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Free Irs Forms

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

Updated 3/5/2013 to include Greene and Perry counties.

Updated 3/4/2013 to include Jefferson Davis county.

Updated 2/19/2013 to include Marion and Wayne counties.

LA-MS-2013-01, Feb. 14, 2013

NEW ORLEANS — Victims of the severe storms, tornadoes and flooding that took place on Feb. 10, 2013 in parts of Mississippi may qualify for tax relief from the Internal Revenue Service.

The President has declared Forrest, Greene, Jefferson Davis, Lamar, Marion, Perry and Wayne counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 10, and on or before April 30, have been postponed to April 30, 2013. This includes the April 15 deadline for filing 2012 individual income tax returns, making income tax payments and making 2012 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 10, and on or before Feb. 27, as long as the deposits are made by Feb. 27, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until April 30 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 10 and on or before April 30.

The IRS also gives affected taxpayers until April 30 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 10 and on or before April 30.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 10 and on or before Feb. 27 provided the taxpayer makes these deposits by Feb. 27.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Mississippi/Severe Storms, Tornadoes, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 04-Feb-2014

The Free Irs Forms

Free irs forms Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Free irs forms S. Free irs forms Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Free irs forms Full-time student. Free irs forms Adjusted gross income. Free irs forms More information. Free irs forms Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Free irs forms Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Free irs forms Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Free irs forms You are a member of a religious order who has taken a vow of poverty. Free irs forms You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Free irs forms See Exemption From Self-Employment (SE) Tax , later. Free irs forms You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Free irs forms For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Free irs forms Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Free irs forms See Ministerial Services , later. Free irs forms Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Free irs forms However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Free irs forms For the specific services covered, see Ministerial Services , later. Free irs forms Ministers defined. Free irs forms   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Free irs forms Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Free irs forms   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Free irs forms Employment status for other tax purposes. Free irs forms   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Free irs forms For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Free irs forms Common-law employee. Free irs forms   Under common-law rules, you are considered either an employee or a self-employed person. Free irs forms Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Free irs forms For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Free irs forms   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Free irs forms However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Free irs forms Example. Free irs forms A church hires and pays you a salary to perform ministerial services subject to its control. Free irs forms Under the common-law rules, you are an employee of the church while performing those services. Free irs forms Form SS-8. Free irs forms   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Free irs forms Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Free irs forms See Ministerial Services , later. Free irs forms However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Free irs forms Vow of poverty. Free irs forms   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Free irs forms You do not need to request a separate exemption. Free irs forms For income tax purposes, the earnings are tax free to you. Free irs forms Your earnings are considered the income of the religious order. Free irs forms Services covered under FICA at the election of the order. Free irs forms   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Free irs forms Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Free irs forms   The order or subdivision elects coverage by filing Form SS-16. Free irs forms The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Free irs forms If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Free irs forms You do not pay any of the FICA tax. Free irs forms Services performed outside the order. Free irs forms   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Free irs forms   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Free irs forms You may, however, be able to take a charitable deduction for the amount you turn over to the order. Free irs forms See Publication 526, Charitable Contributions. Free irs forms Rulings. Free irs forms   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Free irs forms To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Free irs forms R. Free irs forms B. Free irs forms 1, available at www. Free irs forms irs. Free irs forms gov/irb/2014-1_IRB/ar05. Free irs forms html. Free irs forms Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Free irs forms However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Free irs forms Practitioners. Free irs forms   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Free irs forms State law specifically exempts Christian Science practitioners from licensing requirements. Free irs forms   Some Christian Science practitioners also are Christian Science teachers or lecturers. Free irs forms Income from teaching or lecturing is considered the same as income from their work as practitioners. Free irs forms Readers. Free irs forms   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Free irs forms Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Free irs forms Some exceptions are discussed next. Free irs forms Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Free irs forms If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Free irs forms Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Free irs forms 28 during the tax year. Free irs forms However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Free irs forms Churches and church organizations make this election by filing two copies of Form 8274. Free irs forms For more information about making this election, see Form 8274. Free irs forms Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Free irs forms This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Free irs forms Make this choice by filing Form 4029. Free irs forms See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Free irs forms U. Free irs forms S. Free irs forms Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Free irs forms Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Free irs forms S. Free irs forms social security system. Free irs forms To determine your alien status, see Publication 519, U. Free irs forms S. Free irs forms Tax Guide for Aliens. Free irs forms Residents of Puerto Rico, the U. Free irs forms S. Free irs forms Virgin Islands, Guam, the CNMI, and American Samoa. Free irs forms   If you are a resident of one of these U. Free irs forms S. Free irs forms possessions but not a U. Free irs forms S. Free irs forms citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Free irs forms For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Free irs forms Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Free irs forms Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Free irs forms Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Free irs forms The exemption does not apply to any other income. Free irs forms The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Free irs forms Ministers Most services you perform as a minister, priest, rabbi, etc. Free irs forms , are ministerial services. Free irs forms These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Free irs forms You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Free irs forms A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Free irs forms Services for nonreligious organizations. Free irs forms   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Free irs forms Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Free irs forms   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Free irs forms Services that are not part of your ministry. Free irs forms   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Free irs forms The following are not ministerial services. Free irs forms Services you perform for nonreligious organizations other than the services stated above. Free irs forms Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Free irs forms These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Free irs forms (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Free irs forms ) Services you perform in a government-owned and operated hospital. Free irs forms (These services are considered performed by a government employee, not by a minister as part of the ministry. Free irs forms ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Free irs forms Books or articles. Free irs forms   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Free irs forms   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Free irs forms Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Free irs forms The services are considered ministerial because you perform them as an agent of the order. Free irs forms For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Free irs forms However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Free irs forms Effect of employee status. Free irs forms   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Free irs forms In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Free irs forms This result is true even if you have taken a vow of poverty. Free irs forms Example. Free irs forms Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Free irs forms They renounce all claims to their earnings. Free irs forms The earnings belong to the order. Free irs forms Pat is a licensed attorney. Free irs forms The superiors of the order instructed her to get a job with a law firm. Free irs forms Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Free irs forms Chris is a secretary. Free irs forms The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Free irs forms Chris took the job and gave all his earnings to the order. Free irs forms Pat's services are not duties required by the order. Free irs forms Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Free irs forms Chris' services are duties required by the order. Free irs forms He is acting as an agent of the order and not as an employee of a third party. Free irs forms He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Free irs forms Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Free irs forms Amounts you receive for performing these services are generally subject to SE tax. Free irs forms You may request an exemption from SE tax, discussed next, which applies only to those services. Free irs forms Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Free irs forms Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Free irs forms They do not have to request the exemption. Free irs forms Who cannot be exempt. Free irs forms   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Free irs forms These elections are irrevocable. Free irs forms You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Free irs forms You elected before 1968 to be covered under social security for your ministerial services. Free irs forms Requesting exemption. Free irs forms    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Free irs forms More detailed explanations follow. Free irs forms If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Free irs forms It does not apply to any other self-employment income. Free irs forms Table 2. Free irs forms The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Free irs forms You file Form 4361, described below under Requesting Exemption—Form 4361 . Free irs forms You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Free irs forms You file for other than economic reasons. Free irs forms You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Free irs forms This requirement does not apply to Christian Science practitioners or readers. Free irs forms You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Free irs forms You establish that the organization is a church or a convention or association of churches. Free irs forms You did not make an election discussed earlier under Who cannot be exempt . Free irs forms You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Free irs forms Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Free irs forms The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Free irs forms If it is approved, keep the approved copy of Form 4361 in your permanent records. Free irs forms When to file. Free irs forms   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Free irs forms You have net earnings from self-employment of at least $400. Free irs forms Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Free irs forms The 2 years do not have to be consecutive tax years. Free irs forms    The approval process can take some time, so you should file Form 4361 as soon as possible. Free irs forms Example 1. Free irs forms Rev. Free irs forms Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Free irs forms He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Free irs forms However, if Rev. Free irs forms Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Free irs forms Example 2. Free irs forms Rev. Free irs forms Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Free irs forms She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Free irs forms However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Free irs forms Example 3. Free irs forms In 2011, Rev. Free irs forms David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Free irs forms In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Free irs forms Therefore, he had no net self-employment earnings as a minister in 2012. Free irs forms Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Free irs forms In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Free irs forms Rev. Free irs forms Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Free irs forms Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Free irs forms Death of individual. Free irs forms   The right to file an application for exemption ends with an individual's death. Free irs forms A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Free irs forms Effective date of exemption. Free irs forms   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Free irs forms Once the exemption is approved, it is irrevocable. Free irs forms Example. Free irs forms Rev. Free irs forms Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Free irs forms She files an application for exemption on February 20, 2014. Free irs forms If an exemption is granted, it is effective for 2010 and the following years. Free irs forms Refunds of SE tax. Free irs forms   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Free irs forms Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Free irs forms A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Free irs forms   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Free irs forms Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Free irs forms Exception. Free irs forms   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Free irs forms However, if you pay your benefits back, you may be considered for exemption. Free irs forms Contact your local Social Security Administration office to find out the amount you must pay back. Free irs forms Eligibility requirements. Free irs forms   To claim this exemption from SE tax, all the following requirements must be met. Free irs forms You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Free irs forms As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Free irs forms You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Free irs forms The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Free irs forms Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Free irs forms The sect or division must complete part of the form. Free irs forms The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Free irs forms If it is approved, keep the approved copy of Form 4029 in your permanent records. Free irs forms When to file. Free irs forms   You can file Form 4029 at any time. Free irs forms   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Free irs forms See Effective date of exemption next for information on when the newly approved exemption would become effective. Free irs forms    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Free irs forms Effective date of exemption. Free irs forms   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Free irs forms (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Free irs forms )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Free irs forms You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Free irs forms The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Free irs forms Refunds of SE tax paid. Free irs forms    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Free irs forms For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Free irs forms Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Free irs forms Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Free irs forms A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Free irs forms If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Free irs forms Information for employers. Free irs forms   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Free irs forms   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Free irs forms Form W-2. Free irs forms   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Free irs forms ” Do not make any entries in boxes 3, 4, 5, or 6. Free irs forms Forms 941, 943, and 944. Free irs forms   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Free irs forms Instead, follow the instructions given below. Free irs forms Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Free irs forms Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Free irs forms Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Free irs forms Effective date. Free irs forms   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Free irs forms The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Free irs forms Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Free irs forms Regular method. Free irs forms Nonfarm optional method. Free irs forms You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Free irs forms Blank worksheets are in the back of this publication, after the Comprehensive Example. Free irs forms Regular Method Most people use the regular method. Free irs forms Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Free irs forms Then, subtract your allowable business deductions and multiply the difference by 92. Free irs forms 35% (. Free irs forms 9235). Free irs forms Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Free irs forms If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Free irs forms 35% (. Free irs forms 9235). Free irs forms Do not reduce your wages by any business deductions when making this computation. Free irs forms Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Free irs forms If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Free irs forms Amounts included in gross income. Free irs forms   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Free irs forms , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Free irs forms This amount is also subject to income tax. Free irs forms   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Free irs forms Example. Free irs forms Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Free irs forms The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Free irs forms His church owns a parsonage that has a fair rental value of $12,000 per year. Free irs forms The church gives Pastor Adams the use of the parsonage. Free irs forms He is not exempt from SE tax. Free irs forms He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Free irs forms The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Free irs forms Overseas duty. Free irs forms   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Free irs forms S. Free irs forms citizen or resident alien serving abroad and living in a foreign country. Free irs forms   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Free irs forms Example. Free irs forms Diane Jones was the minister of a U. Free irs forms S. Free irs forms church in Mexico. Free irs forms She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Free irs forms The United States does not have a social security agreement with Mexico, so Mrs. Free irs forms Jones is subject to U. Free irs forms S. Free irs forms SE tax and must include $35,000 when figuring net earnings from self-employment. Free irs forms Specified U. Free irs forms S. Free irs forms possessions. Free irs forms    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Free irs forms Also see Residents of Puerto Rico, the U. Free irs forms S. Free irs forms Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Free irs forms S. Free irs forms Citizens and Resident and Nonresident Aliens. Free irs forms Amounts not included in gross income. Free irs forms   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Free irs forms Offerings that others made to the church. Free irs forms Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Free irs forms Pension payments or retirement allowances you receive for your past ministerial services. Free irs forms The rental value of a parsonage or a parsonage allowance provided to you after you retire. Free irs forms Allowable deductions. Free irs forms   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Free irs forms These are ministerial expenses you incurred while working other than as a common-law employee of the church. Free irs forms They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Free irs forms Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Free irs forms   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Free irs forms Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Free irs forms Do not complete Schedule C or C-EZ (Form 1040). Free irs forms However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Free irs forms Employee reimbursement arrangements. Free irs forms   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Free irs forms Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Free irs forms Accountable plans. Free irs forms   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Free irs forms Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Free irs forms You must adequately account to your employer for these expenses within a reasonable period of time. Free irs forms You must return any excess reimbursement or allowance within a reasonable period of time. Free irs forms   The reimbursement is not reported on your Form W-2. Free irs forms Generally, if your expenses equal your reimbursement, you have no deduction. Free irs forms If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Free irs forms Nonaccountable plan. Free irs forms   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Free irs forms In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Free irs forms Excess reimbursements you fail to return to your employer. Free irs forms Reimbursement of nondeductible expenses related to your employer's business. Free irs forms   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Free irs forms Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Free irs forms   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Free irs forms Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Free irs forms If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Free irs forms Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Free irs forms The tax rate for the social security part is 12. Free irs forms 4%. Free irs forms In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Free irs forms This tax rate is 2. Free irs forms 9%. Free irs forms The combined self-employment tax rate is 15. Free irs forms 3%. Free irs forms Additional Medicare Tax. Free irs forms   Beginning in 2013, a 0. Free irs forms 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Free irs forms Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Free irs forms A self-employment loss is not considered for purposes of this tax. Free irs forms RRTA compensation is separately compared to the threshold. Free irs forms For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Free irs forms Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Free irs forms In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Free irs forms You may use the nonfarm optional method if you meet all the following tests. Free irs forms You are self-employed on a regular basis. Free irs forms You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Free irs forms The net earnings can be from either farm or nonfarm earnings or both. Free irs forms You have used this method less than 5 prior years. Free irs forms (There is a 5-year lifetime limit. Free irs forms ) The years do not have to be consecutive. Free irs forms Your net nonfarm profits were: Less than $5,024, and Less than 72. Free irs forms 189% of your gross nonfarm income. Free irs forms If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Free irs forms Table 3. Free irs forms Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Free irs forms . Free irs forms . Free irs forms THEN your net earnings are equal to . Free irs forms . Free irs forms . Free irs forms $6,960 or less Two-thirds of your gross nonfarm income. Free irs forms More than $6,960 $4,640. Free irs forms Actual net earnings. Free irs forms   Multiply your total earnings subject to SE tax by 92. Free irs forms 35% (. Free irs forms 9235) to get actual net earnings. Free irs forms Actual net earnings are equivalent to net earnings under the “Regular Method. Free irs forms ” More information. Free irs forms   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Free irs forms Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Free irs forms Note. Free irs forms For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Free irs forms Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Free irs forms Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Free irs forms , in addition to your salary. Free irs forms If the offering is made to the religious institution, it is not taxable to you. Free irs forms Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Free irs forms However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Free irs forms For more information, see Publication 526. Free irs forms Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Free irs forms Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Free irs forms This exclusion applies only for income tax purposes. Free irs forms It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Free irs forms Designation requirement. Free irs forms   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Free irs forms It must designate a definite amount. Free irs forms It cannot determine the amount of the housing allowance at a later date. Free irs forms If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Free irs forms   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Free irs forms The local congregation must officially designate the part of your salary that is a housing allowance. Free irs forms However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Free irs forms Rental allowances. Free irs forms   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Free irs forms   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Free irs forms Fair rental value of parsonage. Free irs forms   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Free irs forms However, the exclusion cannot be more than the reasonable pay for your services. Free irs forms If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Free irs forms Example. Free irs forms Rev. Free irs forms Joanna Baker is a full-time minister. Free irs forms The church allows her to use a parsonage that has an annual fair rental value of $24,000. Free irs forms The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Free irs forms Her actual utility costs during the year were $7,000. Free irs forms For income tax purposes, Rev. Free irs forms Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Free irs forms She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Free irs forms Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Free irs forms Home ownership. Free irs forms   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Free irs forms Excess rental allowance. Free irs forms   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Free irs forms   Include in the total on Form 1040, line 7. Free irs forms On the dotted line next to line 7, enter “Excess allowance” and the amount. Free irs forms You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Free irs forms However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Free irs forms Retired ministers. Free irs forms   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Free irs forms However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Free irs forms Teachers or administrators. Free irs forms   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Free irs forms However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Free irs forms    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Free irs forms In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Free irs forms   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Free irs forms Theological students. Free irs forms   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Free irs forms Traveling evangelists. Free irs forms   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Free irs forms You are an ordained minister. Free irs forms You perform ministerial services at churches located away from your community. Free irs forms You actually use the rental allowance to maintain your permanent home. Free irs forms Cantors. Free irs forms   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Free irs forms Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Free irs forms See Members of Religious Orders , earlier, under Social Security Coverage. Free irs forms Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Free irs forms S. Free irs forms possession. Free irs forms Publication 54 discusses the foreign earned income exclusion. Free irs forms Publication 570, Tax Guide for Individuals With Income From U. Free irs forms S. Free irs forms Possessions, covers the rules for taxpayers with income from U. Free irs forms S. Free irs forms possessions. Free irs forms You can get these free publications from the Internal Revenue Service at IRS. Free irs forms gov or from most U. Free irs forms S. Free irs forms Embassies or consulates. Free irs forms Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Free irs forms Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Free irs forms You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Free irs forms You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Free irs forms See Publication 529 for more information on this limit. Free irs forms However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Free irs forms Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Free irs forms You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Free irs forms Exception. Free irs forms   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Free irs forms Figuring the allocation. Free irs forms   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Free irs forms    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Free irs forms Example. Free irs forms Rev. Free irs forms Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Free irs forms He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Free irs forms $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Free irs forms Rev. Free irs forms Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Free irs forms Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Free irs forms   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Free irs forms The statement must contain all of the following information. Free irs forms A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Free irs forms ) plus the amount. Free irs forms A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Free irs forms A list of each item of otherwise deductible ministerial expenses plus the amount. Free irs forms How you figured the nondeductible part of your otherwise deductible expenses. Free irs forms A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Free irs forms   See the attachments prepared for the Comprehensive Example , later. Free irs forms Following the example, you will find blank worksheets for your own use. Free irs forms Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Free irs forms If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Free irs forms See the Instructions for Form 1040 to figure your deduction. Free irs forms The following special rules apply to the self-employed health insurance deduction. Free irs forms You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Free irs forms You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Free irs forms The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Free irs forms Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Free irs forms More information. Free irs forms   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Free irs forms Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Free irs forms This is an income tax deduction only, on Form 1040, line 27. Free irs forms Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Free irs forms Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Free irs forms You must pay the tax as you earn or receive income during the year. Free irs forms An employee usually has income tax withheld from his or her wages or salary. Free irs forms However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Free irs forms You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Free irs forms Your salary is for ministerial services (see Ministerial Services , earlier). Free irs forms If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Free irs forms You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Free irs forms Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Free irs forms Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Free irs forms See Form 1040-ES for the different payment methods. Free irs forms The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Free irs forms For more information, see chapter 2 of Publication 505. Free irs forms If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Free irs forms Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Free irs forms Table 4. Free irs forms 2013 Filing Requirements for Most Taxpayers IF your filing status is . Free irs forms . Free irs forms . Free irs forms AND at the end of 2013 you were* . Free irs forms . Free irs forms . Free irs forms THEN file a return if your gross income** was at least . Free irs forms . Free irs forms . Free irs forms single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Free irs forms ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Free irs forms Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Free irs forms If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Free irs forms Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Free irs forms Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Free irs forms But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Free irs forms *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Free irs forms Additional requirements. Free irs forms   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Free irs forms 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Free irs forms Self-employment tax. Free irs forms   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Free irs forms   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Free irs forms You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Free irs forms You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Free irs forms However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Free irs forms Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Free irs forms Note. Free irs forms For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Free irs forms You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Free irs forms Exemption from SE tax. Free irs forms   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Free irs forms Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Free irs forms However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Free irs forms    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Free irs forms Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Free irs forms More information. Free irs forms   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Free irs forms Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Free irs forms You generally can deduct your contributions to the plan. Free irs forms Your contributions and the earnings on them are not taxed until they are distributed. Free irs forms Retirement plans for the self-employed. Free irs forms   To set up one of the following plans you must be self-employed. Free irs forms SEP (simplified employee pension) plan. Free irs forms SIMPLE (savings incentive match plan for employees) plan. Free irs forms Qualified retirement plan (also called a Keogh or H. Free irs forms R. Free irs forms 10 plan). Free irs forms   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Free irs forms See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Free irs forms This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Free irs forms   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Free irs forms You are not a self-employed person for purposes of setting up a retirement plan. Free irs forms This result is true even if your salary is subject to SE tax. Free irs forms   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Free irs forms   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Free irs forms Individual retirement arrangements (IRAs). Free irs forms   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Free irs forms Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Free irs forms   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Free irs forms You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Free irs forms   If you contribute to a traditional IRA, your contribution may be deductible. Free irs forms However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Free irs forms   For more information on IRAs, see Publication 590. Free irs forms Tax-sheltered annuity plans. Free irs forms   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Free irs forms For more