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Https www freefilefillableforms org 5. Https www freefilefillableforms org   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Https www freefilefillableforms org Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Reminder Foreign income. Https www freefilefillableforms org   If you are a U. Https www freefilefillableforms org S. Https www freefilefillableforms org citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U. Https www freefilefillableforms org S. Https www freefilefillableforms org law. Https www freefilefillableforms org This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. Https www freefilefillableforms org This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). Https www freefilefillableforms org If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. Https www freefilefillableforms org For details, see Publication 54, Tax Guide for U. Https www freefilefillableforms org S. Https www freefilefillableforms org Citizens and Resident Aliens Abroad. Https www freefilefillableforms org Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. Https www freefilefillableforms org The following topics are included. Https www freefilefillableforms org Bonuses and awards. Https www freefilefillableforms org Special rules for certain employees. Https www freefilefillableforms org Sickness and injury benefits. Https www freefilefillableforms org The chapter explains what income is included in the employee's gross income and what is not included. Https www freefilefillableforms org Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income Employee Compensation This section discusses various types of employee compensation including fringe benefits, retirement plan contributions, stock options, and restricted property. Https www freefilefillableforms org Form W-2. Https www freefilefillableforms org    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. Https www freefilefillableforms org Include your pay on line 7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ, even if you do not receive a Form W-2. Https www freefilefillableforms org   If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Https www freefilefillableforms org These wages must be included on line 7 of Form 1040. Https www freefilefillableforms org See Form 8919 for more information. Https www freefilefillableforms org Childcare providers. Https www freefilefillableforms org    If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Https www freefilefillableforms org If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Https www freefilefillableforms org You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Https www freefilefillableforms org Babysitting. Https www freefilefillableforms org   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Https www freefilefillableforms org Miscellaneous Compensation This section discusses different types of employee compensation. Https www freefilefillableforms org Advance commissions and other earnings. Https www freefilefillableforms org   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Https www freefilefillableforms org    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Https www freefilefillableforms org If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), or you may be able to take a credit for that year. Https www freefilefillableforms org See Repayments in chapter 12. Https www freefilefillableforms org Allowances and reimbursements. Https www freefilefillableforms org    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. Https www freefilefillableforms org If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Https www freefilefillableforms org Back pay awards. Https www freefilefillableforms org    Include in income amounts you are awarded in a settlement or judgment for back pay. Https www freefilefillableforms org These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Https www freefilefillableforms org They should be reported to you by your employer on Form W-2. Https www freefilefillableforms org Bonuses and awards. Https www freefilefillableforms org   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Https www freefilefillableforms org These include prizes such as vacation trips for meeting sales goals. Https www freefilefillableforms org If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Https www freefilefillableforms org However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Https www freefilefillableforms org Employee achievement award. Https www freefilefillableforms org   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Https www freefilefillableforms org However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Https www freefilefillableforms org Your employer can tell you whether your award is a qualified plan award. Https www freefilefillableforms org Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Https www freefilefillableforms org   However, the exclusion does not apply to the following awards: A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Https www freefilefillableforms org A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Https www freefilefillableforms org Example. Https www freefilefillableforms org Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Https www freefilefillableforms org Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Https www freefilefillableforms org However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income. Https www freefilefillableforms org Differential wage payments. Https www freefilefillableforms org   This is any payment made to you by an employer for any period during which you are, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages you would have received from the employer during that period. Https www freefilefillableforms org These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Https www freefilefillableforms org The payments are reported as wages on Form W-2. Https www freefilefillableforms org Government cost-of-living allowances. Https www freefilefillableforms org   Most payments received by U. Https www freefilefillableforms org S. Https www freefilefillableforms org Government civilian employees for working abroad are taxable. Https www freefilefillableforms org However, certain cost-of-living allowances are tax free. Https www freefilefillableforms org Publication 516, U. Https www freefilefillableforms org S. Https www freefilefillableforms org Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Https www freefilefillableforms org Nonqualified deferred compensation plans. Https www freefilefillableforms org   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Https www freefilefillableforms org This amount is shown on Form W-2, box 12, using code Y. Https www freefilefillableforms org This amount is not included in your income. Https www freefilefillableforms org   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Https www freefilefillableforms org This amount is included in your wages shown on Form W-2, box 1. Https www freefilefillableforms org It is also shown on Form W-2, box 12, using code Z. Https www freefilefillableforms org Note received for services. Https www freefilefillableforms org    If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Https www freefilefillableforms org When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Https www freefilefillableforms org Do not include that part again in your income. Https www freefilefillableforms org Include the rest of the payment in your income in the year of payment. Https www freefilefillableforms org   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Https www freefilefillableforms org Severance pay. Https www freefilefillableforms org   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Https www freefilefillableforms org Accrued leave payment. Https www freefilefillableforms org    If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Https www freefilefillableforms org   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Https www freefilefillableforms org You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Https www freefilefillableforms org Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on the return and the wages on your Forms W-2. Https www freefilefillableforms org Outplacement services. Https www freefilefillableforms org   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Https www freefilefillableforms org    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Https www freefilefillableforms org Sick pay. Https www freefilefillableforms org   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Https www freefilefillableforms org In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. Https www freefilefillableforms org A state sickness or disability fund. Https www freefilefillableforms org An association of employers or employees. Https www freefilefillableforms org An insurance company, if your employer paid for the plan. Https www freefilefillableforms org However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Https www freefilefillableforms org For more information, see Publication 525. Https www freefilefillableforms org Social security and Medicare taxes paid by employer. Https www freefilefillableforms org   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Https www freefilefillableforms org The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Https www freefilefillableforms org However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Https www freefilefillableforms org Stock appreciation rights. Https www freefilefillableforms org   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Https www freefilefillableforms org When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Https www freefilefillableforms org You include the cash payment in your income in the year you use the right. Https www freefilefillableforms org Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Https www freefilefillableforms org Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Https www freefilefillableforms org Accounting period. Https www freefilefillableforms org   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Https www freefilefillableforms org Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Https www freefilefillableforms org The general rule: benefits are reported for a full calendar year (January 1–December 31). Https www freefilefillableforms org The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Https www freefilefillableforms org For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Https www freefilefillableforms org  Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Https www freefilefillableforms org   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Https www freefilefillableforms org Form W-2. Https www freefilefillableforms org   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Https www freefilefillableforms org Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Https www freefilefillableforms org However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Https www freefilefillableforms org Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Https www freefilefillableforms org Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . Https www freefilefillableforms org For information on the items covered in this section, other than Long-term care coverage, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Https www freefilefillableforms org Long-term care coverage. Https www freefilefillableforms org    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Https www freefilefillableforms org However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Https www freefilefillableforms org This amount will be reported as wages in box 1 of your Form W-2. Https www freefilefillableforms org   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. Https www freefilefillableforms org Archer MSA contributions. Https www freefilefillableforms org    Contributions by your employer to your Archer MSA generally are not included in your income. Https www freefilefillableforms org Their total will be reported in box 12 of Form W-2 with code R. Https www freefilefillableforms org You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Https www freefilefillableforms org File the form with your return. Https www freefilefillableforms org Health flexible spending arrangement (health FSA). Https www freefilefillableforms org   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Https www freefilefillableforms org Note. Https www freefilefillableforms org Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Https www freefilefillableforms org The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Https www freefilefillableforms org For more information, see Notice 2012-40, 2012-26 I. Https www freefilefillableforms org R. Https www freefilefillableforms org B. Https www freefilefillableforms org 1046, available at www. Https www freefilefillableforms org irs. Https www freefilefillableforms org gov/irb/2012-26 IRB/ar09. Https www freefilefillableforms org html. Https www freefilefillableforms org Health reimbursement arrangement (HRA). Https www freefilefillableforms org   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Https www freefilefillableforms org Health savings accounts (HSA). Https www freefilefillableforms org   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Https www freefilefillableforms org Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Https www freefilefillableforms org Contributions made by your employer are not included in your income. Https www freefilefillableforms org Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Https www freefilefillableforms org Distributions not used for qualified medical expenses are included in your income. Https www freefilefillableforms org See Publication 969 for the requirements of an HSA. Https www freefilefillableforms org   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Https www freefilefillableforms org The contributions are treated as a distribution of money and are not included in the partner's gross income. Https www freefilefillableforms org Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Https www freefilefillableforms org In both situations, the partner can deduct the contribution made to the partner's HSA. Https www freefilefillableforms org   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Https www freefilefillableforms org The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Https www freefilefillableforms org Qualified HSA funding distribution. Https www freefilefillableforms org   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Https www freefilefillableforms org See Publication 590 for the requirements for these qualified HSA funding distributions. Https www freefilefillableforms org Failure to maintain eligibility. Https www freefilefillableforms org   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Https www freefilefillableforms org If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Https www freefilefillableforms org This income is also subject to an additional 10% tax. Https www freefilefillableforms org Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Https www freefilefillableforms org See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Https www freefilefillableforms org Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Https www freefilefillableforms org They also are included as social security and Medicare wages in boxes 3 and 5. Https www freefilefillableforms org However, they are not included as wages in box 1. Https www freefilefillableforms org To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Https www freefilefillableforms org File the form with your return. Https www freefilefillableforms org De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Https www freefilefillableforms org In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Https www freefilefillableforms org Holiday gifts. Https www freefilefillableforms org   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Https www freefilefillableforms org However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Https www freefilefillableforms org Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Https www freefilefillableforms org For more information, see Publication 970, Tax Benefits for Education. Https www freefilefillableforms org Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Https www freefilefillableforms org However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Https www freefilefillableforms org For exceptions, see Entire cost excluded , and Entire cost taxed , later. Https www freefilefillableforms org If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Https www freefilefillableforms org Also, it is shown separately in box 12 with code C. Https www freefilefillableforms org Group-term life insurance. Https www freefilefillableforms org   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Https www freefilefillableforms org Permanent benefits. Https www freefilefillableforms org   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Https www freefilefillableforms org Your employer should be able to tell you the amount to include in your income. Https www freefilefillableforms org Accidental death benefits. Https www freefilefillableforms org   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Https www freefilefillableforms org Former employer. Https www freefilefillableforms org   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Https www freefilefillableforms org Also, it is shown separately in box 12 with code C. Https www freefilefillableforms org Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Https www freefilefillableforms org You must pay these taxes with your income tax return. Https www freefilefillableforms org Include them on line 60, Form 1040, and follow the instructions for line 60. Https www freefilefillableforms org For more information, see the Instructions for Form 1040. Https www freefilefillableforms org Two or more employers. Https www freefilefillableforms org   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Https www freefilefillableforms org If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Https www freefilefillableforms org You must figure how much to include in your income. Https www freefilefillableforms org Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Https www freefilefillableforms org Figuring the taxable cost. Https www freefilefillableforms org   Use the following worksheet to figure the amount to include in your income. Https www freefilefillableforms org     Worksheet 5-1. Https www freefilefillableforms org Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Https www freefilefillableforms org Enter the total amount of your insurance coverage from your employer(s) 1. Https www freefilefillableforms org   2. Https www freefilefillableforms org Limit on exclusion for employer-provided group-term life insurance coverage 2. Https www freefilefillableforms org 50,000 3. Https www freefilefillableforms org Subtract line 2 from line 1 3. Https www freefilefillableforms org   4. Https www freefilefillableforms org Divide line 3 by $1,000. Https www freefilefillableforms org Figure to the nearest tenth 4. Https www freefilefillableforms org   5. Https www freefilefillableforms org Go to Table 5-1. Https www freefilefillableforms org Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Https www freefilefillableforms org   6. Https www freefilefillableforms org Multiply line 4 by line 5 6. Https www freefilefillableforms org   7. Https www freefilefillableforms org Enter the number of full months of coverage at this cost. Https www freefilefillableforms org 7. Https www freefilefillableforms org   8. Https www freefilefillableforms org Multiply line 6 by line 7 8. Https www freefilefillableforms org   9. Https www freefilefillableforms org Enter the premiums you paid per month 9. Https www freefilefillableforms org       10. Https www freefilefillableforms org Enter the number of months you paid the premiums 10. Https www freefilefillableforms org       11. Https www freefilefillableforms org Multiply line 9 by line 10. Https www freefilefillableforms org 11. Https www freefilefillableforms org   12. Https www freefilefillableforms org Subtract line 11 from line 8. Https www freefilefillableforms org Include this amount in your income as wages 12. Https www freefilefillableforms org      Table 5-1. Https www freefilefillableforms org Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. Https www freefilefillableforms org 05 25 through 29 . Https www freefilefillableforms org 06 30 through 34 . Https www freefilefillableforms org 08 35 through 39 . Https www freefilefillableforms org 09 40 through 44 . Https www freefilefillableforms org 10 45 through 49 . Https www freefilefillableforms org 15 50 through 54 . Https www freefilefillableforms org 23 55 through 59 . Https www freefilefillableforms org 43 60 through 64 . Https www freefilefillableforms org 66 65 through 69 1. Https www freefilefillableforms org 27 70 and older 2. Https www freefilefillableforms org 06 Example. Https www freefilefillableforms org You are 51 years old and work for employers A and B. Https www freefilefillableforms org Both employers provide group-term life insurance coverage for you for the entire year. Https www freefilefillableforms org Your coverage is $35,000 with employer A and $45,000 with employer B. Https www freefilefillableforms org You pay premiums of $4. Https www freefilefillableforms org 15 a month under the employer B group plan. Https www freefilefillableforms org You figure the amount to include in your income as shown in Worksheet 5-1. Https www freefilefillableforms org Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. Https www freefilefillableforms org Worksheet 5-1. Https www freefilefillableforms org Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. Https www freefilefillableforms org Enter the total amount of your insurance coverage from your employer(s) 1. Https www freefilefillableforms org 80,000 2. Https www freefilefillableforms org Limit on exclusion for employer-provided group-term life insurance coverage 2. Https www freefilefillableforms org 50,000 3. Https www freefilefillableforms org Subtract line 2 from line 1 3. Https www freefilefillableforms org 30,000 4. Https www freefilefillableforms org Divide line 3 by $1,000. Https www freefilefillableforms org Figure to the nearest tenth 4. Https www freefilefillableforms org 30. Https www freefilefillableforms org 0 5. Https www freefilefillableforms org Go to Table 5-1. Https www freefilefillableforms org Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Https www freefilefillableforms org . Https www freefilefillableforms org 23 6. Https www freefilefillableforms org Multiply line 4 by line 5 6. Https www freefilefillableforms org 6. Https www freefilefillableforms org 90 7. Https www freefilefillableforms org Enter the number of full months of coverage at this cost. Https www freefilefillableforms org 7. Https www freefilefillableforms org 12 8. Https www freefilefillableforms org Multiply line 6 by line 7 8. Https www freefilefillableforms org 82. Https www freefilefillableforms org 80 9. Https www freefilefillableforms org Enter the premiums you paid per month 9. Https www freefilefillableforms org 4. Https www freefilefillableforms org 15     10. Https www freefilefillableforms org Enter the number of months you paid the premiums 10. Https www freefilefillableforms org 12     11. Https www freefilefillableforms org Multiply line 9 by line 10. Https www freefilefillableforms org 11. Https www freefilefillableforms org 49. Https www freefilefillableforms org 80 12. Https www freefilefillableforms org Subtract line 11 from line 8. Https www freefilefillableforms org Include this amount in your income as wages 12. Https www freefilefillableforms org 33. Https www freefilefillableforms org 00 Entire cost excluded. Https www freefilefillableforms org   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Https www freefilefillableforms org You are permanently and totally disabled and have ended your employment. Https www freefilefillableforms org Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Https www freefilefillableforms org A charitable organization (defined in chapter 24) to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Https www freefilefillableforms org (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Https www freefilefillableforms org ) The plan existed on January 1, 1984, and You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Https www freefilefillableforms org Entire cost taxed. Https www freefilefillableforms org   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply: The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Https www freefilefillableforms org You are a key employee and your employer's plan discriminates in favor of key employees. Https www freefilefillableforms org Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Https www freefilefillableforms org Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Https www freefilefillableforms org You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Https www freefilefillableforms org Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Https www freefilefillableforms org A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Https www freefilefillableforms org Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Https www freefilefillableforms org However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Https www freefilefillableforms org Exclusion limit. Https www freefilefillableforms org   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Https www freefilefillableforms org   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Https www freefilefillableforms org   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Https www freefilefillableforms org   If the benefits have a value that is more than these limits, the excess must be included in your income. Https www freefilefillableforms org You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Https www freefilefillableforms org Commuter highway vehicle. Https www freefilefillableforms org   This is a highway vehicle that seats at least six adults (not including the driver). Https www freefilefillableforms org At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Https www freefilefillableforms org Transit pass. Https www freefilefillableforms org   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Https www freefilefillableforms org Qualified parking. Https www freefilefillableforms org   This is parking provided to an employee at or near the employer's place of business. Https www freefilefillableforms org It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Https www freefilefillableforms org It does not include parking at or near the employee's home. Https www freefilefillableforms org Qualified bicycle commuting. Https www freefilefillableforms org   This is reimbursement based on the number of qualified bicycle commuting months for the year. Https www freefilefillableforms org A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Https www freefilefillableforms org The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Https www freefilefillableforms org Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Https www freefilefillableforms org (Your employer can tell you whether your retirement plan is qualified. Https www freefilefillableforms org ) However, the cost of life insurance coverage included in the plan may have to be included. Https www freefilefillableforms org See Group-Term Life Insurance , earlier, under Fringe Benefits. Https www freefilefillableforms org If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Https www freefilefillableforms org However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Https www freefilefillableforms org For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. Https www freefilefillableforms org S. Https www freefilefillableforms org Civil Service Retirement Benefits, if you are a federal employee or retiree). Https www freefilefillableforms org Elective deferrals. Https www freefilefillableforms org   If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Https www freefilefillableforms org The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Https www freefilefillableforms org An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Https www freefilefillableforms org However, it is included in wages subject to social security and Medicare taxes. Https www freefilefillableforms org   Elective deferrals include elective contributions to the following retirement plans. Https www freefilefillableforms org Cash or deferred arrangements (section 401(k) plans). Https www freefilefillableforms org The Thrift Savings Plan for federal employees. Https www freefilefillableforms org Salary reduction simplified employee pension plans (SARSEP). Https www freefilefillableforms org Savings incentive match plans for employees (SIMPLE plans). Https www freefilefillableforms org Tax-sheltered annuity plans (403(b) plans). Https www freefilefillableforms org Section 501(c)(18)(D) plans. Https www freefilefillableforms org Section 457 plans. Https www freefilefillableforms org Qualified automatic contribution arrangements. Https www freefilefillableforms org   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Https www freefilefillableforms org You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Https www freefilefillableforms org The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Https www freefilefillableforms org   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Https www freefilefillableforms org Overall limit on deferrals. Https www freefilefillableforms org   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3) and (5) above. Https www freefilefillableforms org The limit for SIMPLE plans is $12,000. Https www freefilefillableforms org The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. Https www freefilefillableforms org The limit for section 457 plans is the lesser of your includible compensation or $17,500. Https www freefilefillableforms org Amounts deferred under specific plan limits are part of the overall limit on deferrals. Https www freefilefillableforms org Designated Roth contributions. Https www freefilefillableforms org   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Https www freefilefillableforms org Designated Roth contributions are treated as elective deferrals, except that they are included in income. Https www freefilefillableforms org Excess deferrals. Https www freefilefillableforms org   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Https www freefilefillableforms org However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Https www freefilefillableforms org   If you set aside more than the limit, the excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution. Https www freefilefillableforms org See Publication 525 for a discussion of the tax treatment of excess deferrals. Https www freefilefillableforms org Catch-up contributions. Https www freefilefillableforms org   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. Https www freefilefillableforms org Stock Options If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you usually will have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. Https www freefilefillableforms org However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. Https www freefilefillableforms org Your employer can tell you which kind of option you hold. Https www freefilefillableforms org For more information, see Publication 525. Https www freefilefillableforms org Restricted Property In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. Https www freefilefillableforms org However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. Https www freefilefillableforms org (You can choose to include the value of the property in your income in the year it is transferred to you. Https www freefilefillableforms org ) For more information, see Restricted Property in Publication 525. Https www freefilefillableforms org Dividends received on restricted stock. Https www freefilefillableforms org   Dividends you receive on restricted stock are treated as compensation and not as dividend income. Https www freefilefillableforms org Your employer should include these payments on your Form W-2. Https www freefilefillableforms org Stock you chose to include in income. Https www freefilefillableforms org   Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. Https www freefilefillableforms org Report them on your return as dividends. Https www freefilefillableforms org For a discussion of dividends, see chapter 8. Https www freefilefillableforms org    For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525. Https www freefilefillableforms org Special Rules for Certain Employees This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers. Https www freefilefillableforms org Clergy Generally, if you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Https www freefilefillableforms org , in addition to your salary. Https www freefilefillableforms org If the offering is made to the religious institution, it is not taxable to you. Https www freefilefillableforms org If you are a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. Https www freefilefillableforms org However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Https www freefilefillableforms org See chapter 24. Https www freefilefillableforms org Pension. Https www freefilefillableforms org    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. Https www freefilefillableforms org It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Https www freefilefillableforms org Housing. Https www freefilefillableforms org    Special rules for housing apply to members of the clergy. Https www freefilefillableforms org Under these rules, you do not include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. Https www freefilefillableforms org However, the exclusion cannot be more than the reasonable pay for your service. Https www freefilefillableforms org If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. Https www freefilefillableforms org The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. Https www freefilefillableforms org However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you are subject to the self-employment tax. Https www freefilefillableforms org For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Https www freefilefillableforms org Members of Religious Orders If you are a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order. Https www freefilefillableforms org Services performed for the order. Https www freefilefillableforms org   If you are performing the services as an agent of the order in the exercise of duties required by the order, do not include in your income the amounts turned over to the order. Https www freefilefillableforms org   If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. Https www freefilefillableforms org Any wages you earn as an agent of an order that you turn over to the order are not included in your income. Https www freefilefillableforms org Example. Https www freefilefillableforms org You are a member of a church order and have taken a vow of poverty. Https www freefilefillableforms org You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. Https www freefilefillableforms org You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. Https www freefilefillableforms org However, you remain under the general direction and control of the order. Https www freefilefillableforms org You are considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order are not included in your income. Https www freefilefillableforms org Services performed outside the order. Https www freefilefillableforms org   If you are directed to work outside the order, your services are not an exercise of duties required by the order unless they meet both of the following requirements: They are the kind of services that are ordinarily the duties of members of the order. Https www freefilefillableforms org They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. Https www freefilefillableforms org If you are an employee of a third party, the services you perform for the third party will not be considered directed or required of you by the order. Https www freefilefillableforms org Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. Https www freefilefillableforms org Example. Https www freefilefillableforms org Mark Brown is a member of a religious order and has taken a vow of poverty. Https www freefilefillableforms org He renounces all claims to his earnings and turns over his earnings to the order. Https www freefilefillableforms org Mark is a schoolteacher. Https www freefilefillableforms org He was instructed by the superiors of the order to get a job with a private tax-exempt school. Https www freefilefillableforms org Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. Https www freefilefillableforms org Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. Https www freefilefillableforms org The wages Mark earns working for the school are included in his income. Https www freefilefillableforms org Foreign Employer Special rules apply if you work for a foreign employer. Https www freefilefillableforms org U. Https www freefilefillableforms org S. Https www freefilefillableforms org citizen. Https www freefilefillableforms org   If you are a U. Https www freefilefillableforms org S. Https www freefilefillableforms org citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income. Https www freefilefillableforms org Social security and Medicare taxes. Https www freefilefillableforms org   You are exempt from social security and Medicare employee taxes if you are employed in the United States by an international organization or a foreign government. Https www freefilefillableforms org However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. Https www freefilefillableforms org This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. Https www freefilefillableforms org Employees of international organizations or foreign governments. Https www freefilefillableforms org   Your compensation for official services to an international organization is exempt from federal income tax if you are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Https www freefilefillableforms org   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. Https www freefilefillableforms org You are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Https www freefilefillableforms org Your work is like the work done by employees of the United States in foreign countries. Https www freefilefillableforms org The foreign government gives an equal exemption to employees of the United States in its country. Https www freefilefillableforms org Waiver of alien status. Https www freefilefillableforms org   If you are an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. Https www freefilefillableforms org See Foreign Employer in Publication 525. Https www freefilefillableforms org Employment abroad. Https www freefilefillableforms org   For information on the tax treatment of income earned abroad, see Publication 54. Https www freefilefillableforms org Military Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. Https www freefilefillableforms org Allowances generally are not taxed. Https www freefilefillableforms org For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. Https www freefilefillableforms org Differential wage payments. Https www freefilefillableforms org   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. Https www freefilefillableforms org These wages are subject to income tax withholding and are reported on a Form W-2. Https www freefilefillableforms org See the discussion under Miscellaneous Compensation , earlier. Https www freefilefillableforms org Military retirement pay. Https www freefilefillableforms org   If your retirement pay is based on age or length of service, it is taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Https www freefilefillableforms org Do not include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan. Https www freefilefillableforms org   For more detailed discussion of survivor annuities, see chapter 10. Https www freefilefillableforms org Disability. Https www freefilefillableforms org   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. Https www freefilefillableforms org Veterans' benefits. Https www freefilefillableforms org   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). Https www freefilefillableforms org The following amounts paid to veterans or their families are not taxable. Https www freefilefillableforms org Education, training, and subsistence allowances. Https www freefilefillableforms org Disability compensation and pension payments for disabilities paid either to veterans or their families. Https www freefilefillableforms org Grants for homes designed for wheelchair living. Https www freefilefillableforms org Grants for motor vehicles for veterans who lost their sight or the use of their limbs. Https www freefilefillableforms org Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. Https www freefilefillableforms org Interest on insurance dividends you leave on deposit with the VA. Https www freefilefillableforms org Benefits under a dependent-care assistance program. Https www freefilefillableforms org The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. Https www freefilefillableforms org Payments made under the compensated work therapy program. Https www freefilefillableforms org Any bonus payment by a state or political subdivision because of service in a combat zone. Https www freefilefillableforms org Volunteers The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions. Https www freefilefillableforms org Peace Corps. Https www freefilefillableforms org   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. Https www freefilefillableforms org Taxable allowances. Https www freefilefillableforms org   The following allowances must be included in your income and reported as wages: Allowances paid to your spouse and minor children while you are a volunteer leader training in the United States. Https www freefilefillableforms org Living allowances designated by the Director of the Peace Corps as basic compensation. Https www freefilefillableforms org These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Https www freefilefillableforms org Leave allowances. Https www freefilefillableforms org Readjustment allowances or termination payments. Https www freefilefillableforms org These are considered received by you when credited to your account. Https www freefilefillableforms org Example. Https www freefilefillableforms org Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Https www freefilefillableforms org Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Https www freefilefillableforms org Volunteers in Service to America (VISTA). Https www freefilefillableforms org   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. Https www freefilefillableforms org National Senior Services Corps programs. Https www freefilefillableforms org   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. Https www freefilefillableforms org Retired Senior Volunteer Program (RSVP). Https www freefilefillableforms org Foster Grandparent Program. Https www freefilefillableforms org Senior Companion Program. Https www freefilefillableforms org Service Corps of Retired Executives (SCORE). Https www freefilefillableforms org   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. Https www freefilefillableforms org Volunteer tax counseling. Https www freefilefillableforms org   Do not include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE). Https www freefilefillableforms org   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. Https www freefilefillableforms org See chapter 24. Https www freefilefillableforms org Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. Https www freefilefillableforms org In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Https www freefilefillableforms org If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Https www freefilefillableforms org However, certain payments may not be taxable to you. Https www freefilefillableforms org Your employer should be able to give you specific details about your pension plan and tell you the amount you paid for your disability pension. Https www freefilefillableforms org In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. Https www freefilefillableforms org Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. Https www freefilefillableforms org Cost paid by you. Https www freefilefillableforms org   If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Https www freefilefillableforms org If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Https www freefilefillableforms org See Reimbursement in a later year in chapter 21. Https www freefilefillableforms org Cafeteria plans. Https www freefilefillableforms org   In most cases, if you are covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums was not included in your income, you are not considered to have paid the premiums and you must include any benefits you receive in your income. Https www freefilefillableforms org If the amount of the premiums was included in your income, you are considered to have paid the premiums, and any benefits you receive are not taxable. Https www freefilefillableforms org Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Https www freefilefillableforms org You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. Https www freefilefillableforms org Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Https www freefilefillableforms org You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Https www freefilefillableforms org For information on this credit and the definition of permanent and total disability, see chapter 33. Https www freefilefillableforms org Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Https www freefilefillableforms org Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Https www freefilefillableforms org The rules for reporting pensions are explained in How To Report in chapter 10. Https www freefilefillableforms org For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. Https www freefilefillableforms org Retirement and profit-sharing plans. Https www freefilefillableforms org   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Https www freefilefillableforms org The payments must be reported as a pension or annuity. Https www freefilefillableforms org For more information on pensions, see chapter 10. Https www freefilefillableforms org Accrued leave payment. Https www freefilefillableforms org   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Https www freefilefillableforms org The payment is not a disability payment. Https www freefilefillableforms org Include it in your income in the tax year you receive it. Https www freefilefillableforms org Military and Government Disability Pensions Certain military and government disability pensions are not taxable. Https www freefilefillableforms org Service-connected disability. Https www freefilefillableforms org   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services. Https www freefilefillableforms org The armed forces of any country. Https www freefilefillableforms org The National Oceanic and Atmospheric Administration. Https www freefilefillableforms org The Public Health Service. Https www freefilefillableforms org The Foreign Service. Https www freefilefillableforms org Conditions for exclusion. Https www freefilefillableforms org   Do not include the disability payments in your income if any of the following conditions apply. Https www freefilefillableforms org You were entitled to receive a disability payment before September 25, 1975. Https www freefilefillableforms org You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975. Https www freefilefillableforms org You receive the disability payments for a combat-related injury. Https www freefilefillableforms org This is a personal injury or sickness that Results directly from armed conflict, Takes place while you are engaged in extra-hazardous service, Takes place under conditions simulating war, including training exercises such as maneuvers, or Is caused by an instrumentality of war. Https www freefilefillableforms org You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Https www freefilefillableforms org Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. Https www freefilefillableforms org Pension based on years of service. Https www freefilefillableforms org   If you receive a disability pension based on years of service, in most cases you must include it in your income. Https www freefilefillableforms org However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. Https www freefilefillableforms org You must include the rest of your pension in your income. Https www freefilefillableforms org Retroactive VA determination. Https www freefilefillableforms org   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. Https www freefilefillableforms org You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. Https www freefilefillableforms org You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. Https www freefilefillableforms org The letter must show the amount withheld and the effective date of the benefit. Https www freefilefillableforms org   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. Https www freefilefillableforms org However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA. Https www freefilefillableforms org Special statute of limitations. Https www freefilefillableforms org   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. Https www freefilefillableforms org However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. Https www freefilefillableforms org This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination. Https www freefilefillableforms org Example. Https www freefilefillableforms org You retired in 2007 and receive a pension based on your years of service. Https www freefilefillableforms org On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. Https www freefilefillableforms org Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. Https www freefilefillableforms org However, under the special limitation period, you can also file a claim for 2009 as long as you file the claim by August 1, 2014. Https www freefilefillableforms org You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. Https www freefilefillableforms org Terrorist attack or military action. Https www freefilefillableforms org   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. Https www freefilefillableforms org Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Https www freefilefillableforms org Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. Https www freefilefillableforms org To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. Https www freefilefillableforms org A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. Https www freefilefillableforms org The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits, and In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Https www freefilefillableforms org Qualified long-term care services. Https www freefilefillableforms org   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance and personal care services, and Required by a chronically ill individual and provided pursuant to a plan of care as prescribed by a licensed health care practitioner. Https www freefilefillableforms org Chronically ill individual. Https www freefilefillableforms org   A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. Https www freefilefillableforms org Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Https www freefilefillableforms org An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Https www freefilefillableforms org Limit on exclusion. Https www freefilefillableforms org   You generally can exclude from gross income up to $320 a day for 2013. Https www freefilefillableforms org See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. Https www freefilefillableforms org Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Https www freefilefillableforms org The exemption also applies to your survivors. Https www freefilefillableforms org The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Https www freefilefillableforms org If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Https www freefilefillableforms org For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Https www freefilefillableforms org Return to work. Https www freefilefillableforms org    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Https www freefilefillableforms org Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Https www freefilefillableforms org Railroad sick pay. Https www freefilefillableforms org    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. Https www freefilefillableforms org However, do not include them in your income if they are for an on-the-job injury. Https www freefilefillableforms org   If you received income because of a disability, see Disability Pensions , earlier. Https www freefilefillableforms org Federal Employees' Compensation Act (FECA). Https www freefilefillableforms org   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Https www freefilefillableforms org However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Https www freefilefillableforms org Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. Https www freefilefillableforms org Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Https www freefilefillableforms org    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Https www freefilefillableforms org For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. Https www freefilefillableforms org    You can deduct the amount you spend to buy back sick leave for an earlier year to be eligible for nontaxable FECA benefits for that period. Https www freefilefillableforms org It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). Https www freefilefillableforms org If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. Https www freefilefillableforms org Do not deduct it separately. Https www freefilefillableforms org Other compensation. Https www freefilefillableforms org   Many other amounts you receive as compensation for sickness or injury are not taxable. Https www freefilefillableforms org These include the following amounts. Https www freefilefillableforms org Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. Https www freefilefillableforms org Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Https www freefilefillableforms org Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Https www freefilefillableforms org Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Https www freefilefillableforms org This compensation must be based only on the injury and not on the period of your absence from work. Https www freefilefillableforms org These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Https www freefilefillableforms org Reimbursement for medical care. Https www freefilefillableforms org    A reimbursement for medical care is generally not taxable. Https www freefilefillableforms org However, it may reduce your medical expense deduction. Https www freefilefillableforms org For more information, see chapter 21. Https www freefilefillableforms org Prev  Up  Next   Home   More Online Publications
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Better Business Bureaus (BBBs) are nonprofit organizations that encourage honest advertising and selling practices and are supported primarily by local businesses. They offer a variety of consumer services, including consumer education materials; business reports, particularly unanswered or unsettled complaints or other problems; mediation and arbitration services; and information about charities and other organizations that are seeking public donations. They also provide ratings (A, B, C, D, or F) of local companies to express the BBB's confidence that the company operates in a trustworthy manner and demonstrates a willingness to resolve customer concerns.

Akron, OH

Website: Better Business Bureau

Email: info@akronbbb.org

Address: Better Business Bureau
222 W. Market St.
Akron, OH 44303

Phone Number: 330-253-4590

Canton, OH

Website: Better Business Bureau http://www.bbb.org/

Email: info@cantonbbb.org

Address: Better Business Bureau
1434 Cleveland Ave., NW
Canton, OH 44703

Phone Number: 330-454-9401

Toll-free: 1-800-362-0494

Cincinnati, OH

Website: Better Business Bureau

Email: info@cincinnati.bbb.org

Address: Better Business Bureau
7 W. 7th St., Suite 1600
Cincinnati, OH 45202

Phone Number: 513-421-3015

Cleveland, OH

Website: Better Business Bureau

Email: info@cleveland.bbb.org

Address: Better Business Bureau
2800 Euclid Ave., 4th Floor
Cleveland, OH 44115

Phone Number: 216-241-7678

Toll-free: 1-800-233-0361

Columbus, OH

Website: Better Business Bureau

Email: info@columbus-ohbbb.org

Address: Better Business Bureau
1169 Dublin Rd.
Columbus, OH 43215-1005

Phone Number: 614-486-6336

Dayton, OH

Website: Better Business Bureau

Email: info@dayton.bbb.org

Address: Better Business Bureau
15 W. Fourth St., Suite 300
Dayton, OH 45402

Phone Number: 937-222-5825

Toll-free: 1-800-776-5301

Lima, OH

Website: Better Business Bureau

Email: info@limabbb.org

Address: Better Business Bureau
219 N. McDonel St.
Lima, OH 45801

Phone Number: 419-223-7010

Toledo, OH

Website: Better Business Bureau

Email: info@toledobbb.org

Address: Better Business Bureau
Integrity Pl.
7668 King's Pointe Rd.
Toledo, OH 43617

Phone Number: 419-531-3116

Toll-free: 1-800-743-4222

Youngstown, OH

Website: Better Business Bureau

Email: info@youngstown.bbb.org

Address: Better Business Bureau
PO Box 1495
Youngstown, OH 44501

Phone Number: 330-744-3111

The Https Www Freefilefillableforms Org

Https www freefilefillableforms org Index A Adjusted basis Worksheet 1 to figure, Worksheet A Instructions. Https www freefilefillableforms org Assistance (see Tax help) F Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) T Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. Https www freefilefillableforms org TTY/TDD information, How To Get Tax Help W Worksheets Adjusted basis (Worksheet 1), Worksheet A Instructions. Https www freefilefillableforms org Prev  Up     Home   More Online Publications