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File free tax return Internal Revenue Bulletin:  2013-12  March 18, 2013  Rev. File free tax return Proc. File free tax return 2013-21 Table of Contents SECTION 1. File free tax return PURPOSE SECTION 2. File free tax return BACKGROUND SECTION 3. File free tax return SCOPE SECTION 4. File free tax return APPLICATION. File free tax return 01 Limitations on Depreciation Deductions for Certain Automobiles. File free tax return . File free tax return 02 Inclusions in Income of Lessees of Passenger Automobiles. File free tax return SECTION 5. File free tax return EFFECTIVE DATE SECTION 6. File free tax return DRAFTING INFORMATION SECTION 1. File free tax return PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, including a separate table of inclusion amounts for lessees of trucks and vans. File free tax return The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. File free tax return SECTION 2. File free tax return BACKGROUND . File free tax return 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. File free tax return For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. File free tax return The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. File free tax return This change reflects the higher rate of price inflation for trucks and vans since 1988. File free tax return . File free tax return 02 Section 331(a) of the American Taxpayer Relief Act of 2012, Pub. File free tax return L. File free tax return No. File free tax return 112-240, 126 Stat. File free tax return 2313 (Jan. File free tax return 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014. File free tax return Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. File free tax return . File free tax return 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). File free tax return Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. File free tax return Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)). File free tax return Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. File free tax return This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. File free tax return . File free tax return 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. File free tax return The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. File free tax return Under § 1. File free tax return 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. File free tax return One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. File free tax return Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. File free tax return SECTION 3. File free tax return SCOPE . File free tax return 01 The limitations on depreciation deductions in section 4. File free tax return 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2013, and continue to apply for each taxable year that the passenger automobile remains in service. File free tax return . File free tax return 02 The tables in section 4. File free tax return 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2013. File free tax return Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. File free tax return See Rev. File free tax return Proc. File free tax return 2008-22, 2008-1 C. File free tax return B. File free tax return 658, for passenger automobiles first leased during calendar year 2008; Rev. File free tax return Proc. File free tax return 2009-24, 2009-17 I. File free tax return R. File free tax return B. File free tax return 885, for passenger automobiles first leased during calendar year 2009; Rev. File free tax return Proc. File free tax return 2010-18, 2010-09 I. File free tax return R. File free tax return B. File free tax return 427, as amplified and modified by section 4. File free tax return 03 of Rev. File free tax return Proc. File free tax return 2011-21, 2011-12 I. File free tax return R. File free tax return B. File free tax return 560, for passenger automobiles first leased during calendar year 2010; Rev. File free tax return Proc. File free tax return 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. File free tax return Proc. File free tax return 2012-23, 2012-14 I. File free tax return R. File free tax return B. File free tax return 712, for passenger automobiles first leased during calendar year 2012. File free tax return SECTION 4. File free tax return APPLICATION . File free tax return 01 Limitations on Depreciation Deductions for Certain Automobiles. File free tax return (1) Amount of the inflation adjustment. File free tax return (a) Passenger automobiles (other than trucks or vans). File free tax return Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. File free tax return Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. File free tax return The new car component of the CPI was 115. File free tax return 2 for October 1987 and 143. File free tax return 787 for October 2012. File free tax return The October 2012 index exceeded the October 1987 index by 28. File free tax return 587. File free tax return Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24. File free tax return 8 percent (28. File free tax return 587/115. File free tax return 2 x 100%). File free tax return The dollar limitations in § 280F(a) are multiplied by a factor of 0. File free tax return 248, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2013. File free tax return This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013. File free tax return (b) Trucks and vans. File free tax return To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. File free tax return The new truck component of the CPI was 112. File free tax return 4 for October 1987 and 149. File free tax return 386 for October 2012. File free tax return The October 2012 index exceeded the October 1987 index by 36. File free tax return 986. File free tax return Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32. File free tax return 9 percent (36. File free tax return 986/112. File free tax return 4 x 100%). File free tax return The dollar limitations in § 280F(a) are multiplied by a factor of 0. File free tax return 329, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. File free tax return This adjustment applies to all trucks and vans that are first placed in service in calendar year 2013. File free tax return (2) Amount of the limitation. File free tax return Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. File free tax return Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction applies. File free tax return Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply. File free tax return REV. File free tax return PROC. File free tax return 2013-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. File free tax return PROC. File free tax return 2013-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 REV. File free tax return PROC. File free tax return 2013-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. File free tax return PROC. File free tax return 2013-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 . File free tax return 02 Inclusions in Income of Lessees of Passenger Automobiles. File free tax return A taxpayer must follow the procedures in § 1. File free tax return 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2013. File free tax return In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. File free tax return REV. File free tax return PROC. File free tax return 2013-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 2 4 6 7 8 19,500 20,000 2 5 6 9 9 20,000 20,500 2 5 8 9 11 20,500 21,000 3 6 8 10 12 21,000 21,500 3 6 10 11 13 21,500 22,000 3 7 10 13 14 22,000 23,000 4 8 11 14 16 23,000 24,000 4 9 14 16 18 24,000 25,000 5 10 15 18 21 25,000 26,000 5 12 16 21 23 26,000 27,000 6 12 19 23 25 27,000 28,000 6 14 20 25 28 28,000 29,000 7 15 22 27 30 29,000 30,000 7 16 24 29 33 30,000 31,000 8 17 26 31 35 31,000 32,000 8 19 27 33 38 32,000 33,000 9 20 29 35 40 33,000 34,000 10 21 31 37 43 34,000 35,000 10 22 33 39 45 35,000 36,000 11 23 35 41 48 36,000 37,000 11 25 36 43 50 37,000 38,000 12 26 38 45 53 38,000 39,000 12 27 40 47 55 39,000 40,000 13 28 42 49 58 40,000 41,000 13 29 44 52 59 41,000 42,000 14 30 45 54 63 42,000 43,000 14 32 47 56 64 43,000 44,000 15 33 48 59 67 44,000 45,000 15 34 51 60 69 45,000 46,000 16 35 52 63 72 46,000 47,000 17 36 54 65 74 47,000 48,000 17 38 55 67 77 48,000 49,000 18 39 57 69 79 49,000 50,000 18 40 59 71 82 50,000 51,000 19 41 61 73 84 51,000 52,000 19 42 63 75 87 52,000 53,000 20 43 65 77 89 53,000 54,000 20 45 66 79 92 54,000 55,000 21 46 68 81 94 55,000 56,000 21 47 70 84 96 56,000 57,000 22 48 72 85 99 57,000 58,000 22 50 73 88 101 58,000 59,000 23 51 75 90 103 59,000 60,000 24 52 76 92 106 60,000 62,000 24 54 79 95 110 62,000 64,000 25 56 83 99 115 64,000 66,000 27 58 87 103 120 66,000 68,000 28 60 90 108 125 68,000 70,000 29 63 93 112 130 70,000 72,000 30 65 97 117 134 72,000 74,000 31 68 100 121 139 74,000 76,000 32 70 104 125 144 76,000 78,000 33 73 107 129 149 78,000 80,000 34 75 111 133 154 80,000 85,000 36 79 117 141 162 85,000 90,000 39 85 126 151 174 90,000 95,000 41 91 135 162 186 95,000 100,000 44 97 144 172 199 100,000 110,000 48 106 157 188 217 110,000 120,000 53 118 174 210 241 120,000 130,000 59 129 193 230 266 130,000 140,000 64 141 210 252 290 140,000 150,000 70 153 227 273 315 150,000 160,000 75 165 245 294 339 160,000 170,000 80 177 263 315 363 170,000 180,000 86 189 280 336 388 180,000 190,000 91 201 298 357 412 190,000 200,000 97 212 316 378 436 200,000 210,000 102 224 333 400 461 210,000 220,000 107 236 351 420 486 220,000 230,000 113 248 368 442 509 230,000 240,000 118 260 386 463 534 240,000 And up 124 272 403 484 558 REV. File free tax return PROC. File free tax return 2013-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 1 3 4 5 6 19,500 20,000 2 3 5 6 7 20,000 20,500 2 4 6 7 8 20,500 21,000 2 5 7 8 9 21,000 21,500 2 5 8 9 11 21,500 22,000 3 6 8 10 12 22,000 23,000 3 7 10 11 14 23,000 24,000 4 8 11 14 16 24,000 25,000 4 9 14 16 18 25,000 26,000 5 10 15 18 21 26,000 27,000 5 12 17 20 23 27,000 28,000 6 13 18 23 25 28,000 29,000 6 14 20 25 28 29,000 30,000 7 15 22 27 30 30,000 31,000 7 16 24 29 33 31,000 32,000 8 17 26 31 35 32,000 33,000 8 19 27 33 38 33,000 34,000 9 20 29 35 41 34,000 35,000 10 21 31 37 43 35,000 36,000 10 22 33 39 46 36,000 37,000 11 23 35 41 48 37,000 38,000 11 25 36 43 51 38,000 39,000 12 26 38 45 53 39,000 40,000 12 27 40 48 55 40,000 41,000 13 28 42 49 58 41,000 42,000 13 29 44 52 60 42,000 43,000 14 30 46 54 62 43,000 44,000 14 32 47 56 65 44,000 45,000 15 33 48 59 67 45,000 46,000 15 34 51 60 70 46,000 47,000 16 35 52 63 72 47,000 48,000 17 36 54 65 74 48,000 49,000 17 38 55 67 77 49,000 50,000 18 39 57 69 79 50,000 51,000 18 40 59 71 82 51,000 52,000 19 41 61 73 84 52,000 53,000 19 42 63 75 87 53,000 54,000 20 43 65 77 89 54,000 55,000 20 45 66 80 91 55,000 56,000 21 46 68 81 94 56,000 57,000 21 47 70 84 96 57,000 58,000 22 48 72 86 98 58,000 59,000 22 50 73 88 101 59,000 60,000 23 51 75 90 103 60,000 62,000 24 52 78 93 108 62,000 64,000 25 55 81 97 113 64,000 66,000 26 57 85 101 118 66,000 68,000 27 60 88 106 122 68,000 70,000 28 62 92 110 127 70,000 72,000 29 64 96 114 132 72,000 74,000 30 67 99 118 137 74,000 76,000 31 69 103 122 142 76,000 78,000 32 72 105 127 147 78,000 80,000 34 73 110 131 151 80,000 85,000 35 78 116 138 160 85,000 90,000 38 84 124 149 172 90,000 95,000 41 90 133 160 184 95,000 100,000 44 95 142 171 196 100,000 110,000 48 104 156 186 214 110,000 120,000 53 116 173 207 240 120,000 130,000 58 128 191 228 264 130,000 140,000 64 140 208 249 288 140,000 150,000 69 152 226 270 313 150,000 160,000 75 164 243 292 336 160,000 170,000 80 176 261 312 361 170,000 180,000 85 188 278 334 386 180,000 190,000 91 199 296 355 410 190,000 200,000 96 211 314 376 434 200,000 210,000 101 223 332 397 459 210,000 220,000 107 235 349 418 483 220,000 230,000 112 247 367 439 507 230,000 240,000 118 259 384 460 532 240,000 And up 123 271 401 482 556 SECTION 5. File free tax return EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013. File free tax return SECTION 6. File free tax return DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. File free tax return Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). File free tax return For further information regarding this revenue procedure, contact Mr. File free tax return Harvey at (202) 622-4930 (not a toll-free call). File free tax return Prev  Up  Next   Home   More Internal Revenue Bulletins
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File free tax return Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. File free tax return Gross monthly rate. File free tax return Your cost. File free tax return Choosing a survivor annuity after retirement. File free tax return Canceling a survivor annuity after retirement. File free tax return Annuity starting date after 1986. File free tax return Annuity starting date before 1987. File free tax return Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. File free tax return Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. File free tax return The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. File free tax return If the refund includes only your contributions, none of the refund is taxable. File free tax return If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). File free tax return If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. File free tax return See Rollover Rules in Part II for information on how to make a rollover. File free tax return Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. File free tax return Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. File free tax return If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File free tax return If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. File free tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File free tax return A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. File free tax return Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. File free tax return OPM will tell you how to make the choice. File free tax return The choice for no withholding remains in effect until you change it. File free tax return These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. File free tax return If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments. File free tax return You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. File free tax return Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. File free tax return For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. File free tax return Form CSA 1099R. File free tax return   Form CSA 1099R is mailed to you by OPM each year. File free tax return It will show any tax you had withheld. File free tax return File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. File free tax return    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. File free tax return servicesonline. File free tax return opm. File free tax return gov. File free tax return To log in, you will need your retirement CSA claim number and your personal identification number. File free tax return Choosing no withholding on payments outside the United States. File free tax return   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. File free tax return   To choose no withholding if you are a U. File free tax return S. File free tax return citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. File free tax return Otherwise, OPM has to withhold tax. File free tax return For example, OPM must withhold if you provide a U. File free tax return S. File free tax return address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. File free tax return S. File free tax return home address. File free tax return   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. File free tax return S. File free tax return citizen, a U. File free tax return S. File free tax return resident alien, or someone who left the United States to avoid tax. File free tax return But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. File free tax return For details, see Publication 519, U. File free tax return S. File free tax return Tax Guide for Aliens. File free tax return Withholding certificate. File free tax return   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. File free tax return The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. File free tax return If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. File free tax return To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File free tax return C. File free tax return calling area must call 202-606-0500). File free tax return No special form is needed. File free tax return You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. File free tax return If you have TTY/TDD equipment, call 1-855–887–4957. File free tax return If you need a PIN, call OPM's Retirement Information Office. File free tax return You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. File free tax return servicesonline. File free tax return opm. File free tax return gov. File free tax return You will need your retirement CSA or CSF claim number and your PIN. File free tax return Withholding from certain lump-sum payments. File free tax return   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. File free tax return Tax will be withheld at a 20% rate on the interest distributed. File free tax return However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. File free tax return If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. File free tax return Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. File free tax return See Rollover Rules in Part II. File free tax return If you receive only your contributions, no tax will be withheld. File free tax return Withholding from Thrift Savings Plan payments. File free tax return   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. File free tax return The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. File free tax return  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. File free tax return By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. File free tax return   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. File free tax return The above document is also available in the “Forms & Publications” section of the TSP website at www. File free tax return tsp. File free tax return gov. File free tax return Estimated tax. File free tax return   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). File free tax return The return must cover all 12 months. File free tax return   You do not have to pay estimated tax for 2014 if you were a U. File free tax return S. File free tax return citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. File free tax return   Publication 505 contains information that you can use to help you figure your estimated tax payments. File free tax return Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. File free tax return The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. File free tax return Children. File free tax return   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. File free tax return   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. File free tax return Form CSF 1099R. File free tax return   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. File free tax return It will show the total amount of the annuity you received in the past year. File free tax return It also should show, separately, the survivor annuity for a child or children. File free tax return Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. File free tax return   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. File free tax return    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. File free tax return servicesonline. File free tax return opm. File free tax return gov. File free tax return To log in you will need your retirement CSF claim number and personal identification number. File free tax return    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File free tax return C. File free tax return calling area must call 202-606-0500). File free tax return You will need your CSF claim number and your social security number when you call. File free tax return Taxable part of annuity. File free tax return   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. File free tax return To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. File free tax return Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. File free tax return If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. File free tax return However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. File free tax return Annuity statement. File free tax return   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). File free tax return You will use this information to figure the tax-free recovery of your cost. File free tax return Annuity starting date. File free tax return   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. File free tax return If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. File free tax return Gross monthly rate. File free tax return   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. File free tax return Your cost. File free tax return   Your monthly annuity payment contains an amount on which you have previously paid income tax. File free tax return This amount represents part of your contributions to the retirement plan. File free tax return Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. File free tax return   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. File free tax return If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. File free tax return (See Lump-sum credit under Alternative Annuity Option, later. File free tax return )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. File free tax return You cannot claim an interest deduction for any interest payments. File free tax return You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. File free tax return Recovering your cost tax free. File free tax return   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. File free tax return If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. File free tax return If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). File free tax return If your annuity starting date is after November 18, 1996, you must use the Simplified Method. File free tax return   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). File free tax return The tax-free part is a fixed dollar amount. File free tax return It remains the same, even if your annuity is increased. File free tax return Generally, this rule applies as long as you receive your annuity. File free tax return However, see Exclusion limit , later. File free tax return Choosing a survivor annuity after retirement. File free tax return    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. File free tax return   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. File free tax return To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. File free tax return Figure the expected return as of the date the reduced annuity begins. File free tax return For details on the General Rule, see Publication 939. File free tax return Canceling a survivor annuity after retirement. File free tax return   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. File free tax return The increased annuity does not change the cost recovery you figured at the annuity starting date. File free tax return The tax-free part of each annuity payment remains the same. File free tax return    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. File free tax return C. File free tax return calling area must call 202-606-0500). File free tax return Exclusion limit. File free tax return   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. File free tax return Annuity starting date after 1986. File free tax return   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. File free tax return Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. File free tax return Example. File free tax return Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. File free tax return If your cost is $12,000, the exclusion ends after 10 years (120 months). File free tax return Thereafter, your entire annuity is generally fully taxable. File free tax return Annuity starting date before 1987. File free tax return   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. File free tax return If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. File free tax return The total exclusion may be more than your cost. File free tax return Deduction of unrecovered cost. File free tax return   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. File free tax return The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). File free tax return If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. File free tax return Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. File free tax return (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. File free tax return ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. File free tax return The Simplified Method does not apply if your annuity starting date is before July 2, 1986. File free tax return Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. File free tax return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. File free tax return If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. File free tax return Worksheet A. File free tax return   Use Worksheet A. File free tax return Simplified Method (near the end of this publication), to figure your taxable annuity. File free tax return Be sure to keep the completed worksheet. File free tax return It will help you figure your taxable amounts for later years. File free tax return Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. File free tax return However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. File free tax return Line 2. File free tax return   See Your cost , earlier, for an explanation of your cost in the plan. File free tax return If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. File free tax return Line 3. File free tax return   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. File free tax return If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. File free tax return If your annuity starting date is before 1998, use Table 1. File free tax return Line 6. File free tax return   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. File free tax return If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. File free tax return Example. File free tax return Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. File free tax return His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. File free tax return He must use the Simplified Method to figure the tax-free part of his annuity benefits. File free tax return Bill's monthly annuity benefit is $1,000. File free tax return He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. File free tax return At his annuity starting date, he was 65 and Kathy was 57. File free tax return Bill's completed Worksheet A is shown later. File free tax return To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). File free tax return Bill keeps a copy of the completed worksheet for his records. File free tax return It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. File free tax return Bill's tax-free monthly amount is $100. File free tax return (See line 4 of the worksheet. File free tax return ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. File free tax return If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. File free tax return If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. File free tax return General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. File free tax return If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. File free tax return If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. File free tax return Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. File free tax return Figuring this percentage is complex and requires the use of actuarial tables. File free tax return For these tables and other information about using the General Rule, see Publication 939. File free tax return Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. File free tax return Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. File free tax return After your cost was recovered, all payments became fully taxable. File free tax return You cannot use another rule to again exclude amounts from income. File free tax return The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. File free tax return Worksheet A. File free tax return Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. File free tax return 1. File free tax return Enter the total pension or annuity payments received this year. File free tax return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File free tax return $ 8,000 2. File free tax return Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File free tax return See Your cost in Part II, Rules for Retirees, earlier 2. File free tax return 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). File free tax return Otherwise, go to line 3. File free tax return   3. File free tax return Enter the appropriate number from Table 1 below. File free tax return 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. File free tax return 3. File free tax return 310 4. File free tax return Divide line 2 by the number on line 3 4. File free tax return 100 5. File free tax return Multiply line 4 by the number of months for which this year's payments were made. File free tax return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File free tax return Otherwise, go to line 6 5. File free tax return 800 6. File free tax return Enter any amounts previously recovered tax free in years after 1986. File free tax return This is the amount shown on line 10 of your worksheet for last year 6. File free tax return 0 7. File free tax return Subtract line 6 from line 2 7. File free tax return 31,000 8. File free tax return Enter the smaller of line 5 or line 7 8. File free tax return 800 9. File free tax return Taxable amount for year. File free tax return Subtract line 8 from line 1. File free tax return Enter the result, but not less than zero. File free tax return Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File free tax return If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File free tax return If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File free tax return If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. File free tax return $7,200 10. File free tax return Was your annuity starting date before 1987?   Yes. File free tax return Do not complete the rest of this worksheet. File free tax return    No. File free tax return Add lines 6 and 8. File free tax return This is the amount you have recovered tax free through 2013. File free tax return You will need this number if you need to fill out this worksheet next year 10. File free tax return 800 11. File free tax return Balance of cost to be recovered. File free tax return Subtract line 10 from line 2. File free tax return If zero, you will not have to complete this worksheet next year. File free tax return The payments you receive next year will generally be fully taxable 11. File free tax return $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. File free tax return Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. File free tax return If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. File free tax return You are eligible to make this choice if you meet all of the following requirements. File free tax return You are retiring, but not on disability. File free tax return You have a life-threatening illness or other critical medical condition. File free tax return You do not have a former spouse entitled to court ordered benefits based on your service. File free tax return If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. File free tax return Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. File free tax return The tax-free part represents part of your cost. File free tax return The taxable part represents part of the earnings on your annuity contract. File free tax return Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. File free tax return Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. File free tax return Your taxable amount may therefore be more than the lump-sum payment you receive. File free tax return You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. File free tax return If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. File free tax return See Rollover Rules , later, for information on how to make a rollover. File free tax return OPM can make a direct rollover only up to the amount of the lump-sum payment. File free tax return Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. File free tax return The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File free tax return It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. File free tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File free tax return Worksheet B. File free tax return   Use Worksheet B. File free tax return Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. File free tax return Be sure to keep the completed worksheet for your records. File free tax return   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. File free tax return Lump-sum credit. File free tax return   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). File free tax return However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. File free tax return Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. File free tax return Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. File free tax return You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. File free tax return Present value of your annuity contract. File free tax return   The present value of your annuity contract is figured using actuarial tables provided by the IRS. File free tax return If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. File free tax return Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. File free tax return , NW Washington, DC 20224-0002 Example. File free tax return David Brown retired from the federal government in 2013, one month after his 55th birthday. File free tax return He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. File free tax return The present value of his annuity contract was $155,000. File free tax return The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. File free tax return The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. File free tax return See Reduced Annuity , later. File free tax return Worksheet B. File free tax return Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . File free tax return  1. File free tax return Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. File free tax return $ 31,000 2. File free tax return Enter the present value of your annuity contract 2. File free tax return 155,000 3. File free tax return Divide line 1 by line 2 3. File free tax return . File free tax return 20 4. File free tax return Tax-free amount. File free tax return Multiply line 1 by line 3. File free tax return (Caution: Do not include this amount on line 6 of Worksheet A in this publication. File free tax return ) 4. File free tax return $6,200 5. File free tax return Taxable amount (net cost in the plan). File free tax return Subtract line 4 from line 1. File free tax return Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. File free tax return Also, enter this amount on line 2 of Worksheet A in this publication. File free tax return 5. File free tax return $24,800   Lump-sum payment in installments. File free tax return   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. File free tax return You will receive the first installment after you make the choice upon retirement. File free tax return The second installment will be paid to you, with interest, in the next calendar year. File free tax return (Exceptions to the installment rule are provided for cases of critical medical need. File free tax return )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. File free tax return If the payment has a tax-free part, you must treat the taxable part as received first. File free tax return How to report. File free tax return   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. File free tax return Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. File free tax return    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. File free tax return Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. File free tax return These annuity payments each will have a tax-free and a taxable part. File free tax return To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). File free tax return For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. File free tax return To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. File free tax return Enter as your net cost on line 2 the amount from Worksheet B, line 5. File free tax return Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. File free tax return Example. File free tax return The facts are the same as in the example for David Brown in the preceding discussion. File free tax return In addition, David received 10 annuity payments in 2013 of $1,200 each. File free tax return Using Worksheet A, he figures the taxable part of his annuity payments. File free tax return He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. File free tax return His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). File free tax return He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. File free tax return David's filled-in Worksheet A is shown on the next page. File free tax return Worksheet A. File free tax return Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . File free tax return 1. File free tax return Enter the total pension or annuity payments received this year. File free tax return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File free tax return $ 12,000 2. File free tax return Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File free tax return See Your cost in Part II, Rules for Retirees, earlier 2. File free tax return 24,800 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). File free tax return Otherwise, go to line 3. File free tax return   3. File free tax return Enter the appropriate number from Table 1 below. File free tax return 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. File free tax return 3. File free tax return 360 4. File free tax return Divide line 2 by the number on line 3 4. File free tax return 68. File free tax return 89 5. File free tax return Multiply line 4 by the number of months for which this year's payments were made. File free tax return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File free tax return Otherwise, go to line 6 5. File free tax return 688. File free tax return 90 6. File free tax return Enter any amounts previously recovered tax free in years after 1986. File free tax return This is the amount shown on line 10 of your worksheet for last year 6. File free tax return 0 7. File free tax return Subtract line 6 from line 2 7. File free tax return 24,800 8. File free tax return Enter the smaller of line 5 or line 7 8. File free tax return 688. File free tax return 90 9. File free tax return Taxable amount for year. File free tax return Subtract line 8 from line 1. File free tax return Enter the result, but not less than zero. File free tax return Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File free tax return If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File free tax return If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File free tax return If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. File free tax return $11,311. File free tax return 10 10. File free tax return Was your annuity starting date before 1987?   Yes. File free tax return Do not complete the rest of this worksheet. File free tax return    No. File free tax return Add lines 6 and 8. File free tax return This is the amount you have recovered tax free through 2013. File free tax return You will need this number if you need to fill out this worksheet next year 10. File free tax return 688. File free tax return 90 11. File free tax return Balance of cost to be recovered. File free tax return Subtract line 10 from line 2. File free tax return If zero, you will not have to complete this worksheet next year. File free tax return The payments you receive next year will generally be fully taxable 11. File free tax return $24,111. File free tax return 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. File free tax return Reemployment after choosing the alternative annuity option. File free tax return If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. File free tax return If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. File free tax return Annuity starting date before November 19, 1996. File free tax return   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. File free tax return Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. File free tax return However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. File free tax return Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. File free tax return The gift may be taxable for gift tax purposes. File free tax return The value of the gift is equal to the value of the annuity. File free tax return Joint and survivor annuity. File free tax return   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. File free tax return This will eliminate any gift tax liability with regard to that gift. File free tax return   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. File free tax return This may result in a taxable gift. File free tax return More information. File free tax return   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. File free tax return Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. File free tax return Annual leave. File free tax return   A payment for accrued annual leave received on retirement is a salary payment. File free tax return It is taxable as wages in the tax year you receive it. File free tax return Voluntary contributions. File free tax return   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. File free tax return They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. File free tax return Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. File free tax return See Thrift Savings Plan , later. File free tax return Additional annuity benefit. File free tax return   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. File free tax return This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. File free tax return It does not matter that you receive only one monthly check covering both benefits. File free tax return Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. File free tax return   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. File free tax return Refund of voluntary contributions. File free tax return   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. File free tax return If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. File free tax return See Rollover Rules , later. File free tax return The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File free tax return It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. File free tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File free tax return Community property laws. File free tax return   State community property laws apply to your annuity. File free tax return These laws will affect your income tax only if you file a return separately from your spouse. File free tax return   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. File free tax return Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. File free tax return   At any time, you have only one domicile even though you may have more than one home. File free tax return Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. File free tax return The question of your domicile is mainly a matter of your intentions as indicated by your actions. File free tax return   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. File free tax return The division is based on your periods of service and domicile in community and noncommunity property states while you were married. File free tax return   For more information, see Publication 555, Community Property. File free tax return Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. File free tax return The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. File free tax return This amount is taxable as wages. File free tax return Your annuity will continue to be taxed just as it was before. File free tax return If you are still recovering your cost, you continue to do so. File free tax return If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. File free tax return Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. File free tax return A nonresident alien is an individual who is not a citizen or a resident alien of the United States. File free tax return Special rule for figuring your total contributions. File free tax return   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. File free tax return You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. File free tax return For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. File free tax return Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. File free tax return   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. File free tax return Limit on taxable amount. File free tax return   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. File free tax return Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. File free tax return The numerator of the fraction is the retiree's total U. File free tax return S. File free tax return Government basic pay, other than tax-exempt pay for services performed outside the United States. File free tax return The denominator is the retiree's total U. File free tax return S. File free tax return Government basic pay for all services. File free tax return    Basic pay includes regular pay plus any standby differential. File free tax return It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. File free tax return   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. File free tax return (For an annuity, first complete Worksheet A in this publication. File free tax return ) Worksheet C. File free tax return Limited Taxable Amount for Nonresident Alien 1. File free tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File free tax return   2. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. File free tax return   3. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay for all services 3. File free tax return   4. File free tax return Divide line 2 by line 3 4. File free tax return   5. File free tax return Limited taxable amount. File free tax return Multiply line 1 by line 4. File free tax return Enter this amount on Form 1040NR, line 17b 5. File free tax return   Example 1. File free tax return You are a nonresident alien who performed all services for the U. File free tax return S. File free tax return Government abroad as a nonresident alien. File free tax return You retired and began to receive a monthly annuity of $200. File free tax return Your total basic pay for all services for the U. File free tax return S. File free tax return Government was $100,000. File free tax return All of your basic pay was tax exempt because it was not U. File free tax return S. File free tax return source income. File free tax return The taxable amount of your annuity using Worksheet A in this publication is $720. File free tax return You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File free tax return Worksheet C. File free tax return Limited Taxable Amount for Nonresident Alien — Example 1 1. File free tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File free tax return $ 720 2. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. File free tax return 0 3. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay for all services 3. File free tax return 100,000 4. File free tax return Divide line 2 by line 3 4. File free tax return 0 5. File free tax return Limited taxable amount. File free tax return Multiply line 1 by line 4. File free tax return Enter this amount on Form 1040NR, line 17b 5. File free tax return 0 Example 2. File free tax return You are a nonresident alien who performed services for the U. File free tax return S. File free tax return Government as a nonresident alien both within the United States and abroad. File free tax return You retired and began to receive a monthly annuity of $240. File free tax return Your total basic pay for your services for the U. File free tax return S. File free tax return Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. File free tax return The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. File free tax return S. File free tax return source income. File free tax return The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. File free tax return You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File free tax return Worksheet C. File free tax return Limited Taxable Amount for Nonresident Alien — Example 2 1. File free tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. File free tax return $ 1,980 2. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. File free tax return 40,000 3. File free tax return Enter the total U. File free tax return S. File free tax return Government basic pay for all services 3. File free tax return 120,000 4. File free tax return Divide line 2 by line 3 4. File free tax return . File free tax return 333 5. File free tax return Limited taxable amount. File free tax return Multiply line 1 by line 4. File free tax return Enter this amount on Form 1040NR, line 17b 5. File free tax return 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. File free tax return (However, see Roth TSP balance and Uniformed services TSP accounts, next. File free tax return ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. File free tax return The way that you withdraw your account balance determines when you must pay the tax. File free tax return Roth TSP balance. File free tax return   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. File free tax return This means Roth TSP contributions are included in your income. File free tax return The contribution limits are the same as the traditional TSP. File free tax return You can elect to have part or all of your TSP contributions designated as a Roth TSP. File free tax return Agency contributions will be part of your traditional TSP balance. File free tax return Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. File free tax return   Qualified distributions from your Roth TSP are not included in income. File free tax return This applies to both your cost in the account and income earned on that account. File free tax return A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. File free tax return   For more information, go to the TSP website, www. File free tax return tsp. File free tax return gov, or the TSP Service Office. File free tax return See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. File free tax return Uniformed services TSP accounts. File free tax return   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. File free tax return However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. File free tax return See Roth TSP balance discussed previously to get more information about Roth contributions. File free tax return The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. File free tax return You can get more information from the TSP website, www. File free tax return tsp. File free tax return gov, or the TSP Service Office. File free tax return Direct rollover by the TSP. File free tax return   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. File free tax return However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File free tax return Also, see Rollover Rules , later. File free tax return Direct rollover by the TSP to a Roth IRA. File free tax return   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. File free tax return However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File free tax return Also, see Rollovers to Roth IRAs for more information, later. File free tax return Note. File free tax return A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. File free tax return This is because you already paid tax on those contributions. File free tax return You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. File free tax return TSP annuity. File free tax return   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. File free tax return The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. File free tax return However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. File free tax return See Roth TSP balance , earlier. File free tax return This is because you already paid tax on those contributions. File free tax return Cash withdrawals. File free tax return   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. File free tax return (See Rollover Rules , later. File free tax return ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. File free tax return See Lump-Sum Distributions in Publication 575 for details. File free tax return However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. File free tax return See Roth TSP balance , earlier. File free tax return    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. File free tax return   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. File free tax return If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. File free tax return See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. File free tax return However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. File free tax return See Roth TSP balance , earlier, for a discussion of those conditions. File free tax return Tax on early distributions. File free tax return   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. File free tax return However, this additional tax does not apply in certain situations, including any of the following. File free tax return You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. File free tax return You choose to receive your account balance in monthly payments based on your life expectancy. File free tax return You are totally and permanently disabled. File free tax return You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). File free tax return The earnings may be subject to the 10% tax depending on whether you met certain conditions. File free tax return See Roth TSP balance , earlier. File free tax return   For more information, see Tax on Early Distributions in Publication 575. File free tax return Outstanding loan. File free tax return   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. File free tax return The distribution also may be subject to the additional 10% tax on early distributions. File free tax return However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. File free tax return See Rollover Rules , later. File free tax return   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. File free tax return However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. File free tax return See Roth TSP balance , earlier. File free tax return More information. File free tax return   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. File free tax return Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). File free tax return    The above documents are also available on the TSP website at www. File free tax return tsp. File free tax return gov. File free tax return Select “Forms & Publications. File free tax return ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. File free tax return You do not include the amount rolled over in your income, and you cannot take a deduction for it. File free tax return The amount rolled over is taxed later as the new program pays that amount to you. File free tax return If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. File free tax return However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. File free tax return To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. File free tax return You can also roll over a distribution from a qualified retirement plan into a Roth IRA. File free tax return Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. File free tax return See Rollovers to Roth IRAs , later, for more information. File free tax return Qualified retirement plan. File free tax return   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. File free tax return The CSRS, FERS, and TSP are considered qualified retirement plans. File free tax return Distributions eligible for rollover treatment. File free tax return   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. File free tax return You cannot roll over any part of your CSRS or FERS annuity payments. File free tax return   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. File free tax return   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. File free tax return However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. File free tax return Direct rollover option. File free tax return   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. File free tax return   There is an automatic rollover requirement for mandatory distributions. File free tax return A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. File free tax return The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. File free tax return You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. File free tax return If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. File free tax return No tax withheld. File free tax return   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. File free tax return However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. File free tax return Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. File free tax return Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. File free tax return Payment to you option. File free tax return   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. File free tax return However, the full amount is treated as distributed to you even though you actually receive only 80%. File free tax return You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. File free tax return Rollovers to Roth IRAs are generally included in income. File free tax return Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. File free tax return If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. File free tax return However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). File free tax return Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. File free tax return See Roth TSP balance , earlier. File free tax return Also, see Tax on Early Distributions in Publication 575. File free tax return Exception to withholding. File free tax return   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. File free tax return Partial rollovers. File free tax return   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. File free tax return See Lump-Sum Distributions in Publication 575. File free tax return However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. File free tax return Rolling over more than amount received. File free tax return   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). File free tax return Example. File free tax return You left government service at age 53. File free tax return On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you