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Turbo Tax

Turbo tax Publication 519 - Introductory Material Table of Contents Future Developments IntroductionOrdering forms and publications. Turbo tax Tax questions. Turbo tax What's New Reminders Future Developments For the latest information about developments related to Publication 519, such as legislation enacted after it was published, go to www. Turbo tax irs. Turbo tax gov/pub519. Turbo tax Introduction For tax purposes, an alien is an individual who is not a U. Turbo tax S. Turbo tax citizen. Turbo tax Aliens are classified as nonresident aliens and resident aliens. Turbo tax This publication will help you determine your status and give you information you will need to file your U. Turbo tax S. Turbo tax tax return. Turbo tax Resident aliens generally are taxed on their worldwide income, the same as U. Turbo tax S. Turbo tax citizens. Turbo tax Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. Turbo tax The information in this publication is not as comprehensive for resident aliens as it is for nonresident aliens. Turbo tax Resident aliens are generally treated the same as U. Turbo tax S. Turbo tax citizens and can find more information in other IRS publications. Turbo tax Table A, Where To Find What You Need To Know About U. Turbo tax S. Turbo tax Taxes, provides a list of questions and the chapter or chapters in this publication where you will find the related discussion. Turbo tax Answers to frequently asked questions are presented in the back of the publication. Turbo tax Table A. Turbo tax Where To Find What You Need To Know About U. Turbo tax S. Turbo tax Taxes Commonly Asked Questions Where To Find The Answer Am I a nonresident alien or resident alien? See chapter 1. Turbo tax Can I be a nonresident alien and a resident alien in the same year? See Dual-Status Aliens in chapter 1. Turbo tax See chapter 6. Turbo tax I am a resident alien and my spouse is a nonresident alien. Turbo tax Are there special rules for us? See Nonresident Spouse Treated as a Resident  in chapter 1. Turbo tax See Community Income in chapter 2. Turbo tax Is all my income subject to U. Turbo tax S. Turbo tax tax? See chapter 2. Turbo tax See chapter 3. Turbo tax Is my scholarship subject to U. Turbo tax S. Turbo tax tax? See Scholarship Grants, Prizes, and Awards in chapter 2. Turbo tax See Scholarship and Fellowship Grants in chapter 3. Turbo tax See chapter 9. Turbo tax What is the tax rate on my income subject to U. Turbo tax S. Turbo tax tax? See chapter 4. Turbo tax I moved to the United States this year. Turbo tax Can I deduct my moving expenses on my U. Turbo tax S. Turbo tax return? See Deductions in chapter 5. Turbo tax Can I claim exemptions for my spouse and children? See Exemptions in chapter 5. Turbo tax I pay income taxes to my home country. Turbo tax Can I get credit for these taxes on my U. Turbo tax S. Turbo tax tax return? See Tax Credits and Payments in chapter 5. Turbo tax What forms must I file and when and where do I file them? See chapter 7. Turbo tax How should I pay my U. Turbo tax S. Turbo tax income taxes? See chapter 8. Turbo tax Am I eligible for any benefits under a tax treaty? See Income Entitled to Tax Treaty Benefits in chapter 8. Turbo tax See chapter 9. Turbo tax Are employees of foreign governments and international organizations exempt from U. Turbo tax S. Turbo tax tax? See chapter 10. Turbo tax Is there anything special I have to do before leaving the United States? See chapter 11. Turbo tax See Expatriation Tax in chapter 4. Turbo tax Comments and suggestions. Turbo tax   We welcome your comments about this publication and your suggestions for future editions. Turbo tax   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Turbo tax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Turbo tax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Turbo tax   You can send us comments from www. Turbo tax irs. Turbo tax gov/formspubs/. Turbo tax Click on “More Information” and then on “Comment on Tax Forms and Publications. Turbo tax ”   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. Turbo tax Ordering forms and publications. Turbo tax   Visit www. Turbo tax irs. Turbo tax gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Turbo tax Internal Revenue Service 1201 N. Turbo tax Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Turbo tax   If you have a tax question, check the information available on IRS. Turbo tax gov or call 1-800-829-1040. Turbo tax We cannot answer tax questions sent to either of the above addresses. Turbo tax What's New Personal exemption increased. Turbo tax  For tax years beginning in 2013, the personal exemption amount is increased to $3,900. Turbo tax U. Turbo tax S. Turbo tax real property interest. Turbo tax  Generally, the treatment of a regulated investment company (RIC) as a qualified investment entity (QIE) was scheduled to expire at the end of 2011. Turbo tax The provision has been extended through 2013. Turbo tax The special rules that apply to distributions from a QIE attributable to the gain from the sale or exchange of a U. Turbo tax S. Turbo tax real property interest will continue to apply to any distribution from a RIC in 2013. Turbo tax Beginning in 2014 (unless extended by legislation), a RIC will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Turbo tax See Qualified investment entities under U. Turbo tax S. Turbo tax Real Property Interest. Turbo tax Interest-related dividends and short-term capital gain dividends received from mutual funds. Turbo tax  The exemption of tax on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other regulated investment company was scheduled to expire at the end of 2011. Turbo tax These provisions have been extended through 2013. Turbo tax The exemption expires for amounts paid in tax years beginning after December 31, 2013 (unless extended by legislation). Turbo tax Multi-level marketing. Turbo tax  Clarification regarding the characterization and source of income received from multi-level marketing companies by distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have recruited and sponsored (lower-tier distributors) is provided. Turbo tax See Multi-level marketing under Personal Services in chapter 2. Turbo tax Additional Medicare Tax. Turbo tax  For 2013, you may be required to pay Additional Medicare Tax. Turbo tax Also, you may need to report Additional Medicare Tax withheld by your employer. Turbo tax For more information, see Additional Medicare Tax under Social Security and Medicare Taxes and Self-Employment Tax in chapter 8. Turbo tax For more information on Additional Medicare Tax, go to IRS. Turbo tax gov and enter “Additional Medicare Tax” in the search box. Turbo tax Reminders Refunds of certain withholding tax delayed. Turbo tax  Refund requests for tax withheld and reported on Form 1042-S, Form 8288-A, or Form 8805 may require additional time for processing. Turbo tax Allow up to 6 months for these refunds to be issued. Turbo tax Third party designee. Turbo tax  You can check the “Yes” box in the “Third Party Designee” area of your return to authorize the IRS to discuss your return with a friend, family member, or any other person you choose. Turbo tax This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. Turbo tax It also allows your designee to perform certain actions such as asking the IRS for copies of notices or transcripts related to your return. Turbo tax Also, the authorization can be revoked. Turbo tax See your income tax return instructions for details. Turbo tax Change of address. Turbo tax . Turbo tax  If you change your mailing address, be sure to notify the Internal Revenue Service using Form 8822, Change of Address. Turbo tax Photographs of missing children. Turbo tax  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Turbo tax Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Turbo tax 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. Turbo tax Prev  Up  Next   Home   More Online Publications
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Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Providence  380 Westminster St.
Providence, RI 02903 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(401) 525-4282 
Warwick  60 Quaker Ln.
Warwick, RI 02886 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(401) 826-4797 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). 

For information on where to file your tax return please see Where to File Addresses

The Taxpayer Advocate Service: Call (401) 528-1921 in Providence or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these program for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
380 Westminster Street
Providence, RI  02903

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Turbo Tax

Turbo tax 10. Turbo tax   Retirement Plans, Pensions, and Annuities Table of Contents What's New Reminder IntroductionThe General Rule. Turbo tax Individual retirement arrangements (IRAs). Turbo tax Civil service retirement benefits. Turbo tax Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. Turbo tax How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. Turbo tax Exclusion not limited to cost. Turbo tax Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. Turbo tax Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and Beneficiaries What's New 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), 408, 408A, or 457(b) plans). Turbo tax However, these distributions are taken into account when determining the modified adjusted gross income threshold. Turbo tax Distributions from a nonqualified retirement plan are included in net investment income. Turbo tax See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Turbo tax Reminder Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. Turbo tax For more information, see Designated Roth accounts discussed later. Turbo tax Introduction This chapter discusses the tax treatment of distributions you receive from: An employee pension or annuity from a qualified plan, A disability retirement, and A purchased commercial annuity. Turbo tax What is not covered in this chapter. Turbo tax   The following topics are not discussed in this chapter. Turbo tax The General Rule. Turbo tax   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). Turbo tax For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Turbo tax For more information about the General Rule, see Publication 939, General Rule for Pensions and Annuities. Turbo tax Individual retirement arrangements (IRAs). Turbo tax   Information on the tax treatment of amounts you receive from an IRA is in chapter 17. Turbo tax Civil service retirement benefits. Turbo tax    If you are retired from the federal government (regular, phased, or disability retirement), see Publication 721, Tax Guide to U. Turbo tax S. Turbo tax Civil Service Retirement Benefits. Turbo tax Publication 721 also covers the information that you need if you are the survivor or beneficiary of a federal employee or retiree who died. Turbo tax Useful Items - You may want to see: Publication 575 Pension and Annuity Income 721 Tax Guide to U. Turbo tax S. Turbo tax Civil Service Retirement Benefits 939 General Rule for Pensions and Annuities Form (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. Turbo tax 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts General Information Designated Roth accounts. Turbo tax   A designated Roth account is a separate account created under a qualified Roth contribution program to which participants may elect to have part or all of their elective deferrals to a 401(k), 403(b), or 457(b) plan designated as Roth contributions. Turbo tax Elective deferrals that are designated as Roth contributions are included in your income. Turbo tax However, qualified distributions are not included in your income. Turbo tax See Publication 575 for more information. Turbo tax In-plan rollovers to designated Roth accounts. Turbo tax   If you are a participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. Turbo tax The rollover of any untaxed amounts must be included in income. Turbo tax See Publication 575 for more information. Turbo tax More than one program. Turbo tax   If you receive benefits from more than one program under a single trust or plan of your employer, such as a pension plan and a profit-sharing plan, you may have to figure the taxable part of each pension or annuity contract separately. Turbo tax Your former employer or the plan administrator should be able to tell you if you have more than one pension or annuity contract. Turbo tax Section 457 deferred compensation plans. Turbo tax    If you work for a state or local government or for a tax-exempt organization, you may be able to participate in a section 457 deferred compensation plan. Turbo tax If your plan is an eligible plan, you are not taxed currently on pay that is deferred under the plan or on any earnings from the plan's investment of the deferred pay. Turbo tax You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. Turbo tax You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. Turbo tax   Your 457(b) plan may have a designated Roth account option. Turbo tax If so, you may be able to roll over amounts to the designated Roth account or make contributions. Turbo tax Elective deferrals to a designated Roth account are included in your income. Turbo tax Qualified distributions from a designated Roth account are not subject to tax. Turbo tax   This chapter covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Turbo tax For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525, Taxable and Nontaxable Income. Turbo tax   For general information on these deferred compensation plans, see Section 457 Deferred Compensation Plans in Publication 575. Turbo tax Disability pensions. Turbo tax   If you retired on disability, you generally must include in income any disability pension you receive under a plan that is paid for by your employer. Turbo tax You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Turbo tax Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Turbo tax    You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Turbo tax For information on the credit for the elderly or the disabled, see chapter 33. Turbo tax   Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Turbo tax Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. Turbo tax    Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. Turbo tax For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Turbo tax   For more information on how to report disability pensions, including military and certain government disability pensions, see chapter 5. Turbo tax Retired public safety officers. Turbo tax   An eligible retired public safety officer can elect to exclude from income distributions of up to $3,000 made directly from a government retirement plan to the provider of accident, health, or long-term disability insurance. Turbo tax See Insurance Premiums for Retired Public Safety Officers in Publication 575 for more information. Turbo tax Railroad retirement benefits. Turbo tax   Part of any railroad retirement benefits you receive is treated for tax purposes as social security benefits, and part is treated as an employee pension. Turbo tax For information about railroad retirement benefits treated as social security benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Turbo tax For information about railroad retirement benefits treated as an employee pension, see Railroad Retirement Benefits in Publication 575. Turbo tax Withholding and estimated tax. Turbo tax   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable parts of amounts paid to you. Turbo tax You can tell the payer how much to withhold, or not to withhold, by filing Form W-4P. Turbo tax If you choose not to have tax withheld, or you do not have enough tax withheld, you may have to pay estimated tax. Turbo tax   If you receive an eligible rollover distribution, you cannot choose not to have tax withheld. Turbo tax Generally, 20% will be withheld, but no tax will be withheld on a direct rollover of an eligible rollover distribution. Turbo tax See Direct rollover option under Rollovers, later. Turbo tax   For more information, see Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Turbo tax Qualified plans for self-employed individuals. Turbo tax   Qualified plans set up by self-employed individuals are sometimes called Keogh or H. Turbo tax R. Turbo tax 10 plans. Turbo tax Qualified plans can be set up by sole proprietors, partnerships (but not a partner), and corporations. Turbo tax They can cover self-employed persons, such as the sole proprietor or partners, as well as regular (common-law) employees. Turbo tax    Distributions from a qualified plan are usually fully taxable because most recipients have no cost basis. Turbo tax If you have an investment (cost) in the plan, however, your pension or annuity payments from a qualified plan are taxed under the Simplified Method. Turbo tax For more information about qualified plans, see Publication 560, Retirement Plans for Small Business. Turbo tax Purchased annuities. Turbo tax   If you receive pension or annuity payments from a privately purchased annuity contract from a commercial organization, such as an insurance company, you generally must use the General Rule to figure the tax-free part of each annuity payment. Turbo tax For more information about the General Rule, get Publication 939. Turbo tax Also, see Variable Annuities in Publication 575 for the special provisions that apply to these annuity contracts. Turbo tax Loans. Turbo tax   If you borrow money from your retirement plan, you must treat the loan as a nonperiodic distribution from the plan unless certain exceptions apply. Turbo tax This treatment also applies to any loan under a contract purchased under your retirement plan, and to the value of any part of your interest in the plan or contract that you pledge or assign. Turbo tax This means that you must include in income all or part of the amount borrowed. Turbo tax Even if you do not have to treat the loan as a nonperiodic distribution, you may not be able to deduct the interest on the loan in some situations. Turbo tax For details, see Loans Treated as Distributions in Publication 575. Turbo tax For information on the deductibility of interest, see chapter 23. Turbo tax Tax-free exchange. Turbo tax   No gain or loss is recognized on an exchange of an annuity contract for another annuity contract if the insured or annuitant remains the same. Turbo tax However, if an annuity contract is exchanged for a life insurance or endowment contract, any gain due to interest accumulated on the contract is ordinary income. Turbo tax See Transfers of Annuity Contracts in Publication 575 for more information about exchanges of annuity contracts. Turbo tax How To Report If you file Form 1040, report your total annuity on line 16a and the taxable part on line 16b. Turbo tax If your pension or annuity is fully taxable, enter it on line 16b; do not make an entry on line 16a. Turbo tax If you file Form 1040A, report your total annuity on line 12a and the taxable part on line 12b. Turbo tax If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. Turbo tax More than one annuity. Turbo tax   If you receive more than one annuity and at least one of them is not fully taxable, enter the total amount received from all annuities on Form 1040, line 16a, or Form 1040A, line 12a, and enter the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. Turbo tax If all the annuities you receive are fully taxable, enter the total of all of them on Form 1040, line 16b, or Form 1040A, line 12b. Turbo tax Joint return. Turbo tax   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on Form 1040, line 16a, or Form 1040A, line 12a, and report the taxable part on Form 1040, line 16b, or Form 1040A, line 12b. Turbo tax Cost (Investment in the Contract) Before you can figure how much, if any, of a distribution from your pension or annuity plan is taxable, you must determine your cost (your investment in the contract) in the pension or annuity. Turbo tax Your total cost in the plan includes the total premiums, contributions, or other amounts you paid. Turbo tax This includes the amounts your employer contributed that were taxable to you when paid. Turbo tax Cost does not include any amounts you deducted or were excluded from your income. Turbo tax From this total cost, subtract any refunds of premiums, rebates, dividends, unrepaid loans that were not included in your income, or other tax-free amounts that you received by the later of the annuity starting date or the date on which you received your first payment. Turbo tax Your annuity starting date is the later of the first day of the first period for which you received a payment or the date the plan's obligations became fixed. Turbo tax Designated Roth accounts. Turbo tax   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. Turbo tax Your cost will also include any in-plan Roth rollovers you included in income. Turbo tax Foreign employment contributions. Turbo tax   If you worked in a foreign country and contributions were made to your retirement plan, special rules apply in determining your cost. Turbo tax See Foreign employment contributions under Cost (Investment in the Contract) in Publication 575. Turbo tax Taxation of Periodic Payments Fully taxable payments. Turbo tax   Generally, if you did not pay any part of the cost of your employee pension or annuity and your employer did not withhold part of the cost from your pay while you worked, the amounts you receive each year are fully taxable. Turbo tax You must report them on your income tax return. Turbo tax Partly taxable payments. Turbo tax   If you paid part of the cost of your pension or annuity, you are not taxed on the part of the pension or annuity you receive that represents a return of your cost. Turbo tax The rest of the amount you receive is generally taxable. Turbo tax You figure the tax-free part of the payment using either the Simplified Method or the General Rule. Turbo tax Your annuity starting date and whether or not your plan is qualified determine which method you must or may use. Turbo tax   If your annuity starting date is after November 18, 1996, and your payments are from a qualified plan, you must use the Simplified Method. Turbo tax Generally, you must use the General Rule if your annuity is paid under a nonqualified plan, and you cannot use this method if your annuity is paid under a qualified plan. Turbo tax   If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. Turbo tax   If your annuity is paid under a qualified plan and your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. Turbo tax Exclusion limit. Turbo tax   Your annuity starting date determines the total amount of annuity payments that you can exclude from your taxable income over the years. Turbo tax Once your annuity starting date is determined, it does not change. Turbo tax If you calculate the taxable portion of your annuity payments using the simplified method worksheet, the annuity starting date determines the recovery period for your cost. Turbo tax That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Turbo tax Exclusion limited to cost. Turbo tax   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a recovery of the cost cannot exceed your total cost. Turbo tax Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Turbo tax This deduction is not subject to the 2%-of-adjusted-gross-income limit. Turbo tax Exclusion not limited to cost. Turbo tax   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Turbo tax If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. Turbo tax The total exclusion may be more than your cost. Turbo tax Simplified Method Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. Turbo tax For an annuity that is payable for the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Turbo tax For any other annuity, this number is the number of monthly annuity payments under the contract. Turbo tax Who must use the Simplified Method. Turbo tax   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you both: Receive pension or annuity payments from a qualified employee plan, qualified employee annuity, or a tax-sheltered annuity (403(b)) plan, and On your annuity starting date, you were either under age 75, or entitled to less than 5 years of guaranteed payments. Turbo tax Guaranteed payments. Turbo tax   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. Turbo tax If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. Turbo tax How to use the Simplified Method. Turbo tax    Complete the Simplified Method Worksheet in Publication 575 to figure your taxable annuity for 2013. Turbo tax Single-life annuity. Turbo tax    If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. Turbo tax Enter on line 3 the number shown for your age at the annuity starting date. Turbo tax Multiple-lives annuity. Turbo tax   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. Turbo tax Enter on line 3 the number shown for the combined ages of you and the youngest survivor annuitant at the annuity starting date. Turbo tax   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Turbo tax Instead you must use Table 1 and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Turbo tax    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity next year. Turbo tax Example. Turbo tax Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Turbo tax Bill's annuity starting date is January 1, 2013. Turbo tax The benefits are to be paid for the joint lives of Bill and his wife Kathy, age 65. Turbo tax Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Turbo tax Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. Turbo tax Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. Turbo tax Because his annuity is payable over the lives of more than one annuitant, he uses his and Kathy's combined ages and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet. Turbo tax His completed worksheet is shown in Worksheet 10-A. Turbo tax Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Turbo tax Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Turbo tax The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Turbo tax If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. Turbo tax This deduction is not subject to the 2%-of-adjusted- gross-income limit. Turbo tax Worksheet 10-A. Turbo tax Simplified Method Worksheet for Bill Smith 1. Turbo tax Enter the total pension or annuity payments received this year. Turbo tax Also, add this amount to the total for Form 1040, line 16a, or Form 1040A, line 12a 1. Turbo tax 14,400 2. Turbo tax Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion*. Turbo tax See Cost (Investment in the Contract) , earlier 2. Turbo tax 31,000       Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Turbo tax Otherwise, go to line 3. Turbo tax         3. Turbo tax Enter the appropriate number from Table 1 below. Turbo tax But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. Turbo tax 310     4. Turbo tax Divide line 2 by the number on line 3 4. Turbo tax 100     5. Turbo tax Multiply line 4 by the number of months for which this year's payments were made. Turbo tax If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Turbo tax Otherwise, go to line 6 5. Turbo tax 1,200     6. Turbo tax Enter any amounts previously recovered tax free in years after 1986. Turbo tax This is the amount shown on line 10 of your worksheet for last year 6. Turbo tax -0-     7. Turbo tax Subtract line 6 from line 2 7. Turbo tax 31,000     8. Turbo tax Enter the smaller of line 5 or line 7 8. Turbo tax 1,200 9. Turbo tax Taxable amount for year. Turbo tax Subtract line 8 from line 1. Turbo tax Enter the result, but not less than zero. Turbo tax Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b 9. Turbo tax 13,200   Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Turbo tax If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers in Publication 575 before entering an amount on your tax return. Turbo tax     10. Turbo tax Was your annuity starting date before 1987? □ Yes. Turbo tax STOP. Turbo tax Do not complete the rest of this worksheet. Turbo tax  ☑ No. Turbo tax Add lines 6 and 8. Turbo tax This is the amount you have recovered tax free through 2013. Turbo tax You will need this number if you need to fill out this worksheet next year 10. Turbo tax 1,200 11. Turbo tax Balance of cost to be recovered. Turbo tax Subtract line 10 from line 2. Turbo tax If zero, you will not have to complete this worksheet next year. Turbo tax The payments you receive next year will generally be fully taxable 11. Turbo tax 29,800 TABLE 1 FOR LINE 3 ABOVE   AND your annuity starting date was— IF the age at annuity starting date was. Turbo tax . Turbo tax . Turbo tax before November 19, 1996, enter on line 3. Turbo tax . Turbo tax . Turbo tax after November 18, 1996, enter on line 3. Turbo tax . Turbo tax . Turbo tax 55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or older 120 160 TABLE 2 FOR LINE 3 ABOVE IF the combined ages at annuity starting date were. Turbo tax . Turbo tax . Turbo tax   THEN enter on line 3. Turbo tax . Turbo tax . Turbo tax 110 or under   410 111–120   360 121–130   310 131–140   260 141 or older   210 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Turbo tax Who must use the General Rule. Turbo tax   You must use the General Rule if you receive pension or annuity payments from: A nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan), or A qualified plan if you are age 75 or older on your annuity starting date and your annuity payments are guaranteed for at least 5 years. Turbo tax Annuity starting before November 19, 1996. Turbo tax   If your annuity starting date is after July 1, 1986, and before November 19, 1996, you had to use the General Rule for either circumstance just described. Turbo tax You also had to use it for any fixed-period annuity. Turbo tax If you did not have to use the General Rule, you could have chosen to use it. Turbo tax If your annuity starting date is before July 2, 1986, you had to use the General Rule unless you could use the Three-Year Rule. Turbo tax   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. Turbo tax Who cannot use the General Rule. Turbo tax   You cannot use the General Rule if you receive your pension or annuity from a qualified plan and none of the circumstances described in the preceding discussions apply to you. Turbo tax See Who must use the Simplified Method , earlier. Turbo tax More information. Turbo tax   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Turbo tax Taxation of Nonperiodic Payments Nonperiodic distributions are also known as amounts not received as an annuity. Turbo tax They include all payments other than periodic payments and corrective distributions. Turbo tax Examples of nonperiodic payments are cash withdrawals, distributions of current earnings, certain loans, and the value of annuity contracts transferred without full and adequate consideration. Turbo tax Corrective distributions of excess plan contributions. Turbo tax   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. Turbo tax To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Turbo tax For information on plan contribution limits and how to report corrective distributions of excess contributions, see Retirement Plan Contributions under Employee Compensation in Publication 525. Turbo tax Figuring the taxable amount of nonperiodic payments. Turbo tax   How you figure the taxable amount of a nonperiodic distribution depends on whether it is made before the annuity starting date, or on or after the annuity starting date. Turbo tax If it is made before the annuity starting date, its tax treatment also depends on whether it is made under a qualified or nonqualified plan. Turbo tax If it is made under a nonqualified plan, its tax treatment depends on whether it fully discharges the contract, is received under certain life insurance or endowment contracts, or is allocable to an investment you made before August 14, 1982. Turbo tax Annuity starting date. Turbo tax   The annuity starting date is either the first day of the first period for which you receive an annuity payment under the contract or the date on which the obligation under the contract becomes fixed, whichever is later. Turbo tax Distribution on or after annuity starting date. Turbo tax   If you receive a nonperiodic payment from your annuity contract on or after the annuity starting date, you generally must include all of the payment in gross income. Turbo tax Distribution before annuity starting date. Turbo tax   If you receive a nonperiodic distribution before the annuity starting date from a qualified retirement plan, you generally can allocate only part of it to the cost of the contract. Turbo tax You exclude from your gross income the part that you allocate to the cost. Turbo tax You include the remainder in your gross income. Turbo tax   If you receive a nonperiodic distribution before the annuity starting date from a plan other than a qualified retirement plan (nonqualified plan), it is allocated first to earnings (the taxable part) and then to the cost of the contract (the tax-free part). Turbo tax This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. Turbo tax    Distributions from nonqualified plans are subject to the net investment income tax. Turbo tax See the Instructions for Form 8960. Turbo tax   For more information, see Figuring the Taxable Amount under Taxation of Nonperiodic Payments in Publication 575. Turbo tax Lump-Sum Distributions This section on lump-sum distributions only applies if the plan participant was born before January 2, 1936. Turbo tax If the plan participant was born after January 1, 1936, the taxable amount of this nonperiodic payment is reported as discussed earlier. Turbo tax A lump-sum distribution is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans). Turbo tax A distribution from a nonqualified plan (such as a privately purchased commercial annuity or a section 457 deferred compensation plan of a state or local government or tax-exempt organization) cannot qualify as a lump-sum distribution. Turbo tax The participant's entire balance from a plan does not include certain forfeited amounts. Turbo tax It also does not include any deductible voluntary employee contributions allowed by the plan after 1981 and before 1987. Turbo tax For more information about distributions that do not qualify as lump-sum distributions, see Distributions that do not qualify under Lump-Sum Distributions in Publication 575. Turbo tax If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. Turbo tax The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Turbo tax The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. Turbo tax You may be able to use the 10-year tax option, discussed later, to figure tax on the ordinary income part. Turbo tax Use Form 4972 to figure the separate tax on a lump-sum distribution using the optional methods. Turbo tax The tax figured on Form 4972 is added to the regular tax figured on your other income. Turbo tax This may result in a smaller tax than you would pay by including the taxable amount of the distribution as ordinary income in figuring your regular tax. Turbo tax How to treat the distribution. Turbo tax   If you receive a lump-sum distribution, you may have the following options for how you treat the taxable part. Turbo tax Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and the part from participation after 1973 as ordinary income. Turbo tax Report the part of the distribution from participation before 1974 as a capital gain (if you qualify) and use the 10-year tax option to figure the tax on the part from participation after 1973 (if you qualify). Turbo tax Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). Turbo tax Roll over all or part of the distribution. Turbo tax See Rollovers , later. Turbo tax No tax is currently due on the part rolled over. Turbo tax Report any part not rolled over as ordinary income. Turbo tax Report the entire taxable part of the distribution as ordinary income on your tax return. Turbo tax   The first three options are explained in the following discussions. Turbo tax Electing optional lump-sum treatment. Turbo tax   You can choose to use the 10-year tax option or capital gain treatment only once after 1986 for any plan participant. Turbo tax If you make this choice, you cannot use either of these optional treatments for any future distributions for the participant. Turbo tax Taxable and tax-free parts of the distribution. Turbo tax    The taxable part of a lump-sum distribution is the employer's contributions and income earned on your account. Turbo tax You may recover your cost in the lump sum and any net unrealized appreciation (NUA) in employer securities tax free. Turbo tax Cost. Turbo tax   In general, your cost is the total of: The plan participant's nondeductible contributions to the plan, The plan participant's taxable costs of any life insurance contract distributed, Any employer contributions that were taxable to the plan participant, and Repayments of any loans that were taxable to the plan participant. Turbo tax You must reduce this cost by amounts previously distributed tax free. Turbo tax Net unrealized appreciation (NUA). Turbo tax   The NUA in employer securities (box 6 of Form 1099-R) received as part of a lump-sum distribution is generally tax free until you sell or exchange the securities. Turbo tax (For more information, see Distributions of employer securities under Taxation of Nonperiodic Payments in Publication 575. Turbo tax ) Capital Gain Treatment Capital gain treatment applies only to the taxable part of a lump-sum distribution resulting from participation in the plan before 1974. Turbo tax The amount treated as capital gain is taxed at a 20% rate. Turbo tax You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. Turbo tax Complete Part II of Form 4972 to choose the 20% capital gain election. Turbo tax For more information, see Capital Gain Treatment under Lump-Sum Distributions in Publication 575. Turbo tax 10-Year Tax Option The 10-year tax option is a special formula used to figure a separate tax on the ordinary income part of a lump-sum distribution. Turbo tax You pay the tax only once, for the year in which you receive the distribution, not over the next 10 years. Turbo tax You can elect this treatment only once for any plan participant, and only if the plan participant was born before January 2, 1936. Turbo tax The ordinary income part of the distribution is the amount shown in box 2a of the Form 1099-R given to you by the payer, minus the amount, if any, shown in box 3. Turbo tax You also can treat the capital gain part of the distribution (box 3 of Form 1099-R) as ordinary income for the 10-year tax option if you do not choose capital gain treatment for that part. Turbo tax Complete Part III of Form 4972 to choose the 10-year tax option. Turbo tax You must use the special Tax Rate Schedule shown in the instructions for Part III to figure the tax. Turbo tax Publication 575 illustrates how to complete Form 4972 to figure the separate tax. Turbo tax Rollovers If you withdraw cash or other assets from a qualified retirement plan in an eligible rollover distribution, you can defer tax on the distribution by rolling it over to another qualified retirement plan or a traditional IRA. Turbo tax For this purpose, the following plans are qualified retirement plans. Turbo tax A qualified employee plan. Turbo tax A qualified employee annuity. Turbo tax A tax-sheltered annuity plan (403(b) plan). Turbo tax An eligible state or local government section 457 deferred compensation plan. Turbo tax Eligible rollover distributions. Turbo tax   Generally, an eligible rollover distribution is any distribution of all or any part of the balance to your credit in a qualified retirement plan. Turbo tax For information about exceptions to eligible rollover distributions, see Publication 575. Turbo tax Rollover of nontaxable amounts. Turbo tax   You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another qualified retirement plan that is a qualified employee plan or a 403(b) plan, or to a traditional or Roth IRA. Turbo tax The transfer must be made either through a direct rollover to a qualified plan or 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional or Roth IRA. Turbo tax   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. Turbo tax   Any after-tax contributions that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Turbo tax To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Turbo tax For more information, see the Form 8606 instructions. Turbo tax Direct rollover option. Turbo tax   You can choose to have any part or all of an eligible rollover distribution paid directly to another qualified retirement plan that accepts rollover distributions or to a traditional or Roth IRA. Turbo tax If you choose the direct rollover option, or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. Turbo tax Payment to you option. Turbo tax   If an eligible rollover distribution is paid to you, 20% generally will be withheld for income tax. Turbo tax However, the full amount is treated as distributed to you even though you actually receive only 80%. Turbo tax You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional or Roth IRA. Turbo tax (See Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Turbo tax )    If you decide to roll over an amount equal to the distribution before withholding, your contribution to the new plan or IRA must include other money (for example, from savings or amounts borrowed) to replace the amount withheld. Turbo tax Time for making rollover. Turbo tax   You generally must complete the rollover of an eligible rollover distribution paid to you by the 60th day following the day on which you receive the distribution from your employer's plan. Turbo tax (If an amount distributed to you becomes a frozen deposit in a financial institution during the 60-day period after you receive it, the rollover period is extended for the period during which the distribution is in a frozen deposit in a financial institution. Turbo tax )   The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Turbo tax   The administrator of a qualified plan must give you a written explanation of your distribution options within a reasonable period of time before making an eligible rollover distribution. Turbo tax Qualified domestic relations order (QDRO). Turbo tax   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan that you receive under a QDRO. Turbo tax If you receive the distribution as an employee's spouse or former spouse (not as a nonspousal beneficiary), the rollover rules apply to you as if you were the employee. Turbo tax You can roll over the distribution from the plan into a traditional IRA or to another eligible retirement plan. Turbo tax See Rollovers in Publication 575 for more information on benefits received under a QDRO. Turbo tax Rollover by surviving spouse. Turbo tax   You may be able to roll over tax free all or part of a distribution from a qualified retirement plan you receive as the surviving spouse of a deceased employee. Turbo tax The rollover rules apply to you as if you were the employee. Turbo tax You can roll over a distribution into a qualified retirement plan or a traditional or Roth IRA. Turbo tax For a rollover to a Roth IRA, see Rollovers to Roth IRAs , later. Turbo tax    A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. Turbo tax However, see Rollovers by nonspouse beneficiary next. Turbo tax Rollovers by nonspouse beneficiary. Turbo tax   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you may be able to roll over tax free all or a portion of a distribution you receive from an eligible retirement plan of the employee. Turbo tax The distribution must be a direct trustee-to-trustee transfer to your traditional or Roth IRA that was set up to receive the distribution. Turbo tax The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an inherited IRA. Turbo tax For information on inherited IRAs, see What if You Inherit an IRA? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). Turbo tax Retirement bonds. Turbo tax   If you redeem retirement bonds purchased under a qualified bond purchase plan, you can roll over the proceeds that exceed your basis tax free into an IRA (as discussed in Publication 590) or a qualified employer plan. Turbo tax Designated Roth accounts. Turbo tax   You can roll over an eligible rollover distribution from a designated Roth account into another designated Roth account or a Roth IRA. Turbo tax If you want to roll over the part of the distribution that is not included in income, you must make a direct rollover of the entire distribution or you can roll over the entire amount (or any portion) to a Roth IRA. Turbo tax For more information on rollovers from designated Roth accounts, see Rollovers in Publication 575. Turbo tax In-plan rollovers to designated Roth accounts. Turbo tax   If you are a plan participant in a 401(k), 403(b), or 457(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan. Turbo tax The rollover of any untaxed amounts must be included in income. Turbo tax See Designated Roth accounts under Rollovers in Publication 575 for more information. Turbo tax Rollovers to Roth IRAs. Turbo tax   You can roll over distributions directly from a qualified retirement plan (other than a designated Roth account) to a Roth IRA. Turbo tax   You must include in your gross income distributions from a qualified retirement plan (other than a designated Roth account) that you would have had to include in income if you had not rolled them over into a Roth IRA. Turbo tax You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan that were taxable to you when paid. Turbo tax In addition, the 10% tax on early distributions does not apply. Turbo tax More information. Turbo tax   For more information on the rules for rolling over distributions, see Rollovers in Publication 575. Turbo tax Special Additional Taxes To discourage the use of pension funds for purposes other than normal retirement, the law imposes additional taxes on early distributions of those funds and on failures to withdraw the funds timely. Turbo tax Ordinarily, you will not be subject to these taxes if you roll over all early distributions you receive, as explained earlier, and begin drawing out the funds at a normal retirement age, in reasonable amounts over your life expectancy. Turbo tax These special additional taxes are the taxes on: Early distributions, and Excess accumulation (not receiving minimum distributions). Turbo tax These taxes are discussed in the following sections. Turbo tax If you must pay either of these taxes, report them on Form 5329. Turbo tax However, you do not have to file Form 5329 if you owe only the tax on early distributions and your Form 1099-R correctly shows a “1” in box 7. Turbo tax Instead, enter 10% of the taxable part of the distribution on Form 1040, line 58 and write “No” under the heading “Other Taxes” to the left of line 58. Turbo tax Even if you do not owe any of these taxes, you may have to complete Form 5329 and attach it to your Form 1040. Turbo tax This applies if you meet an exception to the tax on early distributions but box 7 of your Form 1099-R does not indicate an exception. Turbo tax Tax on Early Distributions Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 59½ are subject to an additional tax of 10%. Turbo tax This tax applies to the part of the distribution that you must include in gross income. Turbo tax For this purpose, a qualified retirement plan is: A qualified employee plan, A qualified employee annuity plan, A tax-sheltered annuity plan, or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). Turbo tax 5% rate on certain early distributions from deferred annuity contracts. Turbo tax   If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. Turbo tax A 5% rate applies to distributions under a written election providing a specific schedule for the distribution of your interest in the contract if, as of March 1, 1986, you had begun receiving payments under the election. Turbo tax On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. Turbo tax Attach an explanation to your return. Turbo tax Distributions from Roth IRAs allocable to a rollover from an eligible retirement plan within the 5-year period. Turbo tax   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from an eligible retirement plan to a Roth IRA, you take a distribution from the Roth IRA, you may have to pay the additional 10% tax on early distributions. Turbo tax You generally must pay the 10% additional tax on any amount attributable to the part of the rollover that you had to include in income. Turbo tax The additional tax is figured on Form 5329. Turbo tax For more information, see Form 5329 and its instructions. Turbo tax For information on qualified distributions from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590. Turbo tax Distributions from designated Roth accounts allocable to in-plan Roth rollovers within the 5-year period. Turbo tax   If, within the 5-year period starting with the first day of your tax year in which you rolled over an amount from a 401(k), 403(b), or 457(b) plan to a designated Roth account, you take a distribution from the designated Roth account, you may have to pay the additional 10% tax on early distributions. Turbo tax You generally must pay the 10% additional tax on any amount attributable to the part of the in-plan rollover that you had to include in income. Turbo tax The additional tax is figured on Form 5329. Turbo tax For more information, see Form 5329 and its instructions. Turbo tax For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575. Turbo tax Exceptions to tax. Turbo tax    Certain early distributions are excepted from the early distribution tax. Turbo tax If the payer knows that an exception applies to your early distribution, distribution code “2,” “3,” or “4” should be shown in box 7 of your Form 1099-R and you do not have to report the distribution on Form 5329. Turbo tax If an exception applies but distribution code “1” (early distribution, no known exception) is shown in box 7, you must file Form 5329. Turbo tax Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. Turbo tax On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions. Turbo tax    If distribution code “1” is incorrectly shown on your Form 1099-R for a distribution received when you were age 59½ or older, include that distribution on Form 5329. Turbo tax Enter exception number “12” on line 2. Turbo tax General exceptions. Turbo tax   The tax does not apply to distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after your separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. Turbo tax Additional exceptions for qualified retirement plans. Turbo tax   The tax does not apply to distributions that are: From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees), From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order, From a qualified retirement plan to the extent you have deductible medical expenses that exceed 10% (or 7. Turbo tax 5% if you or your spouse are age 65 or older) of your adjusted gross income, whether or not you itemize your deductions for the year, From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election, From an employee stock ownership plan for dividends on employer securities held by the plan, From a qualified retirement plan due to an IRS levy of the plan, From elective deferral accounts under 401(k) or 403(b) plans or similar arrangements that are qualified reservist distributions, or Phased retirement annuity payments made to federal employees. Turbo tax See Pub. Turbo tax 721 for more information on the phased retirement program. Turbo tax Qualified public safety employees. Turbo tax   If you are a qualified public safety employee, distributions made from a governmental defined benefit pension plan are not subject to the additional tax on early distributions. Turbo tax You are a qualified public safety employee if you provide police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50. Turbo tax Qualified reservist distributions. Turbo tax   A qualified reservist distribution is not subject to the additional tax on early distributions. Turbo tax A qualified reservist distribution is a distribution (a) from elective deferrals under a section 401(k) or 403(b) plan, or a similar arrangement, (b) to an individual ordered or called to active duty (because he or she is a member of a reserve component) for a period of more than 179 days or for an indefinite period, and (c) made during the period beginning on the date of the order or call and ending at the close of the active duty period. Turbo tax You must have been ordered or called to active duty after September 11, 2001. Turbo tax For more information, see Qualified reservist distributions under Special Additional Taxes in Publication 575. Turbo tax Additional exceptions for nonqualified annuity contracts. Turbo tax   The tax does not apply to distributions from: A deferred annuity contract to the extent allocable to investment in the contract before August 14, 1982, A deferred annuity contract under a qualified personal injury settlement, A deferred annuity contract purchased by your employer upon termination of a qualified employee plan or qualified employee annuity plan and held by your employer until your separation from service, or An immediate annuity contract (a single premium contract providing substantially equal annuity payments that start within 1 year from the date of purchase and are paid at least annually). Turbo tax Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date (defined later). Turbo tax The payments each year cannot be less than the required minimum distribution. Turbo tax Required distributions not made. Turbo tax   If the actual distributions to you in any year are less than the minimum required distribution for that year, you are subject to an additional tax. Turbo tax The tax equals 50% of the part of the required minimum distribution that was not distributed. Turbo tax   For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan)(for benefits accruing after 1986). Turbo tax Waiver. Turbo tax   The tax may be waived if you establish that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. Turbo tax See the Instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax. Turbo tax State insurer delinquency proceedings. Turbo tax   You might not receive the minimum distribution because assets are invested in a contract issued by an insurance company in state insurer delinquency proceedings. Turbo tax If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. Turbo tax Under certain conditions, you will not have to pay the 50% excise tax. Turbo tax Required beginning date. Turbo tax   Unless the rule for 5% owners applies, you generally must begin to receive distributions from your qualified retirement plan by April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. Turbo tax However, your plan may require you to begin to receive distributions by April 1 of the year that follows the year in which you reach age 70½, even if you have not retired. Turbo tax   If you reached age 70½ in 2013, you may be required to receive your first distribution by April 1, 2014. Turbo tax Your required distribution then must be made for 2014 by December 31, 2014. Turbo tax 5% owners. Turbo tax   If you are a 5% owner, you must begin to receive distributions by April 1 of the year that follows the calendar year in which you reach age 70½. Turbo tax   You are a 5% owner if, for the plan year ending in the calendar year in which you reach age 70½, you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the outstanding stock (or more than 5% of the total voting power of all stock) of the employer, or more than 5% of the capital or profits interest in the employer. Turbo tax Age 70½. Turbo tax   You reach age 70½ on the date that is 6 calendar months after the date of your 70th birthday. Turbo tax   For example, if you are retired and your 70th birthday was on June 30, 2013, you were age 70½ on December 30, 2013. Turbo tax If your 70th birthday was on July 1, 2013, you reached age 70½ on January 1, 2014. Turbo tax Required distributions. Turbo tax   By the required beginning date, as explained earlier, you must either: Receive your entire interest in the plan (for a tax-sheltered annuity, your entire benefit accruing after 1986), or Begin receiving periodic distributions in annual amounts calculated to distribute your entire interest (for a tax-sheltered annuity, your entire benefit accruing after 1986) over your life or life expectancy or over the joint lives or joint life expectancies of you and a designated beneficiary (or over a shorter period). Turbo tax Additional information. Turbo tax   For more information on this rule, see Tax on Excess Accumulation in Publication 575. Turbo tax Form 5329. Turbo tax   You must file Form 5329 if you owe tax because you did not receive a minimum required distribution from your qualified retirement plan. Turbo tax Survivors and Beneficiaries Generally, a survivor or beneficiary reports pension or annuity income in the same way the plan participant would have. Turbo tax However, some special rules apply. Turbo tax See Publication 575 for more information. Turbo tax Survivors of employees. Turbo tax   If you are entitled to receive a survivor annuity on the death of an employee who died, you can exclude part of each annuity payment as a tax-free recovery of the employee's investment in the contract. Turbo tax You must figure the taxable and tax-free parts of your annuity payments using the method that applies as if you were the employee. Turbo tax Survivors of retirees. Turbo tax   If you receive benefits as a survivor under a joint and survivor annuity, include those benefits in income in the same way the retiree would have included them in income. Turbo tax If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule and recovered all of the cost tax free, your survivor payments are fully taxable. Turbo tax    If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage to your initial survivor annuity payment called for in the contract. Turbo tax The resulting tax-free amount will then remain fixed. Turbo tax Any increases in the survivor annuity are fully taxable. Turbo tax    If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. Turbo tax This amount remains fixed even if the annuity payments are increased or decreased. Turbo tax See Simplified Method , earlier. Turbo tax   In any case, if the annuity starting date is after 1986, the total exclusion over the years cannot be more than the cost. Turbo tax Estate tax deduction. Turbo tax   If your annuity was a joint and survivor annuity that was included in the decedent's estate, an estate tax may have been paid on it. Turbo tax You can deduct the part of the total estate tax that was based on the annuity. Turbo tax The deceased annuitant must have died after the annuity starting date. Turbo tax (For details, see section 1. Turbo tax 691(d)-1 of the regulations. Turbo tax ) Deduct it in equal amounts over your remaining life expectancy. Turbo tax   If the decedent died before the annuity starting date of a deferred annuity contract and you receive a death benefit under that contract, the amount you receive (either in a lump sum or as periodic payments) in excess of the decedent's cost is included in your gross income as income in respect of a decedent for which you may be able to claim an estate tax deduction. Turbo tax   You can take the estate tax deduction as an itemized deduction on Schedule A, Form 1040. Turbo tax This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Turbo tax See Publication 559, Survivors, Executors, and Administrators, for more information on the estate tax deduction. Turbo tax Prev  Up  Next   Home   More Online Publications