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H And R Block Taxes

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H And R Block Taxes

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

H and r block taxes Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. H and r block taxes Tax questions. H and r block taxes Useful Items - You may want to see: Note. H and r block taxes After 2013, Publication 590 will be split into two separate publications as follows. H and r block taxes Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. H and r block taxes This publication will include the rules for rollover and conversion contributions. H and r block taxes Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. H and r block taxes This publication will include the rules for required minimum distributions and IRA beneficiaries. H and r block taxes What's New for 2013 Traditional IRA contribution and deduction limit. H and r block taxes  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. H and r block taxes If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. H and r block taxes For more information, see How Much Can Be Contributed? in chapter 1. H and r block taxes Roth IRA contribution limit. H and r block taxes  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. H and r block taxes If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. H and r block taxes However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. H and r block taxes For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. H and r block taxes Modified AGI limit for traditional IRA contributions increased. H and r block taxes  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. H and r block taxes If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. H and r block taxes If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. H and r block taxes See How Much Can You Deduct? in chapter 1. H and r block taxes Modified AGI limit for Roth IRA contributions increased. H and r block taxes  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. H and r block taxes Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. H and r block taxes Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. H and r block taxes Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. H and r block taxes See Can You Contribute to a Roth IRA? in chapter 2. H and r block taxes Net Investment Income Tax. H and r block taxes  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). H and r block taxes However, these distributions are taken into account when determining the modified adjusted gross income threshold. H and r block taxes Distributions from a nonqualified retirement plan are included in net investment income. H and r block taxes See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. H and r block taxes Kay Bailey Hutchison Spousal IRA. H and r block taxes . H and r block taxes  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. H and r block taxes There are no changes to the rules regarding these IRAs. H and r block taxes See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. H and r block taxes What's New for 2014 Modified AGI limit for traditional IRA contributions increased. H and r block taxes  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. H and r block taxes If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. H and r block taxes If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. H and r block taxes Modified AGI limit for Roth IRA contributions increased. H and r block taxes  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. H and r block taxes Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. H and r block taxes Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. H and r block taxes Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. H and r block taxes You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. H and r block taxes Reminders Future developments. H and r block taxes  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. H and r block taxes irs. H and r block taxes gov/pub590. H and r block taxes Simplified employee pension (SEP). H and r block taxes  SEP IRAs are not covered in this publication. H and r block taxes They are covered in Publication 560, Retirement Plans for Small Business. H and r block taxes Deemed IRAs. H and r block taxes  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. H and r block taxes If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. H and r block taxes An employee's account can be treated as a traditional IRA or a Roth IRA. H and r block taxes For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. H and r block taxes Contributions to both traditional and Roth IRAs. H and r block taxes  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. H and r block taxes Statement of required minimum distribution (RMD). H and r block taxes  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. H and r block taxes The report or offer must include the date by which the amount must be distributed. H and r block taxes The report is due January 31 of the year in which the minimum distribution is required. H and r block taxes It can be provided with the year-end fair market value statement that you normally get each year. H and r block taxes No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. H and r block taxes IRA interest. H and r block taxes  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. H and r block taxes Tax on your traditional IRA is generally deferred until you take a distribution. H and r block taxes Do not report this interest on your return as tax-exempt interest. H and r block taxes For more information on tax-exempt interest, see the instructions for your tax return. H and r block taxes Photographs of missing children. H and r block taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H and r block taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H and r block taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. H and r block taxes Introduction This publication discusses individual retirement arrangements (IRAs). H and r block taxes An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. H and r block taxes What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. H and r block taxes In some cases, amounts are not taxed at all if distributed according to the rules. H and r block taxes What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. H and r block taxes It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. H and r block taxes   It also explains the penalties and additional taxes that apply when the rules are not followed. H and r block taxes To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. H and r block taxes How to use this publication. H and r block taxes   The rules that you must follow depend on which type of IRA you have. H and r block taxes Use Table I-1 to help you determine which parts of this publication to read. H and r block taxes Also use Table I-1 if you were referred to this publication from instructions to a form. H and r block taxes Comments and suggestions. H and r block taxes   We welcome your comments about this publication and your suggestions for future editions. H and r block taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. H and r block taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H and r block taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block taxes   You can send your comments from www. H and r block taxes irs. H and r block taxes gov/formspubs/. H and r block taxes Click on “More Information” and then on “Comment on Tax Forms and Publications”. H and r block taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. H and r block taxes Ordering forms and publications. H and r block taxes   Visit www. H and r block taxes irs. H and r block taxes gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. H and r block taxes Internal Revenue Service 1201 N. H and r block taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H and r block taxes   If you have a tax question, check the information available on IRS. H and r block taxes gov or call 1-800-829-1040. H and r block taxes We cannot answer tax questions sent to either of the above addresses. H and r block taxes Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. H and r block taxes 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. H and r block taxes S. H and r block taxes Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. H and r block taxes Table I-1. H and r block taxes Using This Publication IF you need information on . H and r block taxes . H and r block taxes . H and r block taxes THEN see . H and r block taxes . H and r block taxes . H and r block taxes traditional IRAs chapter 1. H and r block taxes Roth IRAs chapter 2, and parts of  chapter 1. H and r block taxes SIMPLE IRAs chapter 3. H and r block taxes the credit for qualified retirement savings contributions (the saver's credit) chapter 4. H and r block taxes how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. H and r block taxes SEP IRAs and 401(k) plans Publication 560. H and r block taxes Coverdell education savings accounts (formerly called education IRAs) Publication 970. H and r block taxes IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. H and r block taxes . H and r block taxes . H and r block taxes THEN see . H and r block taxes . H and r block taxes . H and r block taxes first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. H and r block taxes then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. H and r block taxes and finally figure how much of your social security is taxable appendix B, worksheet 3. H and r block taxes Table I-2. H and r block taxes How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. H and r block taxes Answers in the middle column apply to traditional IRAs. H and r block taxes Answers in the right column apply to Roth IRAs. H and r block taxes Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. H and r block taxes You must not have reached age  70½ by the end of the year. H and r block taxes See Who Can Open a Traditional IRA? in chapter 1. H and r block taxes No. H and r block taxes You can be any age. H and r block taxes See Can You Contribute to a Roth IRA? in chapter 2. H and r block taxes If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. H and r block taxes For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. H and r block taxes  There is no upper limit on how much you can earn and still contribute. H and r block taxes See How Much Can Be Contributed? in chapter 1. H and r block taxes Yes. H and r block taxes For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. H and r block taxes See How Much Can Be Contributed? and Table 2-1 in chapter 2. H and r block taxes Can I deduct contributions to a Yes. H and r block taxes You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. H and r block taxes See How Much Can You Deduct? in chapter 1. H and r block taxes No. H and r block taxes You can never deduct contributions to a Roth IRA. H and r block taxes See What Is a Roth IRA? in chapter 2. H and r block taxes Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. H and r block taxes In that case, you must file Form 8606. H and r block taxes See Nondeductible Contributions in chapter 1. H and r block taxes No. H and r block taxes You do not have to file a form if you contribute to a Roth IRA. H and r block taxes See Contributions not reported in chapter 2. H and r block taxes Do I have to start taking distributions when I reach a certain age from a Yes. H and r block taxes You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. H and r block taxes See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. H and r block taxes No. H and r block taxes If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. H and r block taxes See Are Distributions Taxable? in chapter 2. H and r block taxes However, if you are the beneficiary of a Roth IRA, you may have to take distributions. H and r block taxes See Distributions After Owner's Death in chapter 2. H and r block taxes How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. H and r block taxes See Are Distributions Taxable? in chapter 1. H and r block taxes Distributions from a Roth IRA are not taxed as long as you meet certain criteria. H and r block taxes See Are Distributions Taxable? in chapter 2. H and r block taxes Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. H and r block taxes If you have, file Form 8606. H and r block taxes See Nondeductible Contributions in chapter 1. H and r block taxes Yes. H and r block taxes File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). H and r block taxes Prev  Up  Next   Home   More Online Publications