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Federal Tax Ez Form

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Federal Tax Ez Form

Federal tax ez form 6. Federal tax ez form   Ingresos de Propinas Table of Contents Introduction Useful Items - You may want to see: Cómo Mantener un Registro Diario de PropinasRegistro electrónico de propinas. Federal tax ez form Cómo Declarar las Propinas a su EmpleadorInforme electrónico de propinas. Federal tax ez form Declaración final. Federal tax ez form Cómo se Declaran las Propinas en la Declaración de Impuestos Asignación de Propinas Introduction Este capítulo es para empleados que reciben propinas. Federal tax ez form Todas las propinas que usted reciba son ingresos y están sujetas al impuesto federal sobre los ingresos. Federal tax ez form Tiene que incluir en el ingreso bruto todas las propinas que reciba directamente, propinas recibidas por medio de cargos a tarjetas de crédito o débito que le son entregadas por su empleador y su participación de todas las propinas recibidas de un fondo común u otro acuerdo de distribución de propinas. Federal tax ez form El valor de las propinas que no son pagadas en efectivo, tales como boletos, pases u otros artículos de valor también son ingresos y están sujetos al impuesto. Federal tax ez form La declaración correcta de los ingresos de propinas no es difícil. Federal tax ez form Usted tiene que completar tres pasos: Mantener un registro diario de propinas. Federal tax ez form Declarar sus propinas a su empleador. Federal tax ez form Declarar todas sus propinas en su declaración de impuestos. Federal tax ez form  Este capítulo le explicará estos tres pasos y le ayudará a determinar cómo completar su declaración de impuestos si no ha realizado los dos primeros pasos. Federal tax ez form Este capítulo también le mostrará cómo tratar las propinas asignadas. Federal tax ez form Para información sobre acuerdos y programas especiales relacionados con las propinas, vea la Publicación 531, en inglés. Federal tax ez form Useful Items - You may want to see: Publicación 531 Reporting Tip Income (Cómo declarar los ingresos de propinas), en inglés 1244-PR Registro Diario de Propinas Recibidas por el(la) Empleado(a) e Informe al Patrono, en español 1244 Employee's Daily Record of Tips and Report to Employer (Registro Diario de Propinas Recibidas por el(la) Empleado(a) e Informe al Empleador), en inglés Formularios (e Instrucciones) 4137 Social Security and Medicare Tax on Unreported Tip Income (Impuestos del Seguro Social y Medicare sobre el ingreso de propinas no declaradas), en inglés 4070-PR Informe al Patrono de Propinas Recibidas por el(la) Empleado(a), disponible en español 4070 Employee's Report of Tips to Employer (Informe al Empleador de Propinas Recibidas por el(la) Empleado(a)), en inglés Cómo Mantener un Registro Diario de Propinas ¿Por qué mantener un registro diario de propinas?   Usted tiene que mantener un registro diario de propinas para que pueda: Declarar sus propinas correctamente a su empleador, Declarar sus propinas correctamente en su declaración de impuestos y Comprobar sus ingresos de propinas si se cuestiona su declaración. Federal tax ez form Cómo mantener un registro diario de propinas. Federal tax ez form   Hay dos maneras de mantener un registro diario de propinas. Federal tax ez form Puede optar por: Anotar la información sobre sus propinas en un diario de propinas o Mantener copias de documentos que comprueben sus propinas, tales como cuentas de restaurantes y recibos de cargos hechos a tarjetas de crédito o de débito. Federal tax ez form Usted debe mantener su registro diario de propinas junto con su documentación tributaria u otra documentación personal. Federal tax ez form Tiene que guardar su documentación por el tiempo en que sea importante para la aplicación de la ley tributaria federal. Federal tax ez form Para información sobre cuánto tiempo debe guardar esta documentación, vea el tema titulado Cuánto Tiempo Debe Mantener Los Documentos , en el capítulo 1. Federal tax ez form    Si mantiene un registro de propinas, puede utilizar el Formulario 4070A-PR, Registro Diario de Propinas del(la) Empleado(a) (o el Formulario 4070-A, en inglés). Federal tax ez form Para obtener el Formulario 4070A-PR (o el Formulario 4070-A), pídale al IRS o a su empleador la Publicación 1244-PR (o la Publicación 1244, en inglés). Federal tax ez form Asimismo, la Publicación 1244-PR está disponible en el sitio web www. Federal tax ez form irs. Federal tax ez form gov/pub/irs-pdf/p1244pr. Federal tax ez form pdf. Federal tax ez form La Publicación 1244-PR (o la Publicación 1244, en inglés) contiene suficientes copias del Formulario 4070A-PR (o del Formulario 4070-A, en inglés) para un año. Federal tax ez form Cada día, anote la información solicitada en el formulario. Federal tax ez form   Además de la información solicitada en el Formulario 4070A-PR, también es necesario que mantenga un registro u otra documentación de la fecha y el valor de toda propina que reciba que no sea en efectivo, tales como boletos, pases u otros artículos de valor. Federal tax ez form Aunque no declara estas propinas a su empleador, tiene que declararlas en su declaración de impuestos. Federal tax ez form   Si no utiliza el Formulario 4070A-PR (o el Formulario 4070-A, en inglés), comience su registro escribiendo su nombre, el nombre de su empleador y el nombre del negocio o establecimiento donde trabaja si es distinto al nombre de su empleador. Federal tax ez form Luego, cada día que trabaje, anote la fecha y la siguiente información: Propinas en efectivo que obtiene directamente de los clientes o de otros empleados. Federal tax ez form Propinas de los clientes que pagan con tarjeta de crédito y de débito que su empleador le paga. Federal tax ez form El valor de toda propina que haya recibido que no sea pagada en efectivo, tales como boletos, pases y otros artículos de valor. Federal tax ez form La cantidad de propinas que usted le pagó a otros empleados a través de un fondo común u otro acuerdo de distribución de propinas y los nombres de los empleados a los cuales les pagó las propinas. Federal tax ez form Registro electrónico de propinas. Federal tax ez form   Usted puede utilizar un sistema electrónico provisto por su empleador para mantener un registro de propinas diarias. Federal tax ez form En tal caso, tiene que recibir y guardar una copia en papel de este registro. Federal tax ez form Cargos por servicios. Federal tax ez form   No anote en su registro de propinas la cantidad de ningún cargo por servicios que su empleador añada a la cuenta de un cliente y que luego le pague a usted y que el empleador trate como salario de usted. Federal tax ez form Los cargos de este tipo son parte de su salario, no son propinas. Federal tax ez form Vea los ejemplos que se presentan a continuación. Federal tax ez form Ejemplo 1. Federal tax ez form El restaurante Buena Comida añade un cargo del 18% a la cuenta de grupos de 6 o más clientes. Federal tax ez form Juanita forma parte de un grupo de 8 personas. Federal tax ez form Además del costo de la comida y bebidas que se sirvieron a todos en el grupo de Juanita, la cuenta incluye un monto igual al 18% del costo de las mismas, el cual aparece en la línea para anotar propinas. Federal tax ez form Dicho monto se incluye en el total de la cuenta. Federal tax ez form Debido a que Juanita no tenía un derecho ilimitado de determinar el monto en la línea para anotar propinas, el cargo del 18% se considera un cargo por servicios. Federal tax ez form No anote el cargo del 18% en su registro de propinas. Federal tax ez form Los cargos por servicios que se le paguen son considerados salarios y no propinas. Federal tax ez form Ejemplo 2. Federal tax ez form El restaurante Buena Comida también incluye ejemplos de cálculos para las cantidades de propinas en la parte inferior de la cuenta para la comida y las bebidas servidas a los clientes. Federal tax ez form En la parte inferior de la cuenta de David, debajo de la línea para la firma, se incluye una línea en blanco para anotar propinas, además de ejemplos de propinas calculadas en base al 15%, 18% y 20% de los costos de la comida y bebidas que le sirvieron. Federal tax ez form Debido a que David tenía libertad para anotar cualquier cantidad en la línea para anotar propinas, o dejarla en blanco, cualquier cantidad que David anote se considera propina. Federal tax ez form Cerciórese de incluir esta cantidad en su registro de propinas. Federal tax ez form Cómo Declarar las Propinas a su Empleador ¿Por qué tiene que declarar sus propinas a su empleador?   Tiene que declarar sus propinas a su empleador para que: Éste pueda retenerle impuesto federal sobre el ingreso, impuestos del Seguro Social, impuestos de Medicare, Impuesto Adicional del Medicare o impuestos de la jubilación ferroviaria, Éste pueda declarar la cantidad correcta de sus ganancias a la Administración del Seguro Social o a la Junta de la Jubilación Ferroviaria (lo cual afecta sus beneficios cuando se jubile o si queda incapacitado, o los beneficios de su familia cuando usted fallezca) y Usted pueda evitar la Multa por no declarar las propinas a su empleador (tema explicado más adelante). Federal tax ez form Propinas que tiene que declarar a su empleador. Federal tax ez form   Declárele a su empleador solamente las propinas que reciba en efectivo, en cheques, tarjetas de débito y de crédito. Federal tax ez form   Si el total de las propinas que reciba de un trabajo en un mes determinado es menos de $20, no declare las propinas de ese mes a ese empleador. Federal tax ez form   Si recibe propinas conforme a un acuerdo para compartir propinas equitativamente, declare sólo las propinas que reciba y retenga. Federal tax ez form No declare a su empleador ninguna parte de las propinas que reciba para luego entregárselas a otros empleados. Federal tax ez form Sin embargo, tiene que declarar las propinas que reciba de otros empleados. Federal tax ez form    No declare a su empleador el valor de las propinas que no reciba en efectivo, tales como boletos o pases. Federal tax ez form No se pagan impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuestos de la jubilación ferroviaria sobre estas propinas. Federal tax ez form Cómo se declaran las propinas. Federal tax ez form    Si su empleador no le proporciona otro medio para declarar las propinas, puede usar el Formulario 4070-PR, en español (o el Formulario 4070, en inglés). Federal tax ez form Escriba la información requerida en el formulario, incluya su firma y la fecha y entrégueselo a su empleador. Federal tax ez form Si desea obtener copias del formulario para un año completo, comuníquese con el IRS o pídale a su empleador la Publicación 1244-PR (o la Publicación 1244, en inglés). Federal tax ez form   Si no usa el Formulario 4070-PR (o el Formulario 4070, en inglés), entréguele a su empleador un informe con la información siguiente: Su nombre, dirección y número de Seguro Social. Federal tax ez form El nombre de su empleador, la dirección y el nombre del establecimiento (si es diferente al nombre del empleador). Federal tax ez form El mes (o las fechas de cualquier período más corto) en el cual usted recibió propinas. Federal tax ez form El total de propinas que se tienen que declarar para ese período. Federal tax ez form Usted tiene que firmar y fechar el informe. Federal tax ez form Cerciórese de guardar una copia junto con sus documentos tributarios u otros documentos personales. Federal tax ez form   Su empleador puede requerirle que declare sus propinas más de una vez al mes. Federal tax ez form Sin embargo, el informe no puede abarcar un período mayor de un mes natural. Federal tax ez form Informe electrónico de propinas. Federal tax ez form   Su empleador puede exigir que facilite su informe de propinas por medios electrónicos. Federal tax ez form Cuándo debe declarar las propinas. Federal tax ez form   Entregue a su empleador el informe correspondiente a cada mes, a más tardar el día 10 del mes siguiente. Federal tax ez form Si el día 10 cae en sábado, domingo o día feriado legal, entonces entréguele el informe a su empleador el próximo día siempre que no sea sábado, domingo o día feriado legal. Federal tax ez form Ejemplo. Federal tax ez form Tiene que declararle a su empleador la cantidad de propinas que recibió en septiembre del año 2014 a más tardar el día 10 de octubre de 2014. Federal tax ez form Declaración final. Federal tax ez form   Si deja de trabajar durante el mes, puede declarar las propinas recibidas cuando termine su empleo. Federal tax ez form Multa por no declarar las propinas. Federal tax ez form   Si no le declara a su empleador las propinas que recibió, tal como se requiere, puede estar sujeto a que se le imponga una multa equivalente al 50% de los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuesto de la jubilación ferroviaria que adeude sobre las propinas que no declaró. Federal tax ez form (Para información sobre estos impuestos, vea Cómo declarar los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuesto de la jubilación ferroviaria sobre las propinas no declaradas a su empleador , bajo Cómo se Declaran las Propinas en la Declaración de Impuestos, más adelante). Federal tax ez form La cantidad de la multa que se impone es adicional a los impuestos que adeude. Federal tax ez form   Puede evitar que esta multa le sea impuesta si puede demostrar que existe causa razonable por la cual no le declaró las propinas a su empleador. Federal tax ez form Para hacerlo, adjunte un documento escrito a su declaración de impuestos explicando la razón por la cual no declaró la cantidad de propinas que recibió. Federal tax ez form Entrega de dinero al empleador para el pago de los impuestos. Federal tax ez form   Es posible que lo que gana normalmente no sea suficiente para que su empleador le retenga todos los impuestos que adeude sobre su salario normal más las propinas que recibe. Federal tax ez form Si esto ocurre, puede entregarle dinero a su empleador hasta el cierre del año natural para pagar el resto de los impuestos. Federal tax ez form   Si no le entrega dinero suficiente a su empleador, el mismo aplicará su salario normal y todo dinero que usted le entregue para los impuestos, en el orden siguiente: Todos los impuestos sobre su salario normal. Federal tax ez form Los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuestos de la jubilación ferroviaria sobre las propinas que declaró. Federal tax ez form Los impuestos federales, estatales y locales sobre los ingresos sobre las propinas que declaró. Federal tax ez form    Su empleador puede descontar de su próximo salario todo impuesto que quede pendiente. Federal tax ez form Si al final del año aún no se le han retenido suficientes impuestos, usted puede estar sujeto a una multa por pago insuficiente de impuestos estimados. Federal tax ez form Vea la Publicación 505, Tax Withholding and Estimated Tax (Retención de impuestos e impuesto estimado), en inglés, para más información. Federal tax ez form    Impuestos no recaudados. Federal tax ez form Usted tiene que informar en su declaración de impuestos todo impuesto del Seguro Social y Medicare o impuestos de la jubilación ferroviaria que no se recaudaron al final del año 2013. Federal tax ez form Estos impuestos no recaudados aparecerán en su Formulario W-2 del año 2013. Federal tax ez form Vea el tema titulado Cómo se declaran los impuestos no recaudados del Seguro Social, Medicare o impuesto de la jubilación ferroviaria sobre propinas declaradas a su empleador , bajo Cómo se Declaran las Propinas en la Declaración de Impuestos, a continuación. Federal tax ez form Cómo se Declaran las Propinas en la Declaración de Impuestos Cómo se declaran las propinas. Federal tax ez form    Declare las propinas que recibió junto con su salario en la línea 7 del Formulario 1040, la línea 7 del Formulario 1040A o en la línea 1 del Formulario 1040EZ. Federal tax ez form Qué propinas se tienen que declarar. Federal tax ez form   Usted tiene que informar en su declaración de impuestos todas las propinas que recibió en 2013. Federal tax ez form Incluya las que recibió en efectivo y las que no fueron en efectivo. Federal tax ez form Toda propina que usted haya declarado en 2013 a su empleador está incluida en los salarios que aparecen en el recuadro 1 de su Formulario W-2. Federal tax ez form Sume a la cantidad del recuadro 1 solamente las propinas que usted no le declaró a su empleador. Federal tax ez form    Si recibió $20 o más en propinas en efectivo o cargadas a tarjetas de crédito o débito en un mes y no las declaró a su empleador, vea más adelante el tema titulado Cómo declarar los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuesto de la jubilación ferroviaria sobre las propinas no declaradas a su empleador . Federal tax ez form    Si usted no llevó un registro diario de las propinas que recibió, tal como se requiere, y aparece una cantidad en el recuadro 8 del Formulario W-2, vea más adelante la sección titulada Asignación de Propinas . Federal tax ez form   Si usted llevó un registro diario y declaró a su empleador todas las propinas que recibió, tal como se requiere conforme a las reglas explicadas anteriormente, añada a la cantidad que aparece en el recuadro 1 de su Formulario W-2 las siguientes propinas: Las propinas que recibió tanto en efectivo como cargadas a tarjetas de crédito o débito que fueron menos de $20 en un mes cualquiera. Federal tax ez form El valor de las propinas que no recibió en efectivo, tales como boletos, pases u otros artículos de valor. Federal tax ez form Ejemplo. Federal tax ez form Mariano Almendares comenzó a trabajar en el Restaurante Océano Azul (su único empleador en el año 2013) el día 30 de junio y recibió $10,000 en salarios durante el año. Federal tax ez form Mariano llevó un registro diario de las propinas que recibió durante el año, el cual muestra que en junio recibió $18 en propinas y en el resto del año recibió $7,000 en propinas. Federal tax ez form Al Sr. Federal tax ez form Almendares no se le requirió declararle a su empleador las propinas que recibió en junio, pero sí le declaró todas las propinas que recibió durante el resto del año, tal como se requiere. Federal tax ez form El Formulario W-2 que el Sr. Federal tax ez form Almendares recibió del Restaurante Océano Azul muestra $17,000 ($10,000 de salario más $7,000 de propinas declaradas) en el recuadro 1. Federal tax ez form El Sr. Federal tax ez form Almendares añade a esa cantidad los $18 de propinas que no le declaró al empleador y declara $17,018 como salario en su declaración de impuestos. Federal tax ez form Cómo declarar los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuesto de la jubilación ferroviaria sobre las propinas no declaradas a su empleador. Federal tax ez form    Si en un mes recibió $20 o más en propinas en efectivo o cargadas a tarjetas de crédito o débito en algún empleo y no declaró todas esas propinas a su empleador, tiene que declarar como impuesto adicional los impuestos del Seguro Social, Medicare e Impuesto Adicional del Medicare sobre las propinas que no declaró a su empleador. Federal tax ez form Para declarar estos impuestos, tiene que presentar una declaración aunque de otro modo no tuviera que presentarla. Federal tax ez form Para hacerlo, tiene que usar el Formulario 1040. Federal tax ez form (No puede presentar el Formulario 1040EZ ni el Formulario 1040A). Federal tax ez form    Use el Formulario 4137, Social Security and Medicare Tax on Unreported Tip Income (Impuestos del Seguro Social y de Medicare sobre el ingreso de propinas no declaradas), en inglés, para calcular los impuestos al Seguro Social y al Medicare. Federal tax ez form Anote el impuesto en su declaración como se indica y adjunte el Formulario 4137 debidamente completado a la misma. Federal tax ez form Use el Formulario 8959, en inglés, para calcular el Impuesto Adicional del Medicare. Federal tax ez form    Si usted está sujeto a la Railroad Retirement Tax Act (Ley Tributaria para la Jubilación Ferroviaria), no puede utilizar el Formulario 4137 para pagar el impuesto para la jubilación ferroviaria sobre propinas no declaradas. Federal tax ez form Para obtener crédito para la jubilación ferroviaria, tiene que declarar sus propinas a su empleador. Federal tax ez form Cómo se declaran los impuestos no recaudados del Seguro Social, Medicare o impuesto de la jubilación ferroviaria sobre propinas declaradas a su empleador. Federal tax ez form   Usted podría tener impuestos sin recaudar si su salario normal no es suficiente para que su empleador retenga todos los impuestos adeudados y si no le dio a su empleador dinero suficiente para pagar el resto de los impuestos. Federal tax ez form Para más información, vea Entrega de dinero al empleador para el pago de los impuestos , bajo Cómo Declarar las Propinas a su Empleador, anteriormente. Federal tax ez form   Si su empleador no pudo recaudar todos los impuestos al Seguro Social y al Medicare o impuesto de la jubilación ferroviaria que usted adeuda sobre propinas declaradas para 2013, los impuestos por recaudar se mostrarán en el recuadro 12 del Formulario W-2 (códigos A y B). Federal tax ez form Tiene que declarar estas cantidades como impuesto adicional en su declaración. Federal tax ez form A diferencia de la parte no recaudada del impuesto regular al Medicare (1. Federal tax ez form 45%), el Impuesto Adicional del Medicare no recaudado no se declara en el recuadro 12 del Formulario W-2 con el código B. Federal tax ez form    Para declarar estos impuestos no recaudados, tiene que presentar una declaración aunque no tuviera que presentarla de otro modo. Federal tax ez form Tiene que declarar estos impuestos en la línea 60 del Formulario 1040. Federal tax ez form Vea las instrucciones para la línea 60 del Formulario 1040, disponibles en inglés. Federal tax ez form (No puede presentar el Formulario 1040EZ ni el Formulario 1040A). Federal tax ez form Asignación de Propinas Si su empleador le asignó propinas, las mismas aparecen por separado en el recuadro 8 de su Formulario W-2. Federal tax ez form Estas propinas no están incluidas en el recuadro 1 con sus salarios y propinas declaradas. Federal tax ez form Si el recuadro 8 está en blanco, lo que se explica en esta sección no es aplicable en su caso. Federal tax ez form ¿Qué son propinas asignadas?   Éstas son propinas que su empleador le asignó, además de las que usted le declaró para el año. Federal tax ez form Su empleador habrá hecho esto únicamente si: Usted trabajó en un establecimiento (restaurante, bar o negocio similar) que tiene que asignar las propinas a los empleados y La cantidad de propinas que declaró a su empleador fue menos de su parte del 8% de las ventas de comidas y bebidas del establecimiento donde usted trabajó. Federal tax ez form De las propinas asignadas, no se retienen impuestos sobre los ingresos, Seguro Social, Medicare, Impuesto Adicional del Medicare ni impuestos de la jubilación ferroviaria. Federal tax ez form ¿Cómo se calcula su asignación de propinas?   Las propinas que se le asignan a usted son su parte de una cantidad calculada restando las propinas declaradas de todos los empleados del 8% (u otra tasa más baja aprobada) de las ventas de comida y bebida (que no sean ventas de comida para llevar por los clientes o ventas con un cargo por servicio del 10% o más). Federal tax ez form Su parte de esa cantidad fue calculada utilizando un método provisto por un acuerdo laboral entre empleador y empleado o por un método provisto por los reglamentos del IRS basado en las ventas hechas o las horas trabajadas por los empleados. Federal tax ez form Para más información sobre el método de asignación exacto utilizado, consulte a su empleador. Federal tax ez form ¿Tiene que incluir en la declaración sus propinas asignadas?   Tiene que incluir en la declaración de impuestos todas las propinas que recibió en 2013, incluyendo las propinas pagadas en efectivo como las no pagadas en efectivo. Federal tax ez form Todas las propinas que usted haya declarado en 2013 a su empleador están incluidas en los salarios que aparecen en el recuadro 1 de su Formulario W-2. Federal tax ez form Sume a la cantidad del recuadro 1 solamente las propinas que usted no le declaró a su empleador. Federal tax ez form Esto tiene que incluir toda propina asignada mostrada en el recuadro 8 de su(s) Formulario(s) W-2, a menos que tenga registros confiables que muestren que recibió menos propinas en el año que las cifras asignadas. Federal tax ez form   Vea los temas titulados Qué propinas se tienen que declarar , bajo Cómo se Declaran las Propinas en la Declaración de Impuestos y Cómo Mantener un Registro Diario de Propinas , anteriormente. Federal tax ez form Cómo declarar las propinas asignadas. Federal tax ez form   Declare la cantidad en el recuadro 1 y las propinas asignadas en el recuadro 8 de su(s) Formulario(s) W-2 como salario en la línea 7 del Formulario 1040, en la línea 8 del Formulario 1040NR o en la línea 3 del Formulario 1040NR-EZ. Federal tax ez form (No puede presentar el Formulario 1040A ni el Formulario 1040EZ cuando se tienen propinas asignadas). Federal tax ez form    Debido a que los impuestos del Seguro Social, Medicare o Impuesto Adicional del Medicare no fueron retenidos de las propinas asignadas, tiene que declararlos como impuestos adicionales en su declaración. Federal tax ez form Complete el Formulario 4137 e incluya las propinas asignadas en la línea 1 del formulario. Federal tax ez form Vea Cómo declarar los impuestos del Seguro Social, Medicare, Impuesto Adicional del Medicare o impuesto de la jubilación ferroviaria sobre las propinas no declaradas a su empleador , bajo Cómo se Declaran las Propinas en la Declaración de Impuestos. Federal tax ez form Prev  Up  Next   Home   More Online Publications
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Federal tax ez form 2. Federal tax ez form   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. Federal tax ez form Surviving spouse. Federal tax ez form 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. Federal tax ez form Payments from a state fund for victims of crime. Federal tax ez form Home Affordable Modification Program (HAMP). Federal tax ez form Mortgage assistance payments. Federal tax ez form Payments to reduce cost of winter energy use. Federal tax ez form Nutrition Program for the Elderly. Federal tax ez form Reemployment Trade Adjustment Assistance (RTAA). Federal tax ez form Generally, income is taxable unless it is specifically exempt (not taxed) by law. Federal tax ez form 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. Federal tax ez form Under special provisions of the law, certain items are partially or fully exempt from tax. Federal tax ez form Provisions that are of special interest to older taxpayers are discussed in this chapter. Federal tax ez form Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. Federal tax ez form In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Federal tax ez form You need not receive the compensation in cash for it to be taxable. Federal tax ez form Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. Federal tax ez form Volunteer work. Federal tax ez form   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. Federal tax ez form Retired Senior Volunteer Program (RSVP). Federal tax ez form Foster Grandparent Program. Federal tax ez form Senior Companion Program. Federal tax ez form Service Corps of Retired Executives (SCORE). Federal tax ez form Unemployment compensation. Federal tax ez form   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. Federal tax ez form More information. Federal tax ez form   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. Federal tax ez form 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. Federal tax ez form A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. Federal tax ez form Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. Federal tax ez form Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. Federal tax ez form These are discussed in Publication 590. Federal tax ez form If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. Federal tax ez form If you do not file Form 8606 with your return, you may have to pay a $50 penalty. Federal tax ez form 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. Federal tax ez form Early distributions. Federal tax ez form   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. Federal tax ez form You must include early distributions of taxable amounts in your gross income. Federal tax ez form These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. Federal tax ez form For purposes of the additional 10% tax, an IRA is a qualified retirement plan. Federal tax ez form For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. Federal tax ez form After age 59½ and before age 70½. Federal tax ez form   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. Federal tax ez form Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. Federal tax ez form Required distributions. Federal tax ez form   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. Federal tax ez form See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. Federal tax ez form 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. Federal tax ez form For purposes of the 50% excise tax, an IRA is a qualified retirement plan. Federal tax ez form For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. Federal tax ez form See also Excess Accumulations (Insufficient Distributions) in Publication 590. Federal tax ez form 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. Federal tax ez form However, see Insurance Premiums for Retired Public Safety Officers , later. Federal tax ez form 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). Federal tax ez form 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. Federal tax ez form The rest of each payment is taxable. Federal tax ez form However, see Insurance Premiums for Retired Public Safety Officers , later. Federal tax ez form You figure the tax-free part of the payment using one of the following methods. Federal tax ez form Simplified Method. Federal tax ez form 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). Federal tax ez form You cannot use this method if your annuity is paid under a nonqualified plan. Federal tax ez form General Rule. Federal tax ez form You must use this method if your annuity is paid under a nonqualified plan. Federal tax ez form You generally cannot use this method if your annuity is paid under a qualified plan. Federal tax ez form Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. Federal tax ez form 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. Federal tax ez form Exclusion limit. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form The total exclusion may be more than your cost. Federal tax ez form Cost. Federal tax ez form   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). Federal tax ez form Your total cost in the plan includes everything that you paid. Federal tax ez form It also includes amounts your employer contributed that were taxable to you when paid. Federal tax ez form However, see Foreign employment contributions , later. Federal tax ez form   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. Federal tax ez form   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. Federal tax ez form    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. Federal tax ez form , that you receive. Federal tax ez form Foreign employment contributions. Federal tax ez form   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. Federal tax ez form For details, see Foreign employment contributions in Publication 575. Federal tax ez form Withholding. Federal tax ez form   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. Federal tax ez form However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. Federal tax ez form (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Federal tax ez form ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. Federal tax ez form   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. Federal tax ez form Simplified Method. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form For any other annuity, this number is the number of monthly annuity payments under the contract. Federal tax ez form Who must use the Simplified Method. Federal tax ez form   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). Federal tax ez form   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. Federal tax ez form If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Federal tax ez form Guaranteed payments. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Who cannot use the Simplified Method. Federal tax ez form   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). Federal tax ez form   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. Federal tax ez form If you did not have to use the General Rule, you could have chosen to use it. Federal tax ez form 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. Federal tax ez form   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. Federal tax ez form   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. Federal tax ez form Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. Federal tax ez form   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. Federal tax ez form How to use the Simplified Method. Federal tax ez form   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. Federal tax ez form Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Federal tax ez form   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Federal tax ez form How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Federal tax ez form 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. Federal tax ez form    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. Federal tax ez form Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Federal tax ez form Single-life annuity. Federal tax ez form   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. Federal tax ez form Enter on line 3 the number shown for your age on your annuity starting date. Federal tax ez form This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Federal tax ez form Multiple-lives annuity. Federal tax ez form   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. Federal tax ez form Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Federal tax ez form   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Federal tax ez form 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. Federal tax ez form This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Federal tax ez form Fixed-period annuities. Federal tax ez form   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. Federal tax ez form Line 6. Federal tax ez form   The amount on line 6 should include all amounts that could have been recovered in prior years. Federal tax ez form If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Federal tax ez form    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. Federal tax ez form Example. Federal tax ez form Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Federal tax ez form Bill's annuity starting date is January 1, 2013. Federal tax ez form The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. Federal tax ez form Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. Federal tax ez form You can find a blank version of this worksheet in Publication 575. Federal tax ez form (The references in the illustrated worksheet are to sections in Publication 575). Federal tax ez form 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. Federal tax ez form Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). Federal tax ez form Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Federal tax ez form The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. Federal tax ez form 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. Federal tax ez form This deduction is not subject to the 2%-of-adjusted-gross-income limit. Federal tax ez form Worksheet 2-A. Federal tax ez form Simplified Method Worksheet—Illustrated 1. Federal tax ez form Enter the total pension or annuity payments received this year. Federal tax ez form Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Federal tax ez form $ 14,400 2. Federal tax ez form 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. Federal tax ez form 31,000   Note. Federal tax ez form 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). Federal tax ez form Otherwise, go to line 3. Federal tax ez form     3. Federal tax ez form Enter the appropriate number from Table 1 below. Federal tax ez form 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. Federal tax ez form 310 4. Federal tax ez form Divide line 2 by the number on line 3 4. Federal tax ez form 100 5. Federal tax ez form Multiply line 4 by the number of months for which this year's payments were made. Federal tax ez form If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Federal tax ez form Otherwise, go to line 6 5. Federal tax ez form 1,200 6. Federal tax ez form Enter any amount previously recovered tax free in years after 1986. Federal tax ez form This is the amount shown on line 10 of your worksheet for last year 6. Federal tax ez form 0 7. Federal tax ez form Subtract line 6 from line 2 7. Federal tax ez form 31,000 8. Federal tax ez form Enter the smaller of line 5 or line 7 8. Federal tax ez form 1,200 9. Federal tax ez form Taxable amount for year. Federal tax ez form Subtract line 8 from line 1. Federal tax ez form Enter the result, but not less than zero. Federal tax ez form Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Federal tax ez form Note. Federal tax ez form If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Federal tax ez form 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. Federal tax ez form 9. Federal tax ez form $ 13,200 10. Federal tax ez form Was your annuity starting date before 1987? □ Yes. Federal tax ez form STOP. Federal tax ez form Do not complete the rest of this worksheet. Federal tax ez form  ☑ No. Federal tax ez form Add lines 6 and 8. Federal tax ez form This is the amount you have recovered tax free through 2013. Federal tax ez form You will need this number if you need to fill out this worksheet next year. Federal tax ez form 10. Federal tax ez form 1,200 11. Federal tax ez form Balance of cost to be recovered. Federal tax ez form Subtract line 10 from line 2. Federal tax ez form If zero, you will not have to complete this worksheet next year. Federal tax ez form The payments you receive next year will generally be fully taxable 11. Federal tax ez form $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Federal tax ez form   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . Federal tax ez form . Federal tax ez form . Federal tax ez form   BEFORE November 19, 1996, enter on line 3 . Federal tax ez form . Federal tax ez form . Federal tax ez form AFTER November 18, 1996, enter on line 3 . Federal tax ez form . Federal tax ez form . Federal tax ez form   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 . Federal tax ez form . Federal tax ez form . Federal tax ez form   THEN enter on line 3 . Federal tax ez form . Federal tax ez form . Federal tax ez form         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. Federal tax ez form   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. Federal tax ez form   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. Federal tax ez form The retiree's cost has already been recovered tax free. Federal tax ez form   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. Federal tax ez form The resulting tax-free amount will then remain fixed. Federal tax ez form Any increases in the survivor annuity are fully taxable. Federal tax ez form   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. Federal tax ez form See Simplified Method , earlier. Federal tax ez form How to report. Federal tax ez form   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. Federal tax ez form If your pension or annuity is fully taxable, enter it on line 16b. Federal tax ez form Do not make an entry on line 16a. Federal tax ez form   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. Federal tax ez form If your pension or annuity is fully taxable, enter it on line 12b. Federal tax ez form Do not make an entry on line 12a. Federal tax ez form   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. Federal tax ez form If your pension or annuity is fully taxable, enter it on line 17b. Federal tax ez form Do not make an entry on line 17a. Federal tax ez form Example. Federal tax ez form 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. Federal tax ez form 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 ). Federal tax ez form The entire $1,200 is taxable. Federal tax ez form You include $1,200 only on Form 1040, line 16b. Federal tax ez form Joint return. Federal tax ez form   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. Federal tax ez form Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. Federal tax ez form Form 1099-R. Federal tax ez form   You should receive a Form 1099-R for your pension or annuity. Federal tax ez form Form 1099-R shows your pension or annuity for the year and any income tax withheld. Federal tax ez form You should receive a Form W-2 if you receive distributions from certain nonqualified plans. Federal tax ez form You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. Federal tax ez form Generally, you should be sent these forms by January 31, 2014. Federal tax ez form 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. Federal tax ez form Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. Federal tax ez form For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. Federal tax ez form The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. Federal tax ez form See Tax on Early Distributions, later. Federal tax ez form Lump-sum distributions. Federal tax ez form   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. Federal tax ez form The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Federal tax ez form The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. Federal tax ez form You may be able to use the 10-year tax option to figure tax on the ordinary income part. Federal tax ez form Form 1099-R. Federal tax ez form   If you receive a total distribution from a plan, you should receive a Form 1099-R. Federal tax ez form If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. Federal tax ez form The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. Federal tax ez form More information. Federal tax ez form   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. Federal tax ez form 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%. Federal tax ez form The tax applies to the taxable part of the distribution. Federal tax ez form 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). Federal tax ez form  An IRA is also a qualified retirement plan for purposes of this tax. Federal tax ez form General exceptions to tax. Federal tax ez form   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. Federal tax ez form Additional exceptions. Federal tax ez form   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. Federal tax ez form See Publication 575 for details. Federal tax ez form Reporting tax. Federal tax ez form   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% (. Federal tax ez form 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. Federal tax ez form See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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). Federal tax ez form  An IRA is also a qualified retirement plan for purposes of this tax. Federal tax ez form An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. Federal tax ez form 5% owners. Federal tax ez form   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. Federal tax ez form See Publication 575 for more information. Federal tax ez form Amount of tax. Federal tax ez form   If you do not receive the required minimum distribution, you are subject to an additional tax. Federal tax ez form The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. Federal tax ez form 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. Federal tax ez form Form 5329. Federal tax ez form   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. Federal tax ez form Additional information. Federal tax ez form   For more detailed information on the tax on excess accumulation, see Publication 575. Federal tax ez form 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. Federal tax ez form The premiums can be for coverage for you, your spouse, or dependent(s). Federal tax ez form The distribution must be made directly from the plan to the insurance provider. Federal tax ez form You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Federal tax ez form You can only make this election for amounts that would otherwise be included in your income. Federal tax ez form The amount excluded from your income cannot be used to claim a medical expense deduction. Federal tax ez form 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. Federal tax ez form If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Federal tax ez form The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. Federal tax ez form Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Federal tax ez form Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Federal tax ez form Enter “PSO” next to the appropriate line on which you report the taxable amount. Federal tax ez form Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Federal tax ez form These categories are treated differently for income tax purposes. Federal tax ez form Social security equivalent benefits. Federal tax ez form   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. Federal tax ez form This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. Federal tax ez form (See Social Security and Equivalent Railroad Retirement Benefits , later. Federal tax ez form ) Non-social security equivalent benefits. Federal tax ez form   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). Federal tax ez form It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Federal tax ez form This category of benefits is treated as an amount received from a qualified employee plan. Federal tax ez form 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. Federal tax ez form Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Federal tax ez form More information. Federal tax ez form   For more information about railroad retirement benefits, see Publication 575. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form For more information, including information about veterans' benefits and insurance, see Publication 525. Federal tax ez form 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. Federal tax ez form Social security benefits include monthly retirement, survivor, and disability benefits. Federal tax ez form They do not include supplemental security income (SSI) payments, which are not taxable. Federal tax ez form 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. Federal tax ez form They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Federal tax ez form 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. Federal tax ez form Are Any of Your Benefits Taxable? Note. Federal tax ez form 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. Federal tax ez form  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. Federal tax ez form When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Federal tax ez form S. Federal tax ez form 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. Federal tax ez form Figuring total income. Federal tax ez form   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. Federal tax ez form If that total amount is more than your base amount, part of your benefits may be taxable. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Federal tax ez form Worksheet 2-B. Federal tax ez form A Quick Way To Check if Your Benefits May Be Taxable A. Federal tax ez form Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Federal tax ez form Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. Federal tax ez form (If you received more than one form, combine the amounts from box 5  and enter the total. Federal tax ez form ) A. Federal tax ez form     Note. Federal tax ez form If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. Federal tax ez form     B. Federal tax ez form Enter one-half of the amount on line A B. Federal tax ez form   C. Federal tax ez form Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Federal tax ez form   D. Federal tax ez form Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. Federal tax ez form S. Federal tax ez form 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. Federal tax ez form   E. Federal tax ez form Add lines B, C, and D and enter the total E. Federal tax ez form   F. Federal tax ez form 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. Federal tax ez form   G. Federal tax ez form Is the amount on line F less than or equal to the amount on line E? □ No. Federal tax ez form None of your benefits are taxable this year. Federal tax ez form  □ Yes. Federal tax ez form Some of your benefits may be taxable. Federal tax ez form To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. Federal tax ez form     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. Federal tax ez form Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Federal tax ez form It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Federal tax ez form If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Federal tax ez form Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Federal tax ez form Your repayments are shown in box 4. Federal tax ez form The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Federal tax ez form Use the amount in box 5 to figure whether any of your benefits are taxable. Federal tax ez form 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. Federal tax ez form If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. Federal tax ez form 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. Federal tax ez form For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Federal tax ez form 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. Federal tax ez form Generally, the higher that total amount, the greater the taxable part of your benefits. Federal tax ez form Maximum taxable part. Federal tax ez form   The taxable part of your benefits usually cannot be more than 50%. Federal tax ez form However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Federal tax ez form 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). Federal tax ez form You are married filing separately and lived with your spouse at any time during 2013. Federal tax ez form   If you are a nonresident alien, 85% of your benefits are taxable. Federal tax ez form However, this income is exempt under some tax treaties. Federal tax ez form Which worksheet to use. Federal tax ez form   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Federal tax ez form However, you will need to use a different worksheet(s) if any of the following situations applies to you. Federal tax ez form You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. Federal tax ez form 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. Federal tax ez form Situation (1) does not apply and you take one or more of the following exclusions. Federal tax ez form Interest from qualified U. Federal tax ez form S. Federal tax ez form savings bonds (Form 8815). Federal tax ez form Employer-provided adoption benefits (Form 8839). Federal tax ez form Foreign earned income or housing (Form 2555 or Form 2555-EZ). Federal tax ez form Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Federal tax ez form In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. Federal tax ez form You received a lump-sum payment for an earlier year. Federal tax ez form In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Federal tax ez form See Lump-Sum Election , later. Federal tax ez form How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. Federal tax ez form You cannot use Form 1040EZ. Federal tax ez form Reporting on Form 1040. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Reporting on Form 1040A. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Reporting on Form 1040NR. Federal tax ez form   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. Federal tax ez form Benefits not taxable. Federal tax ez form   If you are filing Form 1040EZ, do not report any benefits on your tax return. Federal tax ez form 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. Federal tax ez form Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form No part of the lump-sum death benefit is subject to tax. Federal tax ez form For more information about the lump-sum death benefit, visit the Social Security Administration website at www. Federal tax ez form SSA. Federal tax ez form gov, and use keyword: death benefit. Federal tax ez form Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Federal tax ez form 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. Federal tax ez form You can elect this method if it lowers your taxable benefits. Federal tax ez form See Publication 915 for more information. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. Federal tax ez form S. Federal tax ez form Railroad Retirement Board field office. Federal tax ez form Joint return. Federal tax ez form   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. Federal tax ez form You do this to get your net benefits when figuring if your combined benefits are taxable. Federal tax ez form Repayment of benefits received in an earlier year. Federal tax ez form   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. Federal tax ez form   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. Federal tax ez form Claim it on Schedule A (Form 1040), line 23. Federal tax ez form   If this deduction is more than $3,000, you have to follow some special instructions. Federal tax ez form See Publication 915 for those instructions. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form However, certain payments may not be taxable to you. Federal tax ez form Some of these payments are discussed later in this section. Federal tax ez form Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. Federal tax ez form Cost paid by you. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Federal tax ez form 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. Federal tax ez form See Credit for the Elderly or the Disabled, later. Federal tax ez form For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Federal tax ez form Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Federal tax ez form 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. Federal tax ez form For more information on pensions and annuities, see Publication 575. Federal tax ez form Retirement and profit-sharing plans. Federal tax ez form   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. Federal tax ez form The payments must be reported as a pension or annuity. Federal tax ez form Accrued leave payment. Federal tax ez form   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Federal tax ez form The payment is not a disability payment. Federal tax ez form Include it in your income in the tax year you receive it. Federal tax ez form Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. Federal tax ez form 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. Federal tax ez form However, the amount you can exclude may be limited. Federal tax ez form Long-term care insurance contracts are discussed in more detail in Publication 525. Federal tax ez form 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. Federal tax ez form The exemption also applies to your survivors. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Federal tax ez form Return to work. Federal tax ez form   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Federal tax ez form Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Federal tax ez form Federal Employees' Compensation Act (FECA). Federal tax ez form   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Federal tax ez form 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. Federal tax ez form Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. Federal tax ez form Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Federal tax ez form    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. Federal tax ez form For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Federal tax ez form Other compensation. Federal tax ez form   Many other amounts you receive as compensation for sickness or injury are not taxable. Federal tax ez form These include the following amounts. Federal tax ez form 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. Federal tax ez form Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Federal tax ez form 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). Federal tax ez form This compensation must be based only on the injury and not on the period of your absence from work. Federal tax ez form These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Federal tax ez form 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. Federal tax ez form This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Federal tax ez form Proceeds not received in installments. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Proceeds received in installments. Federal tax ez form   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Federal tax ez form   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. Federal tax ez form Include anything over this excluded part in your income as interest. Federal tax ez form Installments for life. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Surviving spouse. Federal tax ez form   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. Federal tax ez form If you remarry, you can continue to take the exclusion. Federal tax ez form Surrender of policy for cash. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form You should receive a Form 1099-R showing the total proceeds and the taxable part. Federal tax ez form Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form Include in your income the part of the lump-sum payment that is more than your cost. Federal tax ez form 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. Federal tax ez form The tax treatment of an annuity is explained in Publication 575. Federal tax ez form For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. Federal tax ez form This election must be made within 60 days after the lump-sum payment first becomes payable to you. Federal tax ez form 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. Federal tax ez form However, see Exception , later. Federal tax ez form For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Federal tax ez form Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form Terminally or chronically ill defined. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. Federal tax ez form Exception. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. Federal tax ez form 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. Federal tax ez form Main home. Federal tax ez form   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. Federal tax ez form Repaying the first-time homebuyer credit because you sold your home. Federal tax ez form   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. Federal tax ez form 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. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. Federal tax ez form 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. Federal tax ez form You meet the ownership test. Federal tax ez form You meet the use test. Federal tax ez form During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Federal tax ez form 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 . Federal tax ez form Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Federal tax ez form 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). Federal tax ez form Exception to ownership and use tests. Federal tax ez form   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. Federal tax ez form Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. Federal tax ez form The maximum amount you can exclude will be reduced. Federal tax ez form See Publication 523, Selling Your Home, for more information. Federal tax ez form Exception to use test for individuals with a disability. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form   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. Federal tax ez form Exception to ownership test for property acquired in a like-kind exchange. Federal tax ez form   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. Federal tax ez form This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. Federal tax ez form A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. Federal tax ez form See Publication 523 for more information. Federal tax ez form Period of nonqualified use. Federal tax ez form   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. Federal tax ez form Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. Federal tax ez form See Publication 523 for more information. Federal tax ez form 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. Federal tax ez form However, see Special rules for joint returns , next. Federal tax ez form Special rules for joint returns. Federal tax ez form   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Federal tax ez form You are married and file a joint return for the year. Federal tax ez form Either you or your spouse meets the ownership test. Federal tax ez form Both you and your spouse meet the use test. Federal tax ez form 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. Federal tax ez form Sale of home by surviving spouse. Federal tax ez form   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. Federal tax ez form   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. Federal tax ez form The sale or exchange took place no more than 2 years after the date of death of your spouse. Federal tax ez form You have not remarried. Federal tax ez form You and your spouse met the use test at the time of your spouse's death. Federal tax ez form You or your spouse met the ownership test at the time of your spouse's death. Federal tax ez form Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Federal tax ez form Home transferred from spouse. Federal tax ez form   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. Federal tax ez form Use of home after divorce. Federal tax ez form   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. Federal tax ez form 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. Federal tax ez form However, you must meet the ownership and use tests. Federal tax ez form See Publication 523 for more information. Federal tax ez form Depreciation after May 6, 1997. Federal tax ez form   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. Federal tax ez form See Publication 523 for more information. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form 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. Federal tax ez form See Publication 523 for more information. Federal tax ez form Reverse Mortgages A revers