 2011 tax act Wages not counted. 2011 tax act   Do not count wages you pay to any of the following individuals as FUTA wages. 2011 tax act Your spouse. 2011 tax act Your child who is under the age of 21. 2011 tax act Your parent. 2011 tax act Credit for 2013. 2011 tax act   The credit you can take for any state unemployment fund contributions for 2013 that you pay after April 15, 2014, is limited to 90% of the credit that would have been allowable if the contributions were paid on or before April 15, 2014. 2011 tax act Use Worksheet A to figure the credit for late contributions if you paid any state contributions after the due date for filing  Form 1040. 2011 tax act Worksheet A. 2011 tax act Worksheet for Credit for Late Contributions 1. 2011 tax act Enter the amount from Schedule H, line 22   2. 2011 tax act Enter the amount from Schedule H, line 19   3. 2011 tax act Subtract line 2 from line 1. 2011 tax act If zero or less, enter -0-   4. 2011 tax act Enter total contributions paid to the state(s) after the Form 1040 due date   5. 2011 tax act Enter the smaller of line 3 or line 4   6. 2011 tax act Multiply line 5 by . 2011 tax act 90 (90%)   7. 2011 tax act Add lines 2 and 6   8. 2011 tax act Enter the smaller of the amount on line 1 or line 7 here and on Schedule H, line 23   Do You Need To Withhold Federal Income Tax? You are not required to withhold federal income tax from wages you pay a household employee. 2011 tax act You should withhold federal income tax only if your household employee asks you to withhold it and you agree. 2011 tax act The employee must give you a completed Form W-4, Employee's Withholding Allowance Certificate. 2011 tax act If you and your employee have agreed to withholding, either of you may end the agreement by letting the other know in writing. 2011 tax act If you agree to withhold federal income tax, you are responsible for paying it to the IRS. 2011 tax act Pay the tax as discussed under How Do You Make Tax Payments, later. 2011 tax act Also, see What Forms Must You File, later. 2011 tax act Use the income tax withholding tables in Publication 15 (Circular E) to find out how much to withhold. 2011 tax act Figure federal income tax withholding on wages before you deduct any amounts for other withheld taxes. 2011 tax act Withhold federal income tax from each payment of wages based on the filing status and exemptions shown on your employee's Form W-4. 2011 tax act Publication 15 (Circular E) contains detailed instructions. 2011 tax act Wages. 2011 tax act   Figure federal income tax withholding on both cash and noncash wages you pay. 2011 tax act Measure wages you pay in any form other than cash by the fair market value of the noncash item. 2011 tax act   Do not count as wages any of the following items. 2011 tax act Meals provided to your employee at your home for your convenience. 2011 tax act Lodging provided to your employee at your home for your convenience and as a condition of employment. 2011 tax act Up to $130 per month for 2014 for transit passes you give your employee (or for any cash reimbursement you make for the amount your employee pays for transit passes used to commute to your home if you qualify for this exclusion). 2011 tax act A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. 2011 tax act See Publication 15-B for special requirements for this exclusion. 2011 tax act Up to $250 per month for 2014 for the value of parking you provide your employee or for any cash reimbursement you make for the amount your employee pays and substantiates for parking at or near your home or at or near a location from which your employee commutes to your home. 2011 tax act   See Publication 15 (Circular E) for more information on cash and noncash wages. 2011 tax act Paying tax without withholding. 2011 tax act   Any income tax you pay for your employee without withholding it from the employee's wages must be included in the employee's wages for federal income tax purposes. 2011 tax act It also must be included in social security and Medicare wages and in federal unemployment (FUTA) wages. 2011 tax act What Do You Need To Know About the Earned Income Credit? Certain workers can take the earned income credit (EIC) on their federal income tax return. 2011 tax act This credit reduces their tax or allows them to receive a payment from the IRS. 2011 tax act You also may have to give your employee a notice about the EIC. 2011 tax act Notice about the EIC. 2011 tax act   Copy B of the 2014 Form W-2 has a statement about the EIC on the back. 2011 tax act If you give your employee that copy by February 2, 2015 (as discussed under Form W-2 under What Forms Must You File, later), you do not have to give the employee any other notice about the EIC. 2011 tax act   If you do not give your employee Copy B of the Form W-2, your notice about the EIC can be any of the following items. 2011 tax act A substitute Form W-2 with the same EIC information on the back of the employee's copy that is on Copy B of the Form W-2. 2011 tax act Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). 2011 tax act Your own written statement with the same wording as in Notice 797. 2011 tax act If a substitute Form W-2 is given on time but does not have the required EIC information, you must notify the employee within one week of the date the substitute Form W-2 is given. 2011 tax act If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement about the 2014 EIC by February 2, 2015. 2011 tax act If Form W-2 is not required, you must notify the employee by February 7, 2015. 2011 tax act   You must give your household employee a notice about the EIC if you agree to withhold federal income tax from the employee's wages (as discussed earlier under Do You Need To Withhold Federal Income Tax?) and the income tax withholding tables show that no tax should be withheld. 2011 tax act Even if not required, you are encouraged to give the employee a notice about the EIC if his or her 2014 wages are less than $46,997 ($52,427 if married filing jointly). 2011 tax act How Do You Make Tax Payments? When you file your 2014 federal income tax return in 2015, attach Schedule H (Form 1040) to your Form 1040, 1040NR, 1040-SS, or 1041. 2011 tax act Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). 2011 tax act Add these household employment taxes to your income tax. 2011 tax act Pay the amount due by April 15, 2015. 2011 tax act For more information about using Schedule H, see Schedule H under What Forms Must You File, later. 2011 tax act You can avoid owing tax with your return if you pay enough tax during the year to cover your household employment taxes, as well as your income tax. 2011 tax act You can pay the additional tax in any of the following ways. 2011 tax act Ask your employer to withhold more federal income tax from your wages in 2014. 2011 tax act Ask the payer of your pension or annuity to withhold more federal income tax from your benefits. 2011 tax act Make estimated tax payments for 2014 to the IRS. 2011 tax act Increase your payments if you already make estimated tax payments. 2011 tax act You may be subject to the estimated tax underpayment penalty if you did not pay enough income and household employment taxes during the year. 2011 tax act (See Publication 505, Tax Withholding and Estimated Tax, for information about the underpayment penalty. 2011 tax act ) However, you will not be subject to the penalty if both of the following situations apply to you. 2011 tax act You will not have federal income tax withheld from wages, pensions, or any other payments you receive. 2011 tax act Your income taxes, excluding your household employment taxes, would not be enough to require payment of estimated taxes. 2011 tax act Asking for more federal income tax withholding. 2011 tax act   If you are employed and want more federal income tax withheld from your wages to cover your household employment taxes, give your employer a new Form W-4. 2011 tax act Complete it as before, but show the additional amount you want withheld from each paycheck on line 6. 2011 tax act   If you receive a pension or annuity and want more federal income tax withheld to cover household employment taxes, give the payer a new Form W-4P, Withholding Certificate for Pension or Annuity Payments (or a similar form provided by the payer). 2011 tax act Complete it as before, but show the additional amount you want withheld from each benefit payment on line 3. 2011 tax act   See Publication 505 to make sure you will have the right amount withheld. 2011 tax act It will help you compare your total expected withholding for 2014 with the combined income tax and employment taxes that you can expect to figure on your 2014 tax return. 2011 tax act Paying estimated tax. 2011 tax act   If you want to make estimated tax payments to cover household employment taxes, get Form 1040-ES, Estimated Tax for Individuals. 2011 tax act You can use its payment vouchers to make your payments by check or money order. 2011 tax act You may be able to pay by Electronic Funds Withdrawal (EFW) or credit card. 2011 tax act For details, see the form instructions and visit IRS. 2011 tax act gov. 2011 tax act    You can pay all the employment taxes at once or you can pay them in installments. 2011 tax act If you have already made estimated tax payments for 2014, you can increase your remaining payments to cover the employment taxes. 2011 tax act Estimated tax payments for 2014 are due April 15, June 16, and September 15, 2014, and January 15, 2015. 2011 tax act Payment option for business employers. 2011 tax act   If you own a business as a sole proprietor or your home is on a farm operated for profit, you can choose either of two ways to pay your 2014 household employment taxes. 2011 tax act You can pay them with your federal income tax as previously described, or you can include them with your federal employment tax deposits or other payments for your business or farm employees. 2011 tax act For information on depositing employment taxes, see Publication 15 (Circular E). 2011 tax act   If you pay your household employment taxes with your business or farm employment taxes, you must report your household employment taxes with those other employment taxes on Form 941, Employer's QUARTERLY Federal Tax Return, Form 944, Employer's ANNUAL Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. 2011 tax act See Business employment tax returns, later. 2011 tax act    The deduction that can be taken on Schedules C and F (Form 1040) for wages and employment taxes applies only to wages and taxes paid for business and farm employees. 2011 tax act You cannot deduct the wages and employment taxes paid for your household employees on your Schedule C or F. 2011 tax act More information. 2011 tax act   For more information about paying taxes through federal income tax withholding and estimated tax payments, and figuring the estimated tax penalty, see Publication 505. 2011 tax act What Forms Must You File? You must file certain forms to report your household employee's wages and the federal employment taxes for the employee if you pay any of the following wages to the employee. 2011 tax act Social security and Medicare wages. 2011 tax act FUTA wages. 2011 tax act Wages from which you withhold federal income tax. 2011 tax act For information on ordering employment tax forms, see How To Get Tax Help, later. 2011 tax act Employer identification number (EIN). 2011 tax act   You must include your employer identification number (EIN) on the forms you file for your household employee. 2011 tax act An EIN is a nine-digit number issued by the IRS. 2011 tax act It is not the same as a social security number. 2011 tax act    You ordinarily will have an EIN if you previously paid taxes for employees, either as a household employer or as a sole proprietor of a business you own. 2011 tax act If you already have an EIN, use that number. 2011 tax act   If you do not have an EIN, you may apply for one online. 2011 tax act Go to IRS. 2011 tax act gov and click on the Apply for an EIN Online link under Tools. 2011 tax act You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 2011 tax act Form W-2. 2011 tax act   File a separate 2014 Form W-2, for each household employee to whom you pay either of the following wages during the year. 2011 tax act Social security and Medicare wages of $1,900 or more. 2011 tax act Wages from which you withhold federal income tax. 2011 tax act You must complete Form W-2 and give Copies B, C, and 2 to your employee by February 2, 2015. 2011 tax act You must send Copy A of Form W-2 with Form W-3, Transmittal of Wage and Tax Statements, to the SSA by March 2, 2015 (March 31, 2015, if you file your Form W-2 electronically). 2011 tax act Electronic filing is available to all employers and is free, fast, secure, and offers a later filing deadline. 2011 tax act Visit the SSA's Employer W-2 Filing Instructions & Information website at www. 2011 tax act socialsecurity. 2011 tax act gov/employer for guidelines on filing electronically. 2011 tax act Employee who leaves during the year. 2011 tax act   If an employee stops working for you before the end of 2014, you can file Form W-2 and provide copies to your employee immediately after you make your final payment of wages. 2011 tax act You do not need to wait until 2015. 2011 tax act If the employee asks you for Form W-2, give it to him or her within 30 days after the request or the last wage payment, whichever is later. 2011 tax act Schedule H. 2011 tax act   Use Schedule H to report household employment taxes if you pay any of the following wages to the employee. 2011 tax act Social security and Medicare wages of $1,900 or more. 2011 tax act FUTA wages. 2011 tax act Wages from which you withhold federal income tax. 2011 tax act File Schedule H with your 2014 federal income tax return by April 15, 2015. 2011 tax act If you get an extension to file your return, the extension also will apply to your Schedule H. 2011 tax act Filing options when no return is required. 2011 tax act   If you are not required to file a 2014 tax return, you have the following two options. 2011 tax act You can file Schedule H by itself. 2011 tax act See the Schedule H instructions for details. 2011 tax act If, besides your household employee, you have other employees for whom you report employment taxes on Form 941, Form 944, or Form 943 and on Form 940, you can include your taxes for your household employee on those forms. 2011 tax act See Business employment tax returns, next. 2011 tax act   Employers having the options listed above include certain tax-exempt organizations that do not have to file a tax return, such as churches that pay a household worker to take care of a minister's home. 2011 tax act Business employment tax returns. 2011 tax act   Do not use Schedule H if you choose to pay the employment taxes for your household employee with business or farm employment taxes. 2011 tax act (See Payment option for business employers, earlier. 2011 tax act ) Instead, include the social security, Medicare, and withheld federal income taxes for the employee on the Form 941 or Form 944 you file for your business or on the Form 943 you file for your farm. 2011 tax act Include the FUTA tax for the employee on your Form 940. 2011 tax act   If you report the employment taxes for your household employee on Form 941, Form 944, or Form 943, file Form W-2 for that employee with the Forms W-2 and Form W-3 for your business or farm employees. 2011 tax act   For information on filing Form 941 or Form 944, see Publication 15 (Circular E). 2011 tax act For information on filing Form 943, see Publication 51 (Circular A), Agricultural Employer's Tax Guide. 2011 tax act Both of these publications also provide information about filing Form 940. 2011 tax act What Records Must You Keep? Keep your copies of Schedule H or other employment tax forms you file and related Forms W-2, W-3, and W-4. 2011 tax act You must also keep records to support the information you enter on the forms you file. 2011 tax act If you must file Form W-2, you will need to keep a record of your employee's name, address, and social security number. 2011 tax act Wage and tax records. 2011 tax act   On each payday, you should record the date and amounts of all the following items. 2011 tax act Your employee's cash and noncash wages. 2011 tax act Any employee social security tax you withhold or agree to pay for your employee. 2011 tax act Any employee Medicare tax you withhold or agree to pay for your employee. 2011 tax act Any federal income tax you withhold. 2011 tax act Any state employment taxes you withhold. 2011 tax act Employee's social security number. 2011 tax act   You must keep a record of your employee's name and social security number exactly as they appear on his or her social security card if you pay the employee either of the following. 2011 tax act Social security and Medicare wages of $1,900 or more. 2011 tax act Wages from which you withhold federal income tax. 2011 tax act You must ask for your employee's social security number no later than the first day on which you pay the wages. 2011 tax act You may wish to ask for it when you hire your employee. 2011 tax act You should ask your employee to show you his or her social security card. 2011 tax act The employee may show the card if it is available. 2011 tax act You may, but are not required to, photocopy the card if the employee provides it. 2011 tax act   An employee who does not have a social security number must apply for one on Form SS-5, Application for a Social Security Card. 2011 tax act An employee who has lost his or her social security card or whose name is not correctly shown on the card may apply for a replacement card. 2011 tax act    Employees can get Form SS-5 from any Social Security Administration office or by calling 1-800-772-1213. 2011 tax act    You also can download Form SS-5 from the Social Security Administration website at  www. 2011 tax act socialsecurity. 2011 tax act gov/online/ss-5. 2011 tax act pdf. 2011 tax act How long to keep records. 2011 tax act   Keep your employment tax records for at least 4 years after the due date of the return on which you report the taxes or the date the taxes were paid, whichever is later. 2011 tax act Can You Claim a Credit for Child and Dependent Care Expenses? If your household employee cares for your dependent who is under age 13 or for your spouse or dependent who is not capable of self-care, you may be able to take an income tax credit against some of your expenses. 2011 tax act To qualify, you must pay these expenses so you can work or look for work. 2011 tax act If you can take the credit, you can include in your qualifying expenses your share of the federal and state employment taxes you pay, as well as the employee's wages. 2011 tax act For information about the credit, see Publication 503, Child and Dependent Care Expenses. 2011 tax act How Can You Correct Schedule H? If you discover that you made an error on a Schedule H (or Anexo H-PR), the forms used to correct the error depend on whether the Schedule H was attached to another form or whether it was filed by itself. 2011 tax act Schedule H attached to another form. 2011 tax act    If you discover an error on a Schedule H that you previously filed with Form 1040, Form 1040NR, or Form 1040-SS, file Form 1040X, Amended U. 2011 tax act S. 2011 tax act Individual Income Tax Return, and attach a corrected Schedule H. 2011 tax act If you filed Formulario 1040-PR, file a Form 1040X and attach a corrected Anexo H-PR. 2011 tax act If you discover an error on a Schedule H that you previously filed with Form 1041, U. 2011 tax act S. 2011 tax act Income Tax Return for Estates and Trusts, file an “amended” Form 1041 and attach a corrected Schedule H. 2011 tax act You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. 2011 tax act Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. 2011 tax act In addition, explain the reason for your correction and the date the error was discovered in Part III of Form 1040X or in a statement attached to the amended Form 1041. 2011 tax act Schedule H filed by itself. 2011 tax act   If you discover an error on a Schedule H (or Anexo H-PR) that you filed as a stand-alone return, file another stand-alone Schedule H with the corrected information. 2011 tax act You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. 2011 tax act Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. 2011 tax act In addition, explain the reason for your correction and the date the error was discovered in a statement attached to the corrected Schedule H. 2011 tax act If you have an overpayment, also write “ADJUSTED” (or “CORREGIDO”) or “REFUND” (or “REEMBOLSO”) in the top margin, depending on whether you want to adjust your overpayment or claim a refund. 2011 tax act (See Overpayment of tax, later. 2011 tax act ) When to file. 2011 tax act   File a corrected Schedule H when you discover an error on a previously filed Schedule H. 2011 tax act If you are correcting an underpayment, file a corrected Schedule H no later than the due date of your next tax return (generally, April 15 of the following calendar year) after you discover the error. 2011 tax act If you are correcting an overpayment, file a corrected Schedule H within the refund period of limitations (generally 3 years from the date your original form was filed or within 2 years from the date you paid the tax, whichever is later). 2011 tax act Underpayment of tax. 2011 tax act   You must pay any underpayment of social security and Medicare taxes by the time you file the corrected Schedule H. 2011 tax act Generally, by filing on time and paying by the time you file the return, you will not be charged interest (and will not be subject to failure-to-pay or estimated tax penalties) on the balance due. 2011 tax act However, underreported FUTA taxes will be subject to interest. 2011 tax act Overpayment of tax. 2011 tax act    You may either adjust or claim a refund of an overpayment of social security and Medicare taxes on a previously filed Schedule H. 2011 tax act However, if you are correcting an overpayment and are filing the corrected Schedule H within 90 days of the expiration of the period of limitations, you can only claim a refund of the overpayment. 2011 tax act Adjust the overpayment. 2011 tax act   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, adjust your return by indicating on line 22 of the Form 1040X or on line 29a of the Form 1041 that you would like the overpayment applied to your estimated taxes on Form 1040, Form 1040NR, Form 1040-PR, Form 1040-SS, or Form 1041 for the year in which you are filing the corrected Schedule H. 2011 tax act If the corrected Schedule H is filed as a stand-alone return, adjust your return by writing “ADJUSTED” (or “CORREGIDO”) in the top margin (in dark, bold letters). 2011 tax act If you adjust your return, you will not receive interest on your overpayment. 2011 tax act If the corrected Schedule H will be filed within 90 days of the expiration of the refund period of limitations, you may not adjust the return and must claim a refund for the overpayment. 2011 tax act You may not adjust your return to correct overpayments of FUTA tax. 2011 tax act Claim for refund process. 2011 tax act   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, claim a refund by indicating that you would like the overpayment refunded to you on line 21 of the Form 1040X or line 29b of the Form 1041. 2011 tax act If the corrected Schedule H is filed as a stand-alone return, claim a refund by writing “REFUND” (or “REEMBOLSO”) in the top margin (in dark, bold letters). 2011 tax act You will receive interest on any overpayment refunded, unless the overpayment is for FUTA tax because you were entitled to increased credits for state contributions. 2011 tax act Required repayment or consent. 2011 tax act   If you previously overreported social security and Medicare taxes, you may adjust your overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection of employee tax. 2011 tax act You reimburse your employees by applying the overwithheld amount against taxes to be withheld on future wages. 2011 tax act You may claim a refund for the overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection or you have obtained consents from your employees to file the claim for refund for the employee tax. 2011 tax act Include a statement that you repaid or reimbursed your employees, or obtained their written consents in the case of a claim for refund, in Part III of Form 1040X or in a statement attached to the amended Form 1041 or the stand-alone corrected Schedule H. 2011 tax act Filing required Forms W-2 or Forms W-2c. 2011 tax act   Whether you previously underreported tax or overreported tax, you will generally be required to file Form W-2, or their territorial equivalents (if none was previously filed), or Form W-2c, Corrected Wage and Tax Statement, to reflect the changes reported on your corrected Schedule H. 2011 tax act Additional Medicare Tax. 2011 tax act   Generally, you may not correct an error in Additional Medicare Tax withholding for wages paid to employees in a prior year unless it is an administrative error. 2011 tax act An administrative error occurs if the amount you entered on Schedule H is not the amount you actually withheld. 2011 tax act For example, if the Additional Medicare Tax actually withheld was incorrectly reported on Schedule H due to a mathematical or transposition error, this would be an administrative error. 2011 tax act   Any underwithheld Additional Medicare Tax must be recovered from employees on or before the last day of the calendar year in which the underwithholding occurred. 2011 tax act Any excess Additional Medicare Tax withholding must be repaid or reimbursed to employees before the end of the calendar year in which it was withheld. 2011 tax act Additional information. 2011 tax act   For more information about correcting errors on a previously filed Schedule H, see page 4 of Form 944-X, Form 944-X: Which process should you use? (substitute “Schedule H” for “Form 944-X”) and the Instructions for Form 944-X (or Formulario 944-X (PR)). 2011 tax act Also, visit IRS. 2011 tax act gov. 2011 tax act How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2011 tax act Free help with your tax return. 2011 tax act   You can get free help preparing your return nationwide from IRS-certified volunteers. 2011 tax act The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2011 tax act The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2011 tax act Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2011 tax act In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2011 tax act To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2011 tax act gov, download the IRS2Go app, or call 1-800-906-9887. 2011 tax act   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2011 tax act To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2011 tax act aarp. 2011 tax act org/money/taxaide or call 1-888-227-7669. 2011 tax act For more information on these programs, go to IRS. 2011 tax act gov and enter “VITA” in the search box. 2011 tax act Internet. 2011 tax act    IRS. 2011 tax act gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2011 tax act Download the free IRS2Go app from the iTunes app store or from Google Play. 2011 tax act Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2011 tax act Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2011 tax act gov or download the IRS2Go app and select the Refund Status option. 2011 tax act The IRS issues more than 9 out of 10 refunds in less than 21 days. 2011 tax act Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2011 tax act You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2011 tax act The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2011 tax act Use the Interactive Tax Assistant (ITA) to research your tax questions. 2011 tax act No need to wait on the phone or stand in line. 2011 tax act The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2011 tax act When you reach the response screen, you can print the entire interview and the final response for your records. 2011 tax act New subject areas are added on a regular basis. 2011 tax act  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2011 tax act gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2011 tax act You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2011 tax act The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2011 tax act When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2011 tax act Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2011 tax act You can also ask the IRS to mail a return or an account transcript to you. 2011 tax act Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2011 tax act gov or by calling 1-800-908-9946. 2011 tax act Tax return and tax account transcripts are generally available for the current year and the past three years. 2011 tax act Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2011 tax act Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2011 tax act If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2011 tax act Check the status of your amended return using Where's My Amended Return? Go to IRS. 2011 tax act gov and enter Where's My Amended Return? in the search box. 2011 tax act You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2011 tax act It can take up to 3 weeks from the date you mailed it to show up in our system. 2011 tax act Make a payment using one of several safe and convenient electronic payment options available on IRS. 2011 tax act gov. 2011 tax act Select the Payment tab on the front page of IRS. 2011 tax act gov for more information. 2011 tax act Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2011 tax act Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2011 tax act gov. 2011 tax act Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2011 tax act Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2011 tax act gov. 2011 tax act Request an Electronic Filing PIN by going to IRS. 2011 tax act gov and entering Electronic Filing PIN in the search box. 2011 tax act Download forms, instructions and publications, including accessible versions for people with disabilities. 2011 tax act Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2011 tax act gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2011 tax act An employee can answer questions about your tax account or help you set up a payment plan. 2011 tax act Before you visit, check the Office Locator on IRS. 2011 tax act gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2011 tax act If you have a special need, such as a disability, you can request an appointment. 2011 tax act Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2011 tax act Apply for an Employer Identification Number (EIN). 2011 tax act Go to IRS. 2011 tax act gov and enter Apply for an EIN in the search box. 2011 tax act Read the Internal Revenue Code, regulations, or other official guidance. 2011 tax act Read Internal Revenue Bulletins. 2011 tax act Sign up to receive local and national tax news and more by email. 2011 tax act Just click on “subscriptions” above the search box on IRS. 2011 tax act gov and choose from a variety of options. 2011 tax act Phone. 2011 tax act    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2011 tax act Download the free IRS2Go app from the iTunes app store or from Google Play. 2011 tax act Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2011 tax act gov, or download the IRS2Go app. 2011 tax act Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2011 tax act The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2011 tax act Most VITA and TCE sites offer free electronic filing. 2011 tax act Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 2011 tax act Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 2011 tax act Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 2011 tax act If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 2011 tax act The IRS issues more than 9 out of 10 refunds in less than 21 days. 2011 tax act Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2011 tax act Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 2011 tax act The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2011 tax act Note, the above information is for our automated hotline. 2011 tax act Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 2011 tax act Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 2011 tax act You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2011 tax act It can take up to 3 weeks from the date you mailed it to show up in our system. 2011 tax act Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 2011 tax act You should receive your order within 10 business days. 2011 tax act Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 2011 tax act If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 2011 tax act Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 2011 tax act The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 2011 tax act These individuals can also contact the IRS through relay services such as the Federal Relay Service. 2011 tax act Walk-in. 2011 tax act   You can find a selection of forms, publications and services — in-person. 2011 tax act Products. 2011 tax act You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2011 tax act Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 2011 tax act Services. 2011 tax act You can walk in to your local TAC for face-to-face tax help. 2011 tax act An employee can answer questions about your tax account or help you set up a payment plan. 2011 tax act Before visiting, use the Office Locator tool on IRS. 2011 tax act gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 2011 tax act Mail. 2011 tax act   You can send your order for forms, instructions, and publications to the address below. 2011 tax act You should receive a response within 10 business days after your request is received. 2011 tax act Internal Revenue Service 1201 N. 2011 tax act Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 2011 tax act The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2011 tax act Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 2011 tax act   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 2011 tax act We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 2011 tax act You face (or your business is facing) an immediate threat of adverse action. 2011 tax act You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 2011 tax act   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 2011 tax act Here's why we can help: TAS is an independent organization within the IRS. 2011 tax act Our advocates know how to work with the IRS. 2011 tax act Our services are free and tailored to meet your needs. 2011 tax act We have offices in every state, the District of Columbia, and Puerto Rico. 2011 tax act   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 2011 tax act   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 2011 tax act If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 2011 tax act Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. 2011 tax act Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 2011 tax act Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 2011 tax act Sample W-2 Form This image is too large to be displayed in the current screen. 2011 tax act Please click the link to view the image. 2011 tax act Webtitle: Form W-2 Wage and Tax Statement and Form W-3 Transmitttal of Wage and Tax Statemtents Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 06-Feb-2014

The 2011 Tax Act

2011 tax act 2. 2011 tax act   Taxable and Nontaxable Income Table of Contents Compensation for Services Retirement Plan DistributionsIndividual Retirement Arrangements (IRAs) Pensions and Annuities Social Security and Equivalent Railroad Retirement BenefitsAre Any of Your Benefits Taxable? How Much Is Taxable? How To Report Your Benefits Lump-Sum Election Repayments More Than Gross Benefits Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Life Insurance ProceedsInstallments for life. 2011 tax act Surviving spouse. 2011 tax act Endowment Contract Proceeds Accelerated Death Benefits Sale of HomeMaximum Amount of Exclusion Ownership and Use Tests Married Persons Business Use or Rental of Home Reporting the Sale Reverse Mortgages Other ItemsWelfare benefits. 2011 tax act Payments from a state fund for victims of crime. 2011 tax act Home Affordable Modification Program (HAMP). 2011 tax act Mortgage assistance payments. 2011 tax act Payments to reduce cost of winter energy use. 2011 tax act Nutrition Program for the Elderly. 2011 tax act Reemployment Trade Adjustment Assistance (RTAA). 2011 tax act Generally, income is taxable unless it is specifically exempt (not taxed) by law. 2011 tax act Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. 2011 tax act Under special provisions of the law, certain items are partially or fully exempt from tax. 2011 tax act Provisions that are of special interest to older taxpayers are discussed in this chapter. 2011 tax act Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. 2011 tax act In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. 2011 tax act You need not receive the compensation in cash for it to be taxable. 2011 tax act Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. 2011 tax act Volunteer work. 2011 tax act   Do not include in your gross income amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs. 2011 tax act Retired Senior Volunteer Program (RSVP). 2011 tax act Foster Grandparent Program. 2011 tax act Senior Companion Program. 2011 tax act Service Corps of Retired Executives (SCORE). 2011 tax act Unemployment compensation. 2011 tax act   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. 2011 tax act More information. 2011 tax act   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. 2011 tax act Retirement Plan Distributions This section summarizes the tax treatment of amounts you receive from traditional individual retirement arrangements (IRA), employee pensions or annuities, and disability pensions or annuities. 2011 tax act A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. 2011 tax act A Roth IRA is an individual retirement plan that can be either an account or an annuity and features nondeductible contributions and tax-free distributions. 2011 tax act A SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. 2011 tax act More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. 2011 tax act Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. 2011 tax act Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. 2011 tax act These are discussed in Publication 590. 2011 tax act If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. 2011 tax act If you do not file Form 8606 with your return, you may have to pay a $50 penalty. 2011 tax act Also, when you receive distributions from your traditional IRA, the amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 2011 tax act Early distributions. 2011 tax act   Generally, early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age  59½. 2011 tax act You must include early distributions of taxable amounts in your gross income. 2011 tax act These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. 2011 tax act For purposes of the additional 10% tax, an IRA is a qualified retirement plan. 2011 tax act For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. 2011 tax act After age 59½ and before age 70½. 2011 tax act   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. 2011 tax act Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. 2011 tax act Required distributions. 2011 tax act   If you are the owner of a traditional IRA, you generally must receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 70½. 2011 tax act See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. 2011 tax act If distributions from your traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required. 2011 tax act For purposes of the 50% excise tax, an IRA is a qualified retirement plan. 2011 tax act For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. 2011 tax act See also Excess Accumulations (Insufficient Distributions) in Publication 590. 2011 tax act Pensions and Annuities Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. 2011 tax act However, see Insurance Premiums for Retired Public Safety Officers , later. 2011 tax act If you paid part of the cost of your pension or annuity plan (see Cost , later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). 2011 tax act This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. 2011 tax act The rest of each payment is taxable. 2011 tax act However, see Insurance Premiums for Retired Public Safety Officers , later. 2011 tax act You figure the tax-free part of the payment using one of the following methods. 2011 tax act Simplified Method. 2011 tax act You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). 2011 tax act You cannot use this method if your annuity is paid under a nonqualified plan. 2011 tax act General Rule. 2011 tax act You must use this method if your annuity is paid under a nonqualified plan. 2011 tax act You generally cannot use this method if your annuity is paid under a qualified plan. 2011 tax act Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. 2011 tax act You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. 2011 tax act Exclusion limit. 2011 tax act   If your annuity starting date is after 1986, the total amount of annuity income you can exclude over the years as a recovery of the cost cannot exceed your total cost. 2011 tax act Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 2011 tax act This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. 2011 tax act   If you contributed to your pension or annuity and your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. 2011 tax act If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. 2011 tax act The total exclusion may be more than your cost. 2011 tax act Cost. 2011 tax act   Before you can figure how much, if any, of your pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). 2011 tax act Your total cost in the plan includes everything that you paid. 2011 tax act It also includes amounts your employer contributed that were taxable to you when paid. 2011 tax act However, see Foreign employment contributions , later. 2011 tax act   From this total cost, subtract any refunded premiums, rebates, dividends, unrepaid loans, or other tax-free amounts you received by the later of the annuity starting date or the date on which you received your first payment. 2011 tax act   The annuity starting date is the later of the first day of the first period for which you received a payment from the plan or the date on which the plan's obligations became fixed. 2011 tax act    The amount of your contributions to the plan may be shown in box 9b of any Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 2011 tax act , that you receive. 2011 tax act Foreign employment contributions. 2011 tax act   If you worked abroad, certain amounts your employer paid into your retirement plan that were not includible in your gross income may be considered part of your cost. 2011 tax act For details, see Foreign employment contributions in Publication 575. 2011 tax act Withholding. 2011 tax act   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable part of amounts paid to you. 2011 tax act However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. 2011 tax act (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. 2011 tax act ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. 2011 tax act   For payments other than eligible rollover distributions, you can tell the payer how much to withhold by filing a Form W-4P, Withholding Certificate for Pension or Annuity Payments. 2011 tax act Simplified Method. 2011 tax act   Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. 2011 tax act For an annuity that is payable over the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. 2011 tax act For any other annuity, this number is the number of monthly annuity payments under the contract. 2011 tax act Who must use the Simplified Method. 2011 tax act   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you receive your pension or annuity payments from a qualified plan or annuity, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments (defined next). 2011 tax act   In addition, if your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use the Simplified Method for payments from a qualified plan, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments. 2011 tax act If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. 2011 tax act Guaranteed payments. 2011 tax act   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. 2011 tax act If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. 2011 tax act Who cannot use the Simplified Method. 2011 tax act   You cannot use the Simplified Method and must use the General Rule if you receive pension or annuity payments from: A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan, or A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5 years of guaranteed payments (defined above). 2011 tax act   In addition, you had to use the General Rule for either circumstance described above if your annuity starting date is after July 1, 1986, and before November 19, 1996. 2011 tax act If you did not have to use the General Rule, you could have chosen to use it. 2011 tax act You also had to use the General Rule for payments from a qualified plan if your annuity starting date is before July 2, 1986, and you did not qualify to use the Three-Year Rule. 2011 tax act   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. 2011 tax act   Unless your annuity starting date was before 1987, once you have recovered all of your non-taxable investment, all of each remaining payment you receive is fully taxable. 2011 tax act Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. 2011 tax act   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. 2011 tax act How to use the Simplified Method. 2011 tax act   Complete the Simplified Method Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions or in Publication 575 to figure your taxable annuity for 2013. 2011 tax act Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. 2011 tax act   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. 2011 tax act How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. 2011 tax act For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. 2011 tax act    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. 2011 tax act Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. 2011 tax act Single-life annuity. 2011 tax act   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. 2011 tax act Enter on line 3 the number shown for your age on your annuity starting date. 2011 tax act This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 2011 tax act Multiple-lives annuity. 2011 tax act   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. 2011 tax act Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. 2011 tax act For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. 2011 tax act For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. 2011 tax act Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. 2011 tax act   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. 2011 tax act Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. 2011 tax act This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 2011 tax act Fixed-period annuities. 2011 tax act   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. 2011 tax act Line 6. 2011 tax act   The amount on line 6 should include all amounts that could have been recovered in prior years. 2011 tax act If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. 2011 tax act    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. 2011 tax act Example. 2011 tax act Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. 2011 tax act Bill's annuity starting date is January 1, 2013. 2011 tax act The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. 2011 tax act Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. 2011 tax act Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. 2011 tax act Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. 2011 tax act See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. 2011 tax act You can find a blank version of this worksheet in Publication 575. 2011 tax act (The references in the illustrated worksheet are to sections in Publication 575). 2011 tax act His annuity is payable over the lives of more than one annuitant, so Bill uses his and Kathy's combined ages, 130 (65 + 65), and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet and finds the line 3 amount to be 310. 2011 tax act Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). 2011 tax act Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. 2011 tax act The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. 2011 tax act If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. 2011 tax act This deduction is not subject to the 2%-of-adjusted-gross-income limit. 2011 tax act Worksheet 2-A. 2011 tax act Simplified Method Worksheet—Illustrated 1. 2011 tax act Enter the total pension or annuity payments received this year. 2011 tax act Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 2011 tax act $ 14,400 2. 2011 tax act Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion* See Cost (Investment in the Contract), earlier 2. 2011 tax act 31,000   Note. 2011 tax act If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 2011 tax act Otherwise, go to line 3. 2011 tax act     3. 2011 tax act Enter the appropriate number from Table 1 below. 2011 tax act But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. 2011 tax act 310 4. 2011 tax act Divide line 2 by the number on line 3 4. 2011 tax act 100 5. 2011 tax act Multiply line 4 by the number of months for which this year's payments were made. 2011 tax act If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 2011 tax act Otherwise, go to line 6 5. 2011 tax act 1,200 6. 2011 tax act Enter any amount previously recovered tax free in years after 1986. 2011 tax act This is the amount shown on line 10 of your worksheet for last year 6. 2011 tax act 0 7. 2011 tax act Subtract line 6 from line 2 7. 2011 tax act 31,000 8. 2011 tax act Enter the smaller of line 5 or line 7 8. 2011 tax act 1,200 9. 2011 tax act Taxable amount for year. 2011 tax act Subtract line 8 from line 1. 2011 tax act Enter the result, but not less than zero. 2011 tax act Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 2011 tax act Note. 2011 tax act If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. 2011 tax act If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return. 2011 tax act 9. 2011 tax act $ 13,200 10. 2011 tax act Was your annuity starting date before 1987? □ Yes. 2011 tax act STOP. 2011 tax act Do not complete the rest of this worksheet. 2011 tax act  ☑ No. 2011 tax act Add lines 6 and 8. 2011 tax act This is the amount you have recovered tax free through 2013. 2011 tax act You will need this number if you need to fill out this worksheet next year. 2011 tax act 10. 2011 tax act 1,200 11. 2011 tax act Balance of cost to be recovered. 2011 tax act Subtract line 10 from line 2. 2011 tax act If zero, you will not have to complete this worksheet next year. 2011 tax act The payments you receive next year will generally be fully taxable 11. 2011 tax act $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. 2011 tax act   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . 2011 tax act . 2011 tax act . 2011 tax act   BEFORE November 19, 1996, enter on line 3 . 2011 tax act . 2011 tax act . 2011 tax act AFTER November 18, 1996, enter on line 3 . 2011 tax act . 2011 tax act . 2011 tax act   55 or under 300 360   56-60 260 310   61-65 240 260   66-70 170 210   71 or over 120 160 Table 2 for Line 3 Above   IF the annuitants' combined ages on your annuity starting date were . 2011 tax act . 2011 tax act . 2011 tax act   THEN enter on line 3 . 2011 tax act . 2011 tax act . 2011 tax act         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. 2011 tax act   Benefits paid to you as a survivor under a joint and survivor annuity must be included in your gross income in the same way the retiree would have included them in gross income. 2011 tax act   If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule, include the total received in your income. 2011 tax act The retiree's cost has already been recovered tax free. 2011 tax act   If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for in the contract. 2011 tax act The resulting tax-free amount will then remain fixed. 2011 tax act Any increases in the survivor annuity are fully taxable. 2011 tax act   If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. 2011 tax act See Simplified Method , earlier. 2011 tax act How to report. 2011 tax act   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. 2011 tax act If your pension or annuity is fully taxable, enter it on line 16b. 2011 tax act Do not make an entry on line 16a. 2011 tax act   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. 2011 tax act If your pension or annuity is fully taxable, enter it on line 12b. 2011 tax act Do not make an entry on line 12a. 2011 tax act   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. 2011 tax act If your pension or annuity is fully taxable, enter it on line 17b. 2011 tax act Do not make an entry on line 17a. 2011 tax act Example. 2011 tax act You are a Form 1040 filer and you received monthly payments totaling $1,200 (12 months x $100) during 2013 from a pension plan that was completely financed by your employer. 2011 tax act You had paid no tax on the payments that your employer made to the plan, and the payments were not used to pay for accident, health, or long-term care insurance premiums (as discussed later under Insurance Premiums for Retired Public Safety Officers ). 2011 tax act The entire $1,200 is taxable. 2011 tax act You include $1,200 only on Form 1040, line 16b. 2011 tax act Joint return. 2011 tax act   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on line 16a of Form 1040, line 12a of Form 1040A, or line 17a of Form 1040NR. 2011 tax act Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. 2011 tax act Form 1099-R. 2011 tax act   You should receive a Form 1099-R for your pension or annuity. 2011 tax act Form 1099-R shows your pension or annuity for the year and any income tax withheld. 2011 tax act You should receive a Form W-2 if you receive distributions from certain nonqualified plans. 2011 tax act You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. 2011 tax act Generally, you should be sent these forms by January 31, 2014. 2011 tax act Nonperiodic Distributions If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from your income as a recovery of your cost. 2011 tax act Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. 2011 tax act For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. 2011 tax act The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. 2011 tax act See Tax on Early Distributions, later. 2011 tax act Lump-sum distributions. 2011 tax act   If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. 2011 tax act The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. 2011 tax act The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. 2011 tax act You may be able to use the 10-year tax option to figure tax on the ordinary income part. 2011 tax act Form 1099-R. 2011 tax act   If you receive a total distribution from a plan, you should receive a Form 1099-R. 2011 tax act If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. 2011 tax act The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. 2011 tax act More information. 2011 tax act   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. 2011 tax act Tax on Early Distributions Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you reach age 59½ are subject to an additional tax of 10%. 2011 tax act The tax applies to the taxable part of the distribution. 2011 tax act For this purpose, a qualified retirement plan is: A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under Internal Revenue Code section 401(k)), A qualified employee annuity plan, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). 2011 tax act  An IRA is also a qualified retirement plan for purposes of this tax. 2011 tax act General exceptions to tax. 2011 tax act   The early distribution tax does not apply to any distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. 2011 tax act Additional exceptions. 2011 tax act   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. 2011 tax act See Publication 575 for details. 2011 tax act Reporting tax. 2011 tax act   If you owe only the tax on early distributions and distribution code 1 (early distribution, no known exception) is correctly shown in Form 1099-R, box 7, multiply the taxable part of the early distribution by 10% (. 2011 tax act 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. 2011 tax act See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. 2011 tax act Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date. 2011 tax act Unless the rule for 5% owners applies, this is generally April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. 2011 tax act However, your plan may require you to begin to receive payments by April 1 of the year that follows the year in which you reach 70½, even if you have not retired. 2011 tax act For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986). 2011 tax act  An IRA is also a qualified retirement plan for purposes of this tax. 2011 tax act An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. 2011 tax act 5% owners. 2011 tax act   If you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the company maintaining your qualified retirement plan, you must begin to receive distributions from the plan by April 1 of the year after the calendar year in which you reach age 70½. 2011 tax act See Publication 575 for more information. 2011 tax act Amount of tax. 2011 tax act   If you do not receive the required minimum distribution, you are subject to an additional tax. 2011 tax act The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. 2011 tax act You can get this excise tax excused if you establish that the shortfall in distributions was due to reasonable error and that you are taking reasonable steps to remedy the shortfall. 2011 tax act Form 5329. 2011 tax act   You must file a Form 5329 if you owe a tax because you did not receive a minimum required distribution from your qualified retirement plan. 2011 tax act Additional information. 2011 tax act   For more detailed information on the tax on excess accumulation, see Publication 575. 2011 tax act Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. 2011 tax act The premiums can be for coverage for you, your spouse, or dependent(s). 2011 tax act The distribution must be made directly from the plan to the insurance provider. 2011 tax act You can exclude from income the smaller of the amount of the insurance premiums or $3,000. 2011 tax act You can only make this election for amounts that would otherwise be included in your income. 2011 tax act The amount excluded from your income cannot be used to claim a medical expense deduction. 2011 tax act An eligible retirement plan is a governmental plan that is a: Qualified trust, Section 403(a) plan, Section 403(b) annuity, or Section 457(b) plan. 2011 tax act If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. 2011 tax act The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. 2011 tax act Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 2011 tax act Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 2011 tax act Enter “PSO” next to the appropriate line on which you report the taxable amount. 2011 tax act Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. 2011 tax act These categories are treated differently for income tax purposes. 2011 tax act Social security equivalent benefits. 2011 tax act   The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. 2011 tax act This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. 2011 tax act (See Social Security and Equivalent Railroad Retirement Benefits , later. 2011 tax act ) Non-social security equivalent benefits. 2011 tax act   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). 2011 tax act It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. 2011 tax act This category of benefits is treated as an amount received from a qualified employee plan. 2011 tax act This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. 2011 tax act Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. 2011 tax act More information. 2011 tax act   For more information about railroad retirement benefits, see Publication 575. 2011 tax act Military Retirement Pay Military retirement pay based on age or length of service is taxable and must be included in income as a pension on Form 1040, lines 16a and 16b; on Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. 2011 tax act But, certain military and government disability pensions that are based on a percentage of disability from active service in the Armed Forces of any country generally are not taxable. 2011 tax act For more information, including information about veterans' benefits and insurance, see Publication 525. 2011 tax act Social Security and Equivalent Railroad Retirement Benefits This discussion explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. 2011 tax act Social security benefits include monthly retirement, survivor, and disability benefits. 2011 tax act They do not include supplemental security income (SSI) payments, which are not taxable. 2011 tax act Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. 2011 tax act They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. 2011 tax act If you received these benefits during 2013, you should have received a Form SSA-1099 or Form RRB-1099 (Form SSA-1042S or Form RRB-1042S if you are a nonresident alien), showing the amount of the benefits. 2011 tax act Are Any of Your Benefits Taxable? Note. 2011 tax act When the term “benefits” is used in this section, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. 2011 tax act  To find out whether any of your benefits may be taxable, compare the base amount for your filing status (explained later) with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 2011 tax act When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 2011 tax act S. 2011 tax act savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned in American Samoa or Puerto Rico by bona fide residents. 2011 tax act Figuring total income. 2011 tax act   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. 2011 tax act If that total amount is more than your base amount, part of your benefits may be taxable. 2011 tax act If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. 2011 tax act Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. 2011 tax act If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. 2011 tax act If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. 2011 tax act Worksheet 2-B. 2011 tax act A Quick Way To Check if Your Benefits May Be Taxable A. 2011 tax act Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2011 tax act Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. 2011 tax act (If you received more than one form, combine the amounts from box 5  and enter the total. 2011 tax act ) A. 2011 tax act     Note. 2011 tax act If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. 2011 tax act     B. 2011 tax act Enter one-half of the amount on line A B. 2011 tax act   C. 2011 tax act Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2011 tax act   D. 2011 tax act Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. 2011 tax act S. 2011 tax act savings bonds, •Employer-provided adoption benefits, •Foreign earned income or foreign housing, or •Income earned in American Samoa or Puerto Rico by bona fide residents D. 2011 tax act   E. 2011 tax act Add lines B, C, and D and enter the total E. 2011 tax act   F. 2011 tax act If you are: •Married filing jointly, enter $32,000 •Single, head of household, qualifying widow(er), or married filing separately and you  lived apart from your spouse for all of 2013, enter $25,000 •Married filing separately and you lived with your spouse at any time during 2013,  enter -0- F. 2011 tax act   G. 2011 tax act Is the amount on line F less than or equal to the amount on line E? □ No. 2011 tax act None of your benefits are taxable this year. 2011 tax act  □ Yes. 2011 tax act Some of your benefits may be taxable. 2011 tax act To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. 2011 tax act     Base Amount Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er) with dependent child, $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $0 if you are married filing separately and lived with your spouse at any time during 2013. 2011 tax act Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 2011 tax act It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 2011 tax act If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 2011 tax act Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. 2011 tax act Your repayments are shown in box 4. 2011 tax act The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 2011 tax act Use the amount in box 5 to figure whether any of your benefits are taxable. 2011 tax act Tax Withholding and Estimated Tax You can choose to have federal income tax withheld from your social security and/or the SSEB portion of your tier 1 railroad retirement benefits. 2011 tax act If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. 2011 tax act If you do not choose to have income tax withheld, you may have to request additional withholding from other income, or pay estimated tax during the year. 2011 tax act For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. 2011 tax act How Much Is Taxable? If part of your benefits is taxable, how much is taxable depends on the total amount of your benefits and other income. 2011 tax act Generally, the higher that total amount, the greater the taxable part of your benefits. 2011 tax act Maximum taxable part. 2011 tax act   The taxable part of your benefits usually cannot be more than 50%. 2011 tax act However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 2011 tax act The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). 2011 tax act You are married filing separately and lived with your spouse at any time during 2013. 2011 tax act   If you are a nonresident alien, 85% of your benefits are taxable. 2011 tax act However, this income is exempt under some tax treaties. 2011 tax act Which worksheet to use. 2011 tax act   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. 2011 tax act However, you will need to use a different worksheet(s) if any of the following situations applies to you. 2011 tax act You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. 2011 tax act In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. 2011 tax act Situation (1) does not apply and you take one or more of the following exclusions. 2011 tax act Interest from qualified U. 2011 tax act S. 2011 tax act savings bonds (Form 8815). 2011 tax act Employer-provided adoption benefits (Form 8839). 2011 tax act Foreign earned income or housing (Form 2555 or Form 2555-EZ). 2011 tax act Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. 2011 tax act In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. 2011 tax act You received a lump-sum payment for an earlier year. 2011 tax act In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. 2011 tax act See Lump-Sum Election , later. 2011 tax act How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. 2011 tax act You cannot use Form 1040EZ. 2011 tax act Reporting on Form 1040. 2011 tax act   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. 2011 tax act If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. 2011 tax act Reporting on Form 1040A. 2011 tax act   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. 2011 tax act If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. 2011 tax act Reporting on Form 1040NR. 2011 tax act   Report 85% of the total amount of your benefits (box 5 of your Form SSA-1042S or Form RRB-1042S) in the appropriate column of Form 1040NR, Schedule NEC, line 8. 2011 tax act Benefits not taxable. 2011 tax act   If you are filing Form 1040EZ, do not report any benefits on your tax return. 2011 tax act If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. 2011 tax act Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2011 tax act If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2011 tax act Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. 2011 tax act This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. 2011 tax act No part of the lump-sum death benefit is subject to tax. 2011 tax act For more information about the lump-sum death benefit, visit the Social Security Administration website at www. 2011 tax act SSA. 2011 tax act gov, and use keyword: death benefit. 2011 tax act Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 2011 tax act However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. 2011 tax act You can elect this method if it lowers your taxable benefits. 2011 tax act See Publication 915 for more information. 2011 tax act Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. 2011 tax act If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. 2011 tax act If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. 2011 tax act If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. 2011 tax act S. 2011 tax act Railroad Retirement Board field office. 2011 tax act Joint return. 2011 tax act   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's does not, subtract the box 5 amount on your form from the box 5 amount on your spouse's form. 2011 tax act You do this to get your net benefits when figuring if your combined benefits are taxable. 2011 tax act Repayment of benefits received in an earlier year. 2011 tax act   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. 2011 tax act   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. 2011 tax act Claim it on Schedule A (Form 1040), line 23. 2011 tax act   If this deduction is more than $3,000, you have to follow some special instructions. 2011 tax act See Publication 915 for those instructions. 2011 tax act Sickness and Injury Benefits Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. 2011 tax act If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. 2011 tax act However, certain payments may not be taxable to you. 2011 tax act Some of these payments are discussed later in this section. 2011 tax act Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. 2011 tax act Cost paid by you. 2011 tax act   If you pay the entire cost of an accident or health plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. 2011 tax act If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. 2011 tax act Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. 2011 tax act You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. 2011 tax act Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. 2011 tax act If you were 65 or older by the end of 2013 or you were retired on permanent and total disability and received taxable disability income, you may be able to claim the credit for the elderly or the disabled. 2011 tax act See Credit for the Elderly or the Disabled, later. 2011 tax act For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. 2011 tax act Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. 2011 tax act Report the payments on lines 16a and 16b of Form 1040, on lines 12a and 12b of Form 1040A, or on lines 17a and 17b of Form 1040NR. 2011 tax act For more information on pensions and annuities, see Publication 575. 2011 tax act Retirement and profit-sharing plans. 2011 tax act   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. 2011 tax act The payments must be reported as a pension or annuity. 2011 tax act Accrued leave payment. 2011 tax act   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. 2011 tax act The payment is not a disability payment. 2011 tax act Include it in your income in the tax year you receive it. 2011 tax act Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. 2011 tax act Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. 2011 tax act However, the amount you can exclude may be limited. 2011 tax act Long-term care insurance contracts are discussed in more detail in Publication 525. 2011 tax act Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. 2011 tax act The exemption also applies to your survivors. 2011 tax act The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. 2011 tax act If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. 2011 tax act For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. 2011 tax act Return to work. 2011 tax act   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. 2011 tax act Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. 2011 tax act Federal Employees' Compensation Act (FECA). 2011 tax act   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. 2011 tax act However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. 2011 tax act Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. 2011 tax act Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. 2011 tax act    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. 2011 tax act For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. 2011 tax act Other compensation. 2011 tax act   Many other amounts you receive as compensation for sickness or injury are not taxable. 2011 tax act These include the following amounts. 2011 tax act Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. 2011 tax act Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. 2011 tax act Compensation you receive for permanent loss or loss of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). 2011 tax act This compensation must be based only on the injury and not on the period of your absence from work. 2011 tax act These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. 2011 tax act 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. 2011 tax act This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 2011 tax act Proceeds not received in installments. 2011 tax act   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. 2011 tax act 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. 2011 tax act Proceeds received in installments. 2011 tax act   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 2011 tax act   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. 2011 tax act Include anything over this excluded part in your income as interest. 2011 tax act Installments for life. 2011 tax act   If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. 2011 tax act If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee. 2011 tax act Surviving spouse. 2011 tax act   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, in any year, up to $1,000 of the interest included in the installments. 2011 tax act If you remarry, you can continue to take the exclusion. 2011 tax act Surrender of policy for cash. 2011 tax act   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. 2011 tax act In general, 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. 2011 tax act You should receive a Form 1099-R showing the total proceeds and the taxable part. 2011 tax act Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. 2011 tax act Endowment Contract Proceeds An endowment contract is a policy that pays over to you 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. 2011 tax act 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. 2011 tax act To determine your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your income. 2011 tax act Include in your income the part of the lump-sum payment that is more than your cost. 2011 tax act Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. 2011 tax act The tax treatment of an annuity is explained in Publication 575. 2011 tax act For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. 2011 tax act This election must be made within 60 days after the lump-sum payment first becomes payable to you. 2011 tax act Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. 2011 tax act However, see Exception , later. 2011 tax act For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 2011 tax act Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. 2011 tax act In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. 2011 tax act Generally, a viatical settlement provider is one 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. 2011 tax act To report taxable 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. 2011 tax act Terminally or chronically ill defined. 2011 tax act   A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. 2011 tax act A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions. 2011 tax act The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity. 2011 tax act The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. 2011 tax act Exception. 2011 tax act   The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the other person, or Has a financial interest in the business of the other person. 2011 tax act Sale of Home You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. 2011 tax act Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. 2011 tax act You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. 2011 tax act Main home. 2011 tax act   Usually, your main home is the home you live in most of the time and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. 2011 tax act Repaying the first-time homebuyer credit because you sold your home. 2011 tax act   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. 2011 tax act For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return. 2011 tax act   For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. 2011 tax act If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. 2011 tax act If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return. 2011 tax act   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. 2011 tax act Maximum Amount of Exclusion You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. 2011 tax act You meet the ownership test. 2011 tax act You meet the use test. 2011 tax act During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. 2011 tax act You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . 2011 tax act Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. 2011 tax act This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). 2011 tax act Exception to ownership and use tests. 2011 tax act   If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. 2011 tax act Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. 2011 tax act The maximum amount you can exclude will be reduced. 2011 tax act See Publication 523, Selling Your Home, for more information. 2011 tax act Exception to use test for individuals with a disability. 2011 tax act   There is an exception to the use test if, during the 5-year period before the sale of your home: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year. 2011 tax act Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition. 2011 tax act   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. 2011 tax act Exception to ownership test for property acquired in a like-kind exchange. 2011 tax act   You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. 2011 tax act This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. 2011 tax act A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. 2011 tax act See Publication 523 for more information. 2011 tax act Period of nonqualified use. 2011 tax act   Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. 2011 tax act Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. 2011 tax act See Publication 523 for more information. 2011 tax act Married Persons In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. 2011 tax act However, see Special rules for joint returns , next. 2011 tax act Special rules for joint returns. 2011 tax act   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. 2011 tax act You are married and file a joint return for the year. 2011 tax act Either you or your spouse meets the ownership test. 2011 tax act Both you and your spouse meet the use test. 2011 tax act During the 2-year period ending on the date of the sale, neither you nor your spouse exclude gain from the sale of another home. 2011 tax act Sale of home by surviving spouse. 2011 tax act   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. 2011 tax act   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013. 2011 tax act The sale or exchange took place no more than 2 years after the date of death of your spouse. 2011 tax act You have not remarried. 2011 tax act You and your spouse met the use test at the time of your spouse's death. 2011 tax act You or your spouse met the ownership test at the time of your spouse's death. 2011 tax act Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. 2011 tax act Home transferred from spouse. 2011 tax act   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. 2011 tax act Use of home after divorce. 2011 tax act   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. 2011 tax act Business Use or Rental of Home You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. 2011 tax act However, you must meet the ownership and use tests. 2011 tax act See Publication 523 for more information. 2011 tax act Depreciation after May 6, 1997. 2011 tax act   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. 2011 tax act See Publication 523 for more information. 2011 tax act Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and you do not qualify to exclude all of it, You have a gain and you choose not to exclude it, or You received Form 1099-S. 2011 tax act If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. 2011 tax act Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. 2011 tax act If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. 2011 tax act See Publication 523 for more information. 2011 tax act Reverse Mortgages A revers