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File 1040x Electronically

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File 1040x Electronically

File 1040x electronically Index A Allowances, Foreign areas allowances. File 1040x electronically American Institute in Taiwan, American Institute in Taiwan. File 1040x electronically Away from home, Traveling away from home. File 1040x electronically B Business expenses, how to report, How To Report Business Expenses C Combat zone, Reminders Commuting expenses, Commuting. File 1040x electronically Contributions, Contributions. File 1040x electronically Cost-of-living allowances, Cost-of-living allowances. File 1040x electronically Credit for foreign taxes, Foreign tax credit. File 1040x electronically Currency conversion, loss on, Loss on conversion of U. File 1040x electronically S. File 1040x electronically dollars into foreign currency. File 1040x electronically D Danger pay (see Pay differentials) Death due to terrorist action, Reminders Deduction for foreign taxes, Foreign tax deduction. File 1040x electronically , Deduction for other foreign taxes. File 1040x electronically Differential pay, Pay differentials. File 1040x electronically Dues, Membership dues. File 1040x electronically E Educational expenses, Educational expenses. File 1040x electronically Employee business expenses, Other Employee Business Expenses Entertainment expenses, Limit on meals and entertainment. File 1040x electronically Expenses, deductible, Other Employee Business Expenses Extension of time to file return, When To File and Pay F Federal court employees, Federal court employees. File 1040x electronically Federal crime investigations, Exception for federal crime investigations or prosecutions. File 1040x electronically Filing information, Filing Information, When To File and Pay Foreign areas allowances, Foreign areas allowances. File 1040x electronically Foreign bank accounts, Foreign Bank Accounts Foreign earned income and housing exclusions, Foreign Earned Income Exclusion Foreign income, U. File 1040x electronically S. File 1040x electronically Government Payments Foreign service representation expenses, Foreign service representation expenses. File 1040x electronically Foreign taxes, Foreign Taxes Forms 1116, Foreign tax credit. File 1040x electronically 2106, Form 2106 or Form 2106-EZ. File 1040x electronically 2106-EZ, Form 2106 or Form 2106-EZ. File 1040x electronically 3903, How to report moving expenses. File 1040x electronically TD F 90-22. File 1040x electronically 1, Foreign Bank Accounts H Home leave, Home leave. File 1040x electronically Home mortgage interest, Real estate tax and home mortgage interest. File 1040x electronically Home, sale of, Sale of your home. File 1040x electronically Hours of service limits, Individuals subject to hours of service limits. File 1040x electronically I Impairment-related work expenses, Impairment-related work expenses. File 1040x electronically Interest on home mortgage, Real estate tax and home mortgage interest. File 1040x electronically International organization, U. File 1040x electronically S. File 1040x electronically reemployment after serving with, Federal reemployment payments after serving with an international organization. File 1040x electronically Itemized deductions Contributions, Contributions. File 1040x electronically Employee business expenses, Other Employee Business Expenses Home mortgage interest, Real estate tax and home mortgage interest. File 1040x electronically Real estate tax, Real estate tax and home mortgage interest. File 1040x electronically L Lodging, Lodging furnished to a principal representative of the United States. File 1040x electronically Loss on currency conversion, Loss on conversion of U. File 1040x electronically S. File 1040x electronically dollars into foreign currency. File 1040x electronically M Meal expenses, Limit on meals and entertainment. File 1040x electronically More information (see Tax help) Mortgage interest, Real estate tax and home mortgage interest. File 1040x electronically Moving expenses, Moving Expenses, Closely related to the start of work. File 1040x electronically , Distance test. File 1040x electronically , Time test. File 1040x electronically , Reimbursements. File 1040x electronically P Pay differentials, Pay differentials. File 1040x electronically Peace Corps volunteers, Peace Corps. File 1040x electronically Personal property, sale of, Sale of personal property. File 1040x electronically Post differentials (see Pay differentials) Post exchanges, Employees of post exchanges, etc. File 1040x electronically Principal representative, Lodging furnished to a principal representative of the United States. File 1040x electronically Proving expenses, Recordkeeping Rules R Real estate tax, Real estate tax and home mortgage interest. File 1040x electronically Recordkeeping, business expenses, Recordkeeping Rules Reemployed by federal agency, Federal reemployment payments after serving with an international organization. File 1040x electronically Reporting Business expenses, How To Report Business Expenses Moving expenses, Moving Expenses, How to report moving expenses. File 1040x electronically Representation expenses, Foreign service representation expenses. File 1040x electronically S Sale of home, Sale of your home. File 1040x electronically Sale of personal property, Sale of personal property. File 1040x electronically Subscriptions, Subscriptions. File 1040x electronically T Taiwan, American Institute in, American Institute in Taiwan. File 1040x electronically Tax credit for foreign taxes, Foreign tax credit. File 1040x electronically Taxpayer Advocate, Taxpayer Advocate Service. File 1040x electronically Temporary assignment, Temporary assignment. File 1040x electronically Terrorist action, Reminders Transportation expenses, Transportation Expenses Travel expenses, Travel Expenses W When to file return, When To File and Pay Prev  Up     Home   More Online Publications
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CP 57 - Notice of Insufficient Funds

Details About This Notice:
Sample Content: Page 1
Purpose:   We send a CP 57 to inform the recipient that we're assessing a penalty for insufficient funds on their account.
Reason for Issuance:   When we attempted to withdraw the agreed upon installment amount from the recipient's bank account, we were notified that there were insuffient funds available. We send this notice to inform the recipient that we're charging them a penalty for insufficient funds and to explain what will happen if this recurs.
     
Frequently Asked Questions About This Notice
Page Last Reviewed or Updated: 31-Mar-2014

The File 1040x Electronically

File 1040x electronically 5. File 1040x electronically   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. File 1040x electronically 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. File 1040x electronically   If you are a U. File 1040x electronically S. File 1040x electronically 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. File 1040x electronically S. File 1040x electronically law. File 1040x electronically 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. File 1040x electronically 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). File 1040x electronically If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. File 1040x electronically For details, see Publication 54, Tax Guide for U. File 1040x electronically S. File 1040x electronically Citizens and Resident Aliens Abroad. File 1040x electronically Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. File 1040x electronically The following topics are included. File 1040x electronically Bonuses and awards. File 1040x electronically Special rules for certain employees. File 1040x electronically Sickness and injury benefits. File 1040x electronically The chapter explains what income is included in the employee's gross income and what is not included. File 1040x electronically 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. File 1040x electronically Form W-2. File 1040x electronically    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. File 1040x electronically 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. File 1040x electronically   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. File 1040x electronically These wages must be included on line 7 of Form 1040. File 1040x electronically See Form 8919 for more information. File 1040x electronically Childcare providers. File 1040x electronically    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. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Babysitting. File 1040x electronically   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. File 1040x electronically Miscellaneous Compensation This section discusses different types of employee compensation. File 1040x electronically Advance commissions and other earnings. File 1040x electronically   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. File 1040x electronically    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. File 1040x electronically 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. File 1040x electronically See Repayments in chapter 12. File 1040x electronically Allowances and reimbursements. File 1040x electronically    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. File 1040x electronically If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. File 1040x electronically Back pay awards. File 1040x electronically    Include in income amounts you are awarded in a settlement or judgment for back pay. File 1040x electronically These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. File 1040x electronically They should be reported to you by your employer on Form W-2. File 1040x electronically Bonuses and awards. File 1040x electronically   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. File 1040x electronically These include prizes such as vacation trips for meeting sales goals. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Employee achievement award. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically Your employer can tell you whether your award is a qualified plan award. File 1040x electronically 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. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically Example. File 1040x electronically 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. File 1040x electronically Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. File 1040x electronically 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. File 1040x electronically Differential wage payments. File 1040x electronically   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. File 1040x electronically These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. File 1040x electronically The payments are reported as wages on Form W-2. File 1040x electronically Government cost-of-living allowances. File 1040x electronically   Most payments received by U. File 1040x electronically S. File 1040x electronically Government civilian employees for working abroad are taxable. File 1040x electronically However, certain cost-of-living allowances are tax free. File 1040x electronically Publication 516, U. File 1040x electronically S. File 1040x electronically Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. File 1040x electronically Nonqualified deferred compensation plans. File 1040x electronically   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. File 1040x electronically This amount is shown on Form W-2, box 12, using code Y. File 1040x electronically This amount is not included in your income. File 1040x electronically   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. File 1040x electronically This amount is included in your wages shown on Form W-2, box 1. File 1040x electronically It is also shown on Form W-2, box 12, using code Z. File 1040x electronically Note received for services. File 1040x electronically    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. File 1040x electronically 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. File 1040x electronically Do not include that part again in your income. File 1040x electronically Include the rest of the payment in your income in the year of payment. File 1040x electronically   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. File 1040x electronically Severance pay. File 1040x electronically   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. File 1040x electronically Accrued leave payment. File 1040x electronically    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. File 1040x electronically   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. File 1040x electronically You can reduce gross wages by the amount you repaid in the same tax year in which you received it. File 1040x electronically 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. File 1040x electronically Outplacement services. File 1040x electronically   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. File 1040x electronically    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). File 1040x electronically Sick pay. File 1040x electronically   Pay you receive from your employer while you are sick or injured is part of your salary or wages. File 1040x electronically In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. File 1040x electronically A state sickness or disability fund. File 1040x electronically An association of employers or employees. File 1040x electronically An insurance company, if your employer paid for the plan. File 1040x electronically However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. File 1040x electronically For more information, see Publication 525. File 1040x electronically Social security and Medicare taxes paid by employer. File 1040x electronically   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. File 1040x electronically The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. File 1040x electronically However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. File 1040x electronically Stock appreciation rights. File 1040x electronically   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. File 1040x electronically 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. File 1040x electronically You include the cash payment in your income in the year you use the right. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Accounting period. File 1040x electronically   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. File 1040x electronically Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. File 1040x electronically The general rule: benefits are reported for a full calendar year (January 1–December 31). File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically  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. File 1040x electronically   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). File 1040x electronically Form W-2. File 1040x electronically   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. File 1040x electronically Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). File 1040x electronically 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). File 1040x electronically 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. File 1040x electronically Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . File 1040x electronically 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. File 1040x electronically Long-term care coverage. File 1040x electronically    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. File 1040x electronically However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. File 1040x electronically This amount will be reported as wages in box 1 of your Form W-2. File 1040x electronically   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. File 1040x electronically Archer MSA contributions. File 1040x electronically    Contributions by your employer to your Archer MSA generally are not included in your income. File 1040x electronically Their total will be reported in box 12 of Form W-2 with code R. File 1040x electronically You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. File 1040x electronically File the form with your return. File 1040x electronically Health flexible spending arrangement (health FSA). File 1040x electronically   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. File 1040x electronically Note. File 1040x electronically Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. File 1040x electronically The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. File 1040x electronically For more information, see Notice 2012-40, 2012-26 I. File 1040x electronically R. File 1040x electronically B. File 1040x electronically 1046, available at www. File 1040x electronically irs. File 1040x electronically gov/irb/2012-26 IRB/ar09. File 1040x electronically html. File 1040x electronically Health reimbursement arrangement (HRA). File 1040x electronically   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. File 1040x electronically Health savings accounts (HSA). File 1040x electronically   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. File 1040x electronically Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. File 1040x electronically Contributions made by your employer are not included in your income. File 1040x electronically Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. File 1040x electronically Distributions not used for qualified medical expenses are included in your income. File 1040x electronically See Publication 969 for the requirements of an HSA. File 1040x electronically   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. File 1040x electronically The contributions are treated as a distribution of money and are not included in the partner's gross income. File 1040x electronically 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. File 1040x electronically In both situations, the partner can deduct the contribution made to the partner's HSA. File 1040x electronically   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. File 1040x electronically The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. File 1040x electronically Qualified HSA funding distribution. File 1040x electronically   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. File 1040x electronically See Publication 590 for the requirements for these qualified HSA funding distributions. File 1040x electronically Failure to maintain eligibility. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically This income is also subject to an additional 10% tax. File 1040x electronically 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. File 1040x electronically See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. File 1040x electronically Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. File 1040x electronically They also are included as social security and Medicare wages in boxes 3 and 5. File 1040x electronically However, they are not included as wages in box 1. File 1040x electronically To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. File 1040x electronically File the form with your return. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Holiday gifts. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. File 1040x electronically For more information, see Publication 970, Tax Benefits for Education. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically For exceptions, see Entire cost excluded , and Entire cost taxed , later. File 1040x electronically 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. File 1040x electronically Also, it is shown separately in box 12 with code C. File 1040x electronically Group-term life insurance. File 1040x electronically   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. File 1040x electronically Permanent benefits. File 1040x electronically   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. File 1040x electronically Your employer should be able to tell you the amount to include in your income. File 1040x electronically Accidental death benefits. File 1040x electronically   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. File 1040x electronically Former employer. File 1040x electronically   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. File 1040x electronically Also, it is shown separately in box 12 with code C. File 1040x electronically Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. File 1040x electronically You must pay these taxes with your income tax return. File 1040x electronically Include them on line 60, Form 1040, and follow the instructions for line 60. File 1040x electronically For more information, see the Instructions for Form 1040. File 1040x electronically Two or more employers. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically You must figure how much to include in your income. File 1040x electronically 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. File 1040x electronically Figuring the taxable cost. File 1040x electronically   Use the following worksheet to figure the amount to include in your income. File 1040x electronically     Worksheet 5-1. File 1040x electronically Figuring the Cost of Group-Term Life Insurance To Include in Income 1. File 1040x electronically Enter the total amount of your insurance coverage from your employer(s) 1. File 1040x electronically   2. File 1040x electronically Limit on exclusion for employer-provided group-term life insurance coverage 2. File 1040x electronically 50,000 3. File 1040x electronically Subtract line 2 from line 1 3. File 1040x electronically   4. File 1040x electronically Divide line 3 by $1,000. File 1040x electronically Figure to the nearest tenth 4. File 1040x electronically   5. File 1040x electronically Go to Table 5-1. File 1040x electronically 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. File 1040x electronically   6. File 1040x electronically Multiply line 4 by line 5 6. File 1040x electronically   7. File 1040x electronically Enter the number of full months of coverage at this cost. File 1040x electronically 7. File 1040x electronically   8. File 1040x electronically Multiply line 6 by line 7 8. File 1040x electronically   9. File 1040x electronically Enter the premiums you paid per month 9. File 1040x electronically       10. File 1040x electronically Enter the number of months you paid the premiums 10. File 1040x electronically       11. File 1040x electronically Multiply line 9 by line 10. File 1040x electronically 11. File 1040x electronically   12. File 1040x electronically Subtract line 11 from line 8. File 1040x electronically Include this amount in your income as wages 12. File 1040x electronically      Table 5-1. File 1040x electronically Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. File 1040x electronically 05 25 through 29 . File 1040x electronically 06 30 through 34 . File 1040x electronically 08 35 through 39 . File 1040x electronically 09 40 through 44 . File 1040x electronically 10 45 through 49 . File 1040x electronically 15 50 through 54 . File 1040x electronically 23 55 through 59 . File 1040x electronically 43 60 through 64 . File 1040x electronically 66 65 through 69 1. File 1040x electronically 27 70 and older 2. File 1040x electronically 06 Example. File 1040x electronically You are 51 years old and work for employers A and B. File 1040x electronically Both employers provide group-term life insurance coverage for you for the entire year. File 1040x electronically Your coverage is $35,000 with employer A and $45,000 with employer B. File 1040x electronically You pay premiums of $4. File 1040x electronically 15 a month under the employer B group plan. File 1040x electronically You figure the amount to include in your income as shown in Worksheet 5-1. File 1040x electronically Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. File 1040x electronically Worksheet 5-1. File 1040x electronically Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. File 1040x electronically Enter the total amount of your insurance coverage from your employer(s) 1. File 1040x electronically 80,000 2. File 1040x electronically Limit on exclusion for employer-provided group-term life insurance coverage 2. File 1040x electronically 50,000 3. File 1040x electronically Subtract line 2 from line 1 3. File 1040x electronically 30,000 4. File 1040x electronically Divide line 3 by $1,000. File 1040x electronically Figure to the nearest tenth 4. File 1040x electronically 30. File 1040x electronically 0 5. File 1040x electronically Go to Table 5-1. File 1040x electronically 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. File 1040x electronically . File 1040x electronically 23 6. File 1040x electronically Multiply line 4 by line 5 6. File 1040x electronically 6. File 1040x electronically 90 7. File 1040x electronically Enter the number of full months of coverage at this cost. File 1040x electronically 7. File 1040x electronically 12 8. File 1040x electronically Multiply line 6 by line 7 8. File 1040x electronically 82. File 1040x electronically 80 9. File 1040x electronically Enter the premiums you paid per month 9. File 1040x electronically 4. File 1040x electronically 15     10. File 1040x electronically Enter the number of months you paid the premiums 10. File 1040x electronically 12     11. File 1040x electronically Multiply line 9 by line 10. File 1040x electronically 11. File 1040x electronically 49. File 1040x electronically 80 12. File 1040x electronically Subtract line 11 from line 8. File 1040x electronically Include this amount in your income as wages 12. File 1040x electronically 33. File 1040x electronically 00 Entire cost excluded. File 1040x electronically   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. File 1040x electronically You are permanently and totally disabled and have ended your employment. File 1040x electronically Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. File 1040x electronically 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. File 1040x electronically (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. File 1040x electronically ) 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. File 1040x electronically Entire cost taxed. File 1040x electronically   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. File 1040x electronically You are a key employee and your employer's plan discriminates in favor of key employees. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. File 1040x electronically Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. File 1040x electronically 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. File 1040x electronically Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. File 1040x electronically 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. File 1040x electronically Exclusion limit. File 1040x electronically   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. File 1040x electronically   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. File 1040x electronically   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. File 1040x electronically   If the benefits have a value that is more than these limits, the excess must be included in your income. File 1040x electronically You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. File 1040x electronically Commuter highway vehicle. File 1040x electronically   This is a highway vehicle that seats at least six adults (not including the driver). File 1040x electronically 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). File 1040x electronically Transit pass. File 1040x electronically   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. File 1040x electronically Qualified parking. File 1040x electronically   This is parking provided to an employee at or near the employer's place of business. File 1040x electronically 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. File 1040x electronically It does not include parking at or near the employee's home. File 1040x electronically Qualified bicycle commuting. File 1040x electronically   This is reimbursement based on the number of qualified bicycle commuting months for the year. File 1040x electronically 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. File 1040x electronically The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. File 1040x electronically Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. File 1040x electronically (Your employer can tell you whether your retirement plan is qualified. File 1040x electronically ) However, the cost of life insurance coverage included in the plan may have to be included. File 1040x electronically See Group-Term Life Insurance , earlier, under Fringe Benefits. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. File 1040x electronically S. File 1040x electronically Civil Service Retirement Benefits, if you are a federal employee or retiree). File 1040x electronically Elective deferrals. File 1040x electronically   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. File 1040x electronically The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. File 1040x electronically An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. File 1040x electronically However, it is included in wages subject to social security and Medicare taxes. File 1040x electronically   Elective deferrals include elective contributions to the following retirement plans. File 1040x electronically Cash or deferred arrangements (section 401(k) plans). File 1040x electronically The Thrift Savings Plan for federal employees. File 1040x electronically Salary reduction simplified employee pension plans (SARSEP). File 1040x electronically Savings incentive match plans for employees (SIMPLE plans). File 1040x electronically Tax-sheltered annuity plans (403(b) plans). File 1040x electronically Section 501(c)(18)(D) plans. File 1040x electronically Section 457 plans. File 1040x electronically Qualified automatic contribution arrangements. File 1040x electronically   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. File 1040x electronically You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. File 1040x electronically 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. File 1040x electronically   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. File 1040x electronically Overall limit on deferrals. File 1040x electronically   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. File 1040x electronically The limit for SIMPLE plans is $12,000. File 1040x electronically The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. File 1040x electronically The limit for section 457 plans is the lesser of your includible compensation or $17,500. File 1040x electronically Amounts deferred under specific plan limits are part of the overall limit on deferrals. File 1040x electronically Designated Roth contributions. File 1040x electronically   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. File 1040x electronically Designated Roth contributions are treated as elective deferrals, except that they are included in income. File 1040x electronically Excess deferrals. File 1040x electronically   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. File 1040x electronically However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. File 1040x electronically   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. File 1040x electronically See Publication 525 for a discussion of the tax treatment of excess deferrals. File 1040x electronically Catch-up contributions. File 1040x electronically   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. File 1040x electronically 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. File 1040x electronically However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. File 1040x electronically Your employer can tell you which kind of option you hold. File 1040x electronically For more information, see Publication 525. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically (You can choose to include the value of the property in your income in the year it is transferred to you. File 1040x electronically ) For more information, see Restricted Property in Publication 525. File 1040x electronically Dividends received on restricted stock. File 1040x electronically   Dividends you receive on restricted stock are treated as compensation and not as dividend income. File 1040x electronically Your employer should include these payments on your Form W-2. File 1040x electronically Stock you chose to include in income. File 1040x electronically   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. File 1040x electronically Report them on your return as dividends. File 1040x electronically For a discussion of dividends, see chapter 8. File 1040x electronically    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. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically , in addition to your salary. File 1040x electronically If the offering is made to the religious institution, it is not taxable to you. File 1040x electronically 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. File 1040x electronically However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. File 1040x electronically See chapter 24. File 1040x electronically Pension. File 1040x electronically    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. File 1040x electronically It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. File 1040x electronically Housing. File 1040x electronically    Special rules for housing apply to members of the clergy. File 1040x electronically 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. File 1040x electronically However, the exclusion cannot be more than the reasonable pay for your service. File 1040x electronically If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. File 1040x electronically The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. File 1040x electronically 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. File 1040x electronically For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. File 1040x electronically 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. File 1040x electronically Services performed for the order. File 1040x electronically   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. File 1040x electronically   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. File 1040x electronically Any wages you earn as an agent of an order that you turn over to the order are not included in your income. File 1040x electronically Example. File 1040x electronically You are a member of a church order and have taken a vow of poverty. File 1040x electronically You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. File 1040x electronically You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. File 1040x electronically However, you remain under the general direction and control of the order. File 1040x electronically 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. File 1040x electronically Services performed outside the order. File 1040x electronically   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. File 1040x electronically They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. File 1040x electronically 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. File 1040x electronically Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. File 1040x electronically Example. File 1040x electronically Mark Brown is a member of a religious order and has taken a vow of poverty. File 1040x electronically He renounces all claims to his earnings and turns over his earnings to the order. File 1040x electronically Mark is a schoolteacher. File 1040x electronically He was instructed by the superiors of the order to get a job with a private tax-exempt school. File 1040x electronically Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. File 1040x electronically Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. File 1040x electronically The wages Mark earns working for the school are included in his income. File 1040x electronically Foreign Employer Special rules apply if you work for a foreign employer. File 1040x electronically U. File 1040x electronically S. File 1040x electronically citizen. File 1040x electronically   If you are a U. File 1040x electronically S. File 1040x electronically 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. File 1040x electronically Social security and Medicare taxes. File 1040x electronically   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. File 1040x electronically However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. File 1040x electronically This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. File 1040x electronically Employees of international organizations or foreign governments. File 1040x electronically   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). File 1040x electronically   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. File 1040x electronically 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). File 1040x electronically Your work is like the work done by employees of the United States in foreign countries. File 1040x electronically The foreign government gives an equal exemption to employees of the United States in its country. File 1040x electronically Waiver of alien status. File 1040x electronically   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. File 1040x electronically See Foreign Employer in Publication 525. File 1040x electronically Employment abroad. File 1040x electronically   For information on the tax treatment of income earned abroad, see Publication 54. File 1040x electronically 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. File 1040x electronically Allowances generally are not taxed. File 1040x electronically For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. File 1040x electronically Differential wage payments. File 1040x electronically   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. File 1040x electronically These wages are subject to income tax withholding and are reported on a Form W-2. File 1040x electronically See the discussion under Miscellaneous Compensation , earlier. File 1040x electronically Military retirement pay. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically   For more detailed discussion of survivor annuities, see chapter 10. File 1040x electronically Disability. File 1040x electronically   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. File 1040x electronically Veterans' benefits. File 1040x electronically   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). File 1040x electronically The following amounts paid to veterans or their families are not taxable. File 1040x electronically Education, training, and subsistence allowances. File 1040x electronically Disability compensation and pension payments for disabilities paid either to veterans or their families. File 1040x electronically Grants for homes designed for wheelchair living. File 1040x electronically Grants for motor vehicles for veterans who lost their sight or the use of their limbs. File 1040x electronically Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. File 1040x electronically Interest on insurance dividends you leave on deposit with the VA. File 1040x electronically Benefits under a dependent-care assistance program. File 1040x electronically The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. File 1040x electronically Payments made under the compensated work therapy program. File 1040x electronically Any bonus payment by a state or political subdivision because of service in a combat zone. File 1040x electronically 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. File 1040x electronically Peace Corps. File 1040x electronically   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. File 1040x electronically Taxable allowances. File 1040x electronically   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. File 1040x electronically Living allowances designated by the Director of the Peace Corps as basic compensation. File 1040x electronically These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. File 1040x electronically Leave allowances. File 1040x electronically Readjustment allowances or termination payments. File 1040x electronically These are considered received by you when credited to your account. File 1040x electronically Example. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Volunteers in Service to America (VISTA). File 1040x electronically   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. File 1040x electronically National Senior Services Corps programs. File 1040x electronically   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. File 1040x electronically Retired Senior Volunteer Program (RSVP). File 1040x electronically Foster Grandparent Program. File 1040x electronically Senior Companion Program. File 1040x electronically Service Corps of Retired Executives (SCORE). File 1040x electronically   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. File 1040x electronically Volunteer tax counseling. File 1040x electronically   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). File 1040x electronically   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. File 1040x electronically See chapter 24. File 1040x electronically Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically However, certain payments may not be taxable to you. File 1040x electronically 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. File 1040x electronically In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. File 1040x electronically Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. File 1040x electronically Cost paid by you. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically See Reimbursement in a later year in chapter 21. File 1040x electronically Cafeteria plans. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. File 1040x electronically Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. File 1040x electronically You may be entitled to a tax credit if you were permanently and totally disabled when you retired. File 1040x electronically For information on this credit and the definition of permanent and total disability, see chapter 33. File 1040x electronically Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. File 1040x electronically Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. File 1040x electronically The rules for reporting pensions are explained in How To Report in chapter 10. File 1040x electronically For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. File 1040x electronically Retirement and profit-sharing plans. File 1040x electronically   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. File 1040x electronically The payments must be reported as a pension or annuity. File 1040x electronically For more information on pensions, see chapter 10. File 1040x electronically Accrued leave payment. File 1040x electronically   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. File 1040x electronically The payment is not a disability payment. File 1040x electronically Include it in your income in the tax year you receive it. File 1040x electronically Military and Government Disability Pensions Certain military and government disability pensions are not taxable. File 1040x electronically Service-connected disability. File 1040x electronically   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. File 1040x electronically The armed forces of any country. File 1040x electronically The National Oceanic and Atmospheric Administration. File 1040x electronically The Public Health Service. File 1040x electronically The Foreign Service. File 1040x electronically Conditions for exclusion. File 1040x electronically   Do not include the disability payments in your income if any of the following conditions apply. File 1040x electronically You were entitled to receive a disability payment before September 25, 1975. File 1040x electronically 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. File 1040x electronically You receive the disability payments for a combat-related injury. File 1040x electronically 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. File 1040x electronically You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. File 1040x electronically Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. File 1040x electronically Pension based on years of service. File 1040x electronically   If you receive a disability pension based on years of service, in most cases you must include it in your income. File 1040x electronically 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. File 1040x electronically You must include the rest of your pension in your income. File 1040x electronically Retroactive VA determination. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. File 1040x electronically The letter must show the amount withheld and the effective date of the benefit. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically Special statute of limitations. File 1040x electronically   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. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically Example. File 1040x electronically You retired in 2007 and receive a pension based on your years of service. File 1040x electronically On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. File 1040x electronically Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. File 1040x electronically 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. File 1040x electronically You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. File 1040x electronically Terrorist attack or military action. File 1040x electronically   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. File 1040x electronically Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. File 1040x electronically 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. File 1040x electronically Qualified long-term care services. File 1040x electronically   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. File 1040x electronically Chronically ill individual. File 1040x electronically   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. File 1040x electronically Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. File 1040x electronically An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. File 1040x electronically Limit on exclusion. File 1040x electronically   You generally can exclude from gross income up to $320 a day for 2013. File 1040x electronically See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. File 1040x electronically 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. File 1040x electronically The exemption also applies to your survivors. File 1040x electronically 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. File 1040x electronically 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. File 1040x electronically For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. File 1040x electronically Return to work. File 1040x electronically    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. File 1040x electronically Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. File 1040x electronically Railroad sick pay. File 1040x electronically    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. File 1040x electronically However, do not include them in your income if they are for an on-the-job injury. File 1040x electronically   If you received income because of a disability, see Disability Pensions , earlier. File 1040x electronically Federal Employees' Compensation Act (FECA). File 1040x electronically   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. File 1040x electronically 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. File 1040x electronically Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. File 1040x electronically Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. File 1040x electronically    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. File 1040x electronically For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. File 1040x electronically    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. File 1040x electronically It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). File 1040x electronically If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. File 1040x electronically Do not deduct it separately. File 1040x electronically Other compensation. File 1040x electronically   Many other amounts you receive as compensation for sickness or injury are not taxable. File 1040x electronically These include the following amounts. File 1040x electronically Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. File 1040x electronically 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. File 1040x electronically Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. File 1040x electronically Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. File 1040x electronically This compensation must be based only on the injury and not on the period of your absence from work. File 1040x electronically These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. File 1040x electronically Reimbursement for medical care. File 1040x electronically    A reimbursement for medical care is generally not taxable. File 1040x electronically However, it may reduce your medical expense deduction. File 1040x electronically For more information, see chapter 21. File 1040x electronically Prev  Up  Next   Home   More Online Publications