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File taxes online 1040ez free 6. File taxes online 1040ez free   How To Report Table of Contents Where To ReportGifts. File taxes online 1040ez free Statutory employees. File taxes online 1040ez free Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. File taxes online 1040ez free Standard mileage rate. File taxes online 1040ez free Actual expenses. File taxes online 1040ez free Car rentals. File taxes online 1040ez free Hours of service limits. File taxes online 1040ez free Allocating your reimbursement. File taxes online 1040ez free 1. File taxes online 1040ez free Limit on meals and entertainment. File taxes online 1040ez free 2. File taxes online 1040ez free Limit on miscellaneous itemized deductions. File taxes online 1040ez free 3. File taxes online 1040ez free Limit on total itemized deductions. File taxes online 1040ez free Special Rules This chapter explains where and how to report the expenses discussed in this publication. File taxes online 1040ez free It discusses reimbursements and how to treat them under accountable and nonaccountable plans. File taxes online 1040ez free It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. File taxes online 1040ez free The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. File taxes online 1040ez free Where To Report This section provides general information on where to report the expenses discussed in this publication. File taxes online 1040ez free Self-employed. File taxes online 1040ez free   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. File taxes online 1040ez free You do not use Form 2106 or 2106-EZ. File taxes online 1040ez free    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. File taxes online 1040ez free You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. File taxes online 1040ez free   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. File taxes online 1040ez free Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. File taxes online 1040ez free   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. File taxes online 1040ez free You can only include 50% of your meals and entertainment in that total. File taxes online 1040ez free If you include car expenses, you must also complete Part III of the form. File taxes online 1040ez free    If you file Schedule F (Form 1040): Report your car expenses on line 10. File taxes online 1040ez free Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. File taxes online 1040ez free Report all other business expenses discussed in this publication on line 32. File taxes online 1040ez free You can only include 50% of your meals and entertainment on that line. File taxes online 1040ez free See your form instructions for more information on how to complete your tax return. File taxes online 1040ez free Both self-employed and an employee. File taxes online 1040ez free   If you are both self-employed and an employee, you must keep separate records for each business activity. File taxes online 1040ez free Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. File taxes online 1040ez free Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. File taxes online 1040ez free Employees. File taxes online 1040ez free    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. File taxes online 1040ez free However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. File taxes online 1040ez free You are an employee deducting expenses attributable to your job. File taxes online 1040ez free You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). File taxes online 1040ez free If you claim car expenses, you use the standard mileage rate. File taxes online 1040ez free   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. File taxes online 1040ez free Gifts. File taxes online 1040ez free   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. File taxes online 1040ez free Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). File taxes online 1040ez free Statutory employees. File taxes online 1040ez free    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). File taxes online 1040ez free Do not complete Form 2106 or 2106-EZ. File taxes online 1040ez free   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. File taxes online 1040ez free If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. File taxes online 1040ez free Reimbursement for personal expenses. File taxes online 1040ez free    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. File taxes online 1040ez free You cannot deduct personal expenses. File taxes online 1040ez free Income-producing property. File taxes online 1040ez free   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. File taxes online 1040ez free   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. File taxes online 1040ez free See Publication 527, Residential Rental Property, for more information on the rental of real estate. File taxes online 1040ez free If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. File taxes online 1040ez free Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. File taxes online 1040ez free The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. File taxes online 1040ez free You cannot use the standard mileage rate. File taxes online 1040ez free Value reported on Form W-2. File taxes online 1040ez free   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). File taxes online 1040ez free Your employer must separately state the amount if 100% of the annual lease value was included in your income. File taxes online 1040ez free If you are unsure of the amount included on your Form W-2, ask your employer. File taxes online 1040ez free Full value included in your income. File taxes online 1040ez free   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. File taxes online 1040ez free On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. File taxes online 1040ez free    To claim your expenses, complete Form 2106, Part II, Sections A and C. File taxes online 1040ez free Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. File taxes online 1040ez free Complete the rest of the form. File taxes online 1040ez free Less than full value included in your income. File taxes online 1040ez free   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. File taxes online 1040ez free Do not enter this value on your Form 2106 because it is not deductible. File taxes online 1040ez free   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. File taxes online 1040ez free Examples of costs that you may have are gas, oil, and repairs. File taxes online 1040ez free Complete Form 2106, Part II, Sections A and C. File taxes online 1040ez free Enter your actual costs on line 23 of Section C and leave line 25 blank. File taxes online 1040ez free Complete the rest of the form. File taxes online 1040ez free Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. File taxes online 1040ez free If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. File taxes online 1040ez free This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. File taxes online 1040ez free It also covers rules for independent contractors. File taxes online 1040ez free No reimbursement. File taxes online 1040ez free   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. File taxes online 1040ez free In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. File taxes online 1040ez free Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. File taxes online 1040ez free Reimbursement, allowance, or advance. File taxes online 1040ez free   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. File taxes online 1040ez free Arrangements include per diem and car allowances. File taxes online 1040ez free    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. File taxes online 1040ez free (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. File taxes online 1040ez free ) A car allowance is an amount your employer gives you for the business use of your car. File taxes online 1040ez free   Your employer should tell you what method of reimbursement is used and what records you must provide. File taxes online 1040ez free Employers. File taxes online 1040ez free   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. File taxes online 1040ez free Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. File taxes online 1040ez free Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. File taxes online 1040ez free See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. File taxes online 1040ez free Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. File taxes online 1040ez free You must adequately account to your employer for these expenses within a reasonable period of time. File taxes online 1040ez free You must return any excess reimbursement or allowance within a reasonable period of time. File taxes online 1040ez free “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. File taxes online 1040ez free An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. File taxes online 1040ez free Reasonable period of time. File taxes online 1040ez free   The definition of reasonable period of time depends on the facts and circumstances of your situation. File taxes online 1040ez free However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. File taxes online 1040ez free You receive an advance within 30 days of the time you have an expense. File taxes online 1040ez free You adequately account for your expenses within 60 days after they were paid or incurred. File taxes online 1040ez free You return any excess reimbursement within 120 days after the expense was paid or incurred. File taxes online 1040ez free You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. File taxes online 1040ez free Employee meets accountable plan rules. File taxes online 1040ez free   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. File taxes online 1040ez free If your expenses equal your reimbursements, you do not complete Form 2106. File taxes online 1040ez free You have no deduction since your expenses and reimbursement are equal. File taxes online 1040ez free    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. File taxes online 1040ez free Accountable plan rules not met. File taxes online 1040ez free   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. File taxes online 1040ez free All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). File taxes online 1040ez free Failure to return excess reimbursements. File taxes online 1040ez free   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. File taxes online 1040ez free See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. File taxes online 1040ez free Reimbursement of nondeductible expenses. File taxes online 1040ez free   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. File taxes online 1040ez free The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. File taxes online 1040ez free Example. File taxes online 1040ez free Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. File taxes online 1040ez free The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. File taxes online 1040ez free The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. File taxes online 1040ez free If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. File taxes online 1040ez free Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. File taxes online 1040ez free You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. File taxes online 1040ez free (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. File taxes online 1040ez free ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. File taxes online 1040ez free See Per Diem and Car Allowances , later. File taxes online 1040ez free You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. File taxes online 1040ez free This includes amounts you charged to your employer by credit card or other method. File taxes online 1040ez free You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. File taxes online 1040ez free You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. File taxes online 1040ez free Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. File taxes online 1040ez free A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. File taxes online 1040ez free Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. File taxes online 1040ez free The allowance is similar in form to and not more than the federal rate (defined later). File taxes online 1040ez free You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. File taxes online 1040ez free You are not related to your employer (as defined next). File taxes online 1040ez free If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. File taxes online 1040ez free If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. File taxes online 1040ez free In this case, you must be able to prove your expenses to the IRS. File taxes online 1040ez free Related to employer. File taxes online 1040ez free   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. File taxes online 1040ez free You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. File taxes online 1040ez free The federal rate. File taxes online 1040ez free   The federal rate can be figured using any one of the following methods. File taxes online 1040ez free For per diem amounts: The regular federal per diem rate. File taxes online 1040ez free The standard meal allowance. File taxes online 1040ez free The high-low rate. File taxes online 1040ez free For car expenses: The standard mileage rate. File taxes online 1040ez free A fixed and variable rate (FAVR). File taxes online 1040ez free    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. File taxes online 1040ez free Regular federal per diem rate. File taxes online 1040ez free   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. File taxes online 1040ez free The rates are different for different locations. File taxes online 1040ez free Your employer should have these rates available. File taxes online 1040ez free You can also find federal per diem rates at www. File taxes online 1040ez free gsa. File taxes online 1040ez free gov/perdiem. File taxes online 1040ez free The standard meal allowance. File taxes online 1040ez free   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). File taxes online 1040ez free The rate for most small localities in the United States is $46 a day. File taxes online 1040ez free Most major cities and many other localities qualify for higher rates. File taxes online 1040ez free You can find this information on the Internet at www. File taxes online 1040ez free gsa. File taxes online 1040ez free gov/perdiem. File taxes online 1040ez free   You receive an allowance only for meals and incidental expenses when your employer does one of the following. File taxes online 1040ez free Provides you with lodging (furnishes it in kind). File taxes online 1040ez free Reimburses you, based on your receipts, for the actual cost of your lodging. File taxes online 1040ez free Pays the hotel, motel, etc. File taxes online 1040ez free , directly for your lodging. File taxes online 1040ez free Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. File taxes online 1040ez free Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. File taxes online 1040ez free High-low rate. File taxes online 1040ez free   This is a simplified method of computing the federal per diem rate for travel within the continental United States. File taxes online 1040ez free It eliminates the need to keep a current list of the per diem rates for each city. File taxes online 1040ez free   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. File taxes online 1040ez free All other areas have a per diem amount of $163 (including $52 for M&IE). File taxes online 1040ez free For more information, see Notice 2012-63, which can be found on the Internet at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/irb/2012-42_IRB/ar12. File taxes online 1040ez free html. File taxes online 1040ez free    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). File taxes online 1040ez free The rate for all other locations increased to $170 (including $52 for M&IE). File taxes online 1040ez free Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. File taxes online 1040ez free For more information, see Notice 2013-65, which can be found on the Internet at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/pub/irs-drop/n-13–65. File taxes online 1040ez free pdf and Revenue Procedure 2011-47 at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/irb/2011-42_IRB/ar12. File taxes online 1040ez free html. File taxes online 1040ez free Prorating the standard meal allowance on partial days of travel. File taxes online 1040ez free   The standard meal allowance is for a full 24-hour day of travel. File taxes online 1040ez free If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. File taxes online 1040ez free This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. File taxes online 1040ez free   You can use either of the following methods to figure the federal M&IE for that day. File taxes online 1040ez free Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. File taxes online 1040ez free For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. File taxes online 1040ez free Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. File taxes online 1040ez free For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. File taxes online 1040ez free m. File taxes online 1040ez free of one day to 5 p. File taxes online 1040ez free m. File taxes online 1040ez free of the next day as being no more than the federal rate. File taxes online 1040ez free This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. File taxes online 1040ez free The standard mileage rate. File taxes online 1040ez free   This is a set rate per mile that you can use to compute your deductible car expenses. File taxes online 1040ez free For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. File taxes online 1040ez free Fixed and variable rate (FAVR). File taxes online 1040ez free   This is an allowance your employer may use to reimburse your car expenses. File taxes online 1040ez free Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. File taxes online 1040ez free ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. File taxes online 1040ez free ). File taxes online 1040ez free If your employer chooses to use this method, your employer will request the necessary records from you. File taxes online 1040ez free Reporting your expenses with a per diem or car allowance. File taxes online 1040ez free   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. File taxes online 1040ez free The federal rate. File taxes online 1040ez free Whether the allowance or your actual expenses were more than the federal rate. File taxes online 1040ez free The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. File taxes online 1040ez free Allowance less than or equal to the federal rate. File taxes online 1040ez free   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. File taxes online 1040ez free You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. File taxes online 1040ez free   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). File taxes online 1040ez free If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. File taxes online 1040ez free If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. File taxes online 1040ez free Example 1. File taxes online 1040ez free In April, Jeremy takes a 2-day business trip to Denver. File taxes online 1040ez free The federal rate for Denver is $215 per day. File taxes online 1040ez free As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. File taxes online 1040ez free His employer reimburses him $215 a day ($430 total) for living expenses. File taxes online 1040ez free Jeremy's living expenses in Denver are not more than $215 a day. File taxes online 1040ez free Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. File taxes online 1040ez free Example 2. File taxes online 1040ez free In June, Matt takes a 2-day business trip to Boston. File taxes online 1040ez free Matt's employer uses the high-low method to reimburse employees. File taxes online 1040ez free Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. File taxes online 1040ez free Matt's actual expenses totaled $700. File taxes online 1040ez free Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. File taxes online 1040ez free Matt completes Form 2106 (showing all of his expenses and reimbursements). File taxes online 1040ez free He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . File taxes online 1040ez free Example 3. File taxes online 1040ez free Nicole drives 10,000 miles in 2013 for business. File taxes online 1040ez free Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. File taxes online 1040ez free Her employer pays her a mileage allowance of 40 cents a mile. File taxes online 1040ez free Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. File taxes online 1040ez free Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. File taxes online 1040ez free Allowance more than the federal rate. File taxes online 1040ez free   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. File taxes online 1040ez free This amount is not taxable. File taxes online 1040ez free However, the excess allowance will be included in box 1 of your Form W-2. File taxes online 1040ez free You must report this part of your allowance as if it were wage income. File taxes online 1040ez free   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. File taxes online 1040ez free   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. File taxes online 1040ez free You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. File taxes online 1040ez free You should be able to prove these amounts to the IRS. File taxes online 1040ez free Example 1. File taxes online 1040ez free Laura lives and works in Austin. File taxes online 1040ez free In July her employer sent her to Albuquerque for 4 days on business. File taxes online 1040ez free Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. File taxes online 1040ez free Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. File taxes online 1040ez free Table 6-1. File taxes online 1040ez free Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. File taxes online 1040ez free No amount. File taxes online 1040ez free No amount. File taxes online 1040ez free Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. File taxes online 1040ez free The excess amount as wages in box 1. File taxes online 1040ez free No amount. File taxes online 1040ez free Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. File taxes online 1040ez free No amount. File taxes online 1040ez free All expenses and reimbursements only if excess expenses are claimed. File taxes online 1040ez free Otherwise, form is not filed. File taxes online 1040ez free Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. File taxes online 1040ez free The excess amount as wages in box 1. File taxes online 1040ez free The amount up to the federal rate is reported only in box 12—it is not reported in box 1. File taxes online 1040ez free No amount. File taxes online 1040ez free Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. File taxes online 1040ez free The excess amount as wages in box 1. File taxes online 1040ez free The amount up to the federal rate is reported only in box 12—it is not reported in box 1. File taxes online 1040ez free All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. File taxes online 1040ez free Otherwise, form is not filed. File taxes online 1040ez free A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. File taxes online 1040ez free The entire amount as wages in box 1. File taxes online 1040ez free All expenses. File taxes online 1040ez free No reimbursement plan: The entire amount as wages in box 1. File taxes online 1040ez free All expenses. File taxes online 1040ez free * You may be able to use Form 2106-EZ. File taxes online 1040ez free See Completing Forms 2106 and 2106-EZ . File taxes online 1040ez free Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. File taxes online 1040ez free Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. File taxes online 1040ez free This amount is not included in Laura's income. File taxes online 1040ez free Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). File taxes online 1040ez free Example 2. File taxes online 1040ez free Joe also lives in Austin and works for the same employer as Laura. File taxes online 1040ez free In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. File taxes online 1040ez free The employer reimbursed Joe $75 a day for his meals and incidental expenses. File taxes online 1040ez free The federal rate for San Diego is $71 a day. File taxes online 1040ez free Joe can prove that his actual meal expenses totaled $380. File taxes online 1040ez free His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. File taxes online 1040ez free However, he does account for the time, place, and business purpose of the trip. File taxes online 1040ez free This is Joe's only business trip this year. File taxes online 1040ez free Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). File taxes online 1040ez free The employer includes the $16 as income on Joe's Form W-2 in box 1. File taxes online 1040ez free The employer also enters $284 in box 12 of Joe's Form W-2. File taxes online 1040ez free Joe completes Form 2106 to figure his deductible expenses. File taxes online 1040ez free He enters the total of his actual expenses for the year ($380) on Form 2106. File taxes online 1040ez free He also enters the reimbursements that were not included in his income ($284). File taxes online 1040ez free His total deductible expense, before the 50% limit, is $96. File taxes online 1040ez free After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. File taxes online 1040ez free Example 3. File taxes online 1040ez free Debbie drives 10,000 miles in 2013 for business. File taxes online 1040ez free Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. File taxes online 1040ez free Her total reimbursement is $6,000. File taxes online 1040ez free Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. File taxes online 1040ez free That amount is not taxable. File taxes online 1040ez free Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. File taxes online 1040ez free This is the reimbursement that is more than the standard mileage rate. File taxes online 1040ez free If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. File taxes online 1040ez free If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). File taxes online 1040ez free She would then claim the excess expenses as an itemized deduction. File taxes online 1040ez free Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. File taxes online 1040ez free Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. File taxes online 1040ez free For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. File taxes online 1040ez free “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. File taxes online 1040ez free Travel advance. File taxes online 1040ez free   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. File taxes online 1040ez free Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. File taxes online 1040ez free   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). File taxes online 1040ez free Unproved amounts. File taxes online 1040ez free   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. File taxes online 1040ez free If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). File taxes online 1040ez free Per diem allowance more than federal rate. File taxes online 1040ez free   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. File taxes online 1040ez free However, the difference will be reported as wages on your Form W-2. File taxes online 1040ez free This excess amount is considered paid under a nonaccountable plan (discussed later). File taxes online 1040ez free Example. File taxes online 1040ez free Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. File taxes online 1040ez free The federal per diem for meals and incidental expenses for Phoenix is $71. File taxes online 1040ez free Your trip lasts only 3 days. File taxes online 1040ez free Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. File taxes online 1040ez free For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). File taxes online 1040ez free However, the $27 will be reported on your Form W-2 as wages. File taxes online 1040ez free Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. File taxes online 1040ez free In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. File taxes online 1040ez free See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. File taxes online 1040ez free An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. File taxes online 1040ez free This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. File taxes online 1040ez free If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. File taxes online 1040ez free Reporting your expenses under a nonaccountable plan. File taxes online 1040ez free   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. File taxes online 1040ez free Your employer will report the total in box 1 of your Form W-2. File taxes online 1040ez free    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. File taxes online 1040ez free Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. File taxes online 1040ez free Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. File taxes online 1040ez free Example 1. File taxes online 1040ez free Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. File taxes online 1040ez free Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. File taxes online 1040ez free Kim is being reimbursed under a nonaccountable plan. File taxes online 1040ez free Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. File taxes online 1040ez free If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. File taxes online 1040ez free Example 2. File taxes online 1040ez free Kevin is paid $2,000 a month by his employer. File taxes online 1040ez free On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. File taxes online 1040ez free Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. File taxes online 1040ez free No part of the $50 a day designated by his employer is treated as paid under an accountable plan. File taxes online 1040ez free Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. File taxes online 1040ez free The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. File taxes online 1040ez free You are considered an independent contractor if you are self-employed and you perform services for a customer or client. File taxes online 1040ez free Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. File taxes online 1040ez free If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. File taxes online 1040ez free You must keep adequate records of these expenses whether or not you account to your client for these expenses. File taxes online 1040ez free If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. File taxes online 1040ez free See 50% Limit in chapter 2. File taxes online 1040ez free Adequate accounting. File taxes online 1040ez free   As a self-employed person, you adequately account by reporting your actual expenses. File taxes online 1040ez free You should follow the recordkeeping rules in chapter 5 . File taxes online 1040ez free How to report. File taxes online 1040ez free   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. File taxes online 1040ez free Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. File taxes online 1040ez free However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. File taxes online 1040ez free Contractor adequately accounts. File taxes online 1040ez free   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . File taxes online 1040ez free Use your records as proof for a deduction on your tax return. File taxes online 1040ez free If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. File taxes online 1040ez free If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. File taxes online 1040ez free Contractor does not adequately account. File taxes online 1040ez free    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. File taxes online 1040ez free You are not subject to the 50% limit on entertainment in this case. File taxes online 1040ez free You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. File taxes online 1040ez free However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. File taxes online 1040ez free How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. File taxes online 1040ez free The Two Substantiation Methods High-low method. File taxes online 1040ez free   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. File taxes online 1040ez free Notice 2012–63, available at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/irb/2012–42_IRB/ar12. File taxes online 1040ez free html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. File taxes online 1040ez free For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. File taxes online 1040ez free   Notice 2013–65, available at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/pub/irs-drop/n-13–65. File taxes online 1040ez free pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. File taxes online 1040ez free For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). File taxes online 1040ez free Regular federal per diem rate method. File taxes online 1040ez free   Regular federal per diem rates are published by the General Services Administration (GSA). File taxes online 1040ez free Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. File taxes online 1040ez free The rates listed for FY2013 at www. File taxes online 1040ez free gsa. File taxes online 1040ez free gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. File taxes online 1040ez free The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). File taxes online 1040ez free For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). File taxes online 1040ez free Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. File taxes online 1040ez free During this period, you generally may change to the new rates or finish out the year with the rates you had been using. File taxes online 1040ez free High-low method. File taxes online 1040ez free   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. File taxes online 1040ez free However, you must continue using the high-low method for the rest of the calendar year (through December 31). File taxes online 1040ez free If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. File taxes online 1040ez free   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. File taxes online 1040ez free You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. File taxes online 1040ez free irs. File taxes online 1040ez free gov/irb. File taxes online 1040ez free Federal per diem rate method. File taxes online 1040ez free   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. File taxes online 1040ez free Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). File taxes online 1040ez free However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. File taxes online 1040ez free   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. File taxes online 1040ez free Go to www. File taxes online 1040ez free gsa. File taxes online 1040ez free gov/perdiem. File taxes online 1040ez free Per diem rates for localities listed for FY2014 may change at any time. File taxes online 1040ez free To be sure you have the most current rate, check www. File taxes online 1040ez free gsa. File taxes online 1040ez free gov/perdiem. File taxes online 1040ez free Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. File taxes online 1040ez free Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. File taxes online 1040ez free The instructions for the forms have more information on completing them. File taxes online 1040ez free If you are self-employed, do not file Form 2106 or 2106-EZ. File taxes online 1040ez free Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). File taxes online 1040ez free See the instructions for the form that you must file. File taxes online 1040ez free Form 2106-EZ. File taxes online 1040ez free   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. File taxes online 1040ez free You can use this form if you meet all the following conditions. File taxes online 1040ez free You are an employee deducting ordinary and necessary expenses attributable to your job. File taxes online 1040ez free You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). File taxes online 1040ez free If you are claiming car expenses, you are using the standard mileage rate. File taxes online 1040ez free Car expenses. File taxes online 1040ez free   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. File taxes online 1040ez free These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. File taxes online 1040ez free Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. File taxes online 1040ez free Information on use of cars. File taxes online 1040ez free   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. File taxes online 1040ez free The information relates to the following items. File taxes online 1040ez free Date placed in service. File taxes online 1040ez free Mileage (total, business, commuting, and other personal mileage). File taxes online 1040ez free Percentage of business use. File taxes online 1040ez free After-work use. File taxes online 1040ez free Use of other vehicles. File taxes online 1040ez free Whether you have evidence to support the deduction. File taxes online 1040ez free Whether or not the evidence is written. File taxes online 1040ez free Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. File taxes online 1040ez free Standard mileage rate. File taxes online 1040ez free   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. File taxes online 1040ez free The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. File taxes online 1040ez free In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. File taxes online 1040ez free If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. File taxes online 1040ez free See Standard Mileage Rate in chapter 4 for information on using this rate. File taxes online 1040ez free Actual expenses. File taxes online 1040ez free   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. File taxes online 1040ez free You must complete Form 2106, Part II, Section C. File taxes online 1040ez free In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. File taxes online 1040ez free   If you are still using a car that is fully depreciated, continue to complete Section C. File taxes online 1040ez free Since you have no depreciation deduction, enter zero on line 28. File taxes online 1040ez free In this case, do not complete Section D. File taxes online 1040ez free Car rentals. File taxes online 1040ez free   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. File taxes online 1040ez free If so, you can show your car expenses and any inclusion amount as follows. File taxes online 1040ez free Compute the inclusion amount without taking into account your business use percentage for the tax year. File taxes online 1040ez free Report the inclusion amount from (1) on Form 2106, Part II, line 24b. File taxes online 1040ez free Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). File taxes online 1040ez free The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. File taxes online 1040ez free Transportation expenses. File taxes online 1040ez free   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. File taxes online 1040ez free Also include on this line business expenses you have for parking fees and tolls. File taxes online 1040ez free Do not include expenses of operating your car or expenses of commuting between your home and work. File taxes online 1040ez free Employee business expenses other than meals and entertainment. File taxes online 1040ez free   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. File taxes online 1040ez free Do not include expenses for meals and entertainment on those lines. File taxes online 1040ez free Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. File taxes online 1040ez free    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. File taxes online 1040ez free Claim these amounts directly on Schedule A (Form 1040), line 21. File taxes online 1040ez free List the type and amount of each expense on the dotted lines and include the total on line 21. File taxes online 1040ez free Meal and entertainment expenses. File taxes online 1040ez free   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. File taxes online 1040ez free Include meals while away from your tax home overnight and other business meals and entertainment. File taxes online 1040ez free Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. File taxes online 1040ez free   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. File taxes online 1040ez free Enter the result on line 5. File taxes online 1040ez free Hours of service limits. File taxes online 1040ez free   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. File taxes online 1040ez free Reimbursements. File taxes online 1040ez free   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. File taxes online 1040ez free This includes any amount reported under code L in box 12 of Form W-2. File taxes online 1040ez free Allocating your reimbursement. File taxes online 1040ez free   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. File taxes online 1040ez free This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. File taxes online 1040ez free You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. File taxes online 1040ez free Example. File taxes online 1040ez free Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. File taxes online 1040ez free The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. File taxes online 1040ez free The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. File taxes online 1040ez free Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). File taxes online 1040ez free Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. File taxes online 1040ez free To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. File taxes online 1040ez free His completed worksheet follows. File taxes online 1040ez free Reimbursement Allocation Worksheet (Keep for your records)   1. File taxes online 1040ez free Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. File taxes online 1040ez free Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. File taxes online 1040ez free Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. File taxes online 1040ez free Divide line 3 by line 2. File taxes online 1040ez free Enter the result as a decimal (rounded to at least three places) . File taxes online 1040ez free 529   5. File taxes online 1040ez free Multiply line 1 by line 4. File taxes online 1040ez free Enter the result here and in Column B, line 7 3,703   6. File taxes online 1040ez free Subtract line 5 from line 1. File taxes online 1040ez free Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. File taxes online 1040ez free After you complete the form. File taxes online 1040ez free   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. File taxes online 1040ez free For most taxpayers, this is line 21 of Schedule A (Form 1040). File taxes online 1040ez free However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. File taxes online 1040ez free Limits on employee business expenses. File taxes online 1040ez free   Your employee business expenses may be subject to either of the limits described next. File taxes online 1040ez free They are figured in the following order on the specified form. File taxes online 1040ez free 1. File taxes online 1040ez free Limit on meals and entertainment. File taxes online 1040ez free   Certain meal and entertainment expenses are subject to a 50% limit. File taxes online 1040ez free If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. File taxes online 1040ez free (See 50% Limit in chapter 2. File taxes online 1040ez free ) 2. File taxes online 1040ez free Limit on miscellaneous itemized deductions. File taxes online 1040ez free   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). File taxes online 1040ez free Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. File taxes online 1040ez free This limit is figured on line 26 of Schedule A (Form 1040). File taxes online 1040ez free 3. File taxes online 1040ez free Limit on total itemized deductions. File taxes online 1040ez free   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. File taxes online 1040ez free See your form instructions for information on how to figure this limit. File taxes online 1040ez free Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. File taxes online 1040ez free Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. File taxes online 1040ez free The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. File taxes online 1040ez free See Per Diem and Car Allowances , earlier, for more information. File taxes online 1040ez free Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. File taxes online 1040ez free Member of a reserve component. File taxes online 1040ez free   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. File taxes online 1040ez free How to report. File taxes online 1040ez free   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. File taxes online 1040ez free Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File taxes online 1040ez free Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. File taxes online 1040ez free   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. File taxes online 1040ez free Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. File taxes online 1040ez free Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). File taxes online 1040ez free Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. File taxes online 1040ez free They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. File taxes online 1040ez free If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File taxes online 1040ez free Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. File taxes online 1040ez free To qualify, you must meet all of the following requirements. File taxes online 1040ez free During the tax year, you perform services in the performing arts as an employee for at least two employers. File taxes online 1040ez free You receive at least $200 each from any two of these employers. File taxes online 1040ez free Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. File taxes online 1040ez free Your adjusted gross income is not more than $16,000 before deducting these business expenses. File taxes online 1040ez free Special rules for married persons. File taxes online 1040ez free   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. File taxes online 1040ez free If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. File taxes online 1040ez free However, requirement (4) applies to your and your spouse's combined adjusted gross income. File taxes online 1040ez free Where to report. File taxes online 1040ez free   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. File taxes online 1040ez free Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File taxes online 1040ez free   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. File taxes online 1040ez free Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. File taxes online 1040ez free Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. File taxes online 1040ez free After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. File taxes online 1040ez free Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. File taxes online 1040ez free Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. File taxes online 1040ez free You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. File taxes online 1040ez free You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. File taxes online 1040ez free Example 1. File taxes online 1040ez free You are blind. File taxes online 1040ez free You must use a reader to do your work. File taxes online 1040ez free You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. File taxes online 1040ez free The reader's services are only for your work. File taxes online 1040ez free You can deduct your expenses for the reader as business expenses. File taxes online 1040ez free Example 2. File taxes online 1040ez free You are deaf. File taxes online 1040ez free You must use a sign language interpreter during meetings while you are at work. File taxes online 1040ez free The interpreter's services are used only for your work. File taxes online 1040ez free You can deduct your expenses for the interpreter as business expenses. File taxes online 1040ez free Prev  Up  Next   Home   More Online Publications
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File taxes online 1040ez free 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 taxes online 1040ez free Gross monthly rate. File taxes online 1040ez free Your cost. File taxes online 1040ez free Choosing a survivor annuity after retirement. File taxes online 1040ez free Canceling a survivor annuity after retirement. File taxes online 1040ez free Annuity starting date after 1986. File taxes online 1040ez free Annuity starting date before 1987. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. File taxes online 1040ez free If the refund includes only your contributions, none of the refund is taxable. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free See Rollover Rules in Part II for information on how to make a rollover. File taxes online 1040ez free 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 taxes online 1040ez free Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free OPM will tell you how to make the choice. File taxes online 1040ez free The choice for no withholding remains in effect until you change it. File taxes online 1040ez free These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. File taxes online 1040ez free Form CSA 1099R. File taxes online 1040ez free   Form CSA 1099R is mailed to you by OPM each year. File taxes online 1040ez free It will show any tax you had withheld. File taxes online 1040ez free File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. File taxes online 1040ez free    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. File taxes online 1040ez free servicesonline. File taxes online 1040ez free opm. File taxes online 1040ez free gov. File taxes online 1040ez free To log in, you will need your retirement CSA claim number and your personal identification number. File taxes online 1040ez free Choosing no withholding on payments outside the United States. File taxes online 1040ez free   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. File taxes online 1040ez free   To choose no withholding if you are a U. File taxes online 1040ez free S. File taxes online 1040ez free citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. File taxes online 1040ez free Otherwise, OPM has to withhold tax. File taxes online 1040ez free For example, OPM must withhold if you provide a U. File taxes online 1040ez free S. File taxes online 1040ez free 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 taxes online 1040ez free S. File taxes online 1040ez free home address. File taxes online 1040ez free   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 taxes online 1040ez free S. File taxes online 1040ez free citizen, a U. File taxes online 1040ez free S. File taxes online 1040ez free resident alien, or someone who left the United States to avoid tax. File taxes online 1040ez free But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. File taxes online 1040ez free For details, see Publication 519, U. File taxes online 1040ez free S. File taxes online 1040ez free Tax Guide for Aliens. File taxes online 1040ez free Withholding certificate. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. File taxes online 1040ez free 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 taxes online 1040ez free C. File taxes online 1040ez free calling area must call 202-606-0500). File taxes online 1040ez free No special form is needed. File taxes online 1040ez free You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. File taxes online 1040ez free If you have TTY/TDD equipment, call 1-855–887–4957. File taxes online 1040ez free If you need a PIN, call OPM's Retirement Information Office. File taxes online 1040ez free You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. File taxes online 1040ez free servicesonline. File taxes online 1040ez free opm. File taxes online 1040ez free gov. File taxes online 1040ez free You will need your retirement CSA or CSF claim number and your PIN. File taxes online 1040ez free Withholding from certain lump-sum payments. File taxes online 1040ez free   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 taxes online 1040ez free Tax will be withheld at a 20% rate on the interest distributed. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free See Rollover Rules in Part II. File taxes online 1040ez free If you receive only your contributions, no tax will be withheld. File taxes online 1040ez free Withholding from Thrift Savings Plan payments. File taxes online 1040ez free   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. File taxes online 1040ez free 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 taxes online 1040ez free  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. File taxes online 1040ez free 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 taxes online 1040ez free   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 taxes online 1040ez free The above document is also available in the “Forms & Publications” section of the TSP website at www. File taxes online 1040ez free tsp. File taxes online 1040ez free gov. File taxes online 1040ez free Estimated tax. File taxes online 1040ez free   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 taxes online 1040ez free The return must cover all 12 months. File taxes online 1040ez free   You do not have to pay estimated tax for 2014 if you were a U. File taxes online 1040ez free S. File taxes online 1040ez free citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. File taxes online 1040ez free   Publication 505 contains information that you can use to help you figure your estimated tax payments. File taxes online 1040ez free 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 taxes online 1040ez free The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. File taxes online 1040ez free Children. File taxes online 1040ez free   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 taxes online 1040ez free   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 taxes online 1040ez free Form CSF 1099R. File taxes online 1040ez free   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. File taxes online 1040ez free It will show the total amount of the annuity you received in the past year. File taxes online 1040ez free It also should show, separately, the survivor annuity for a child or children. File taxes online 1040ez free Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. File taxes online 1040ez free   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 taxes online 1040ez free    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. File taxes online 1040ez free servicesonline. File taxes online 1040ez free opm. File taxes online 1040ez free gov. File taxes online 1040ez free To log in you will need your retirement CSF claim number and personal identification number. File taxes online 1040ez free    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 taxes online 1040ez free C. File taxes online 1040ez free calling area must call 202-606-0500). File taxes online 1040ez free You will need your CSF claim number and your social security number when you call. File taxes online 1040ez free Taxable part of annuity. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free Annuity statement. File taxes online 1040ez free   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 taxes online 1040ez free You will use this information to figure the tax-free recovery of your cost. File taxes online 1040ez free Annuity starting date. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free Gross monthly rate. File taxes online 1040ez free   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 taxes online 1040ez free Your cost. File taxes online 1040ez free   Your monthly annuity payment contains an amount on which you have previously paid income tax. File taxes online 1040ez free This amount represents part of your contributions to the retirement plan. File taxes online 1040ez free 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 taxes online 1040ez free   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. File taxes online 1040ez free 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 taxes online 1040ez free (See Lump-sum credit under Alternative Annuity Option, later. File taxes online 1040ez free )   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 taxes online 1040ez free You cannot claim an interest deduction for any interest payments. File taxes online 1040ez free You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. File taxes online 1040ez free Recovering your cost tax free. File taxes online 1040ez free   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free If your annuity starting date is after November 18, 1996, you must use the Simplified Method. File taxes online 1040ez free   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 taxes online 1040ez free The tax-free part is a fixed dollar amount. File taxes online 1040ez free It remains the same, even if your annuity is increased. File taxes online 1040ez free Generally, this rule applies as long as you receive your annuity. File taxes online 1040ez free However, see Exclusion limit , later. File taxes online 1040ez free Choosing a survivor annuity after retirement. File taxes online 1040ez free    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 taxes online 1040ez free   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 taxes online 1040ez free To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. File taxes online 1040ez free Figure the expected return as of the date the reduced annuity begins. File taxes online 1040ez free For details on the General Rule, see Publication 939. File taxes online 1040ez free Canceling a survivor annuity after retirement. File taxes online 1040ez free   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 taxes online 1040ez free The increased annuity does not change the cost recovery you figured at the annuity starting date. File taxes online 1040ez free The tax-free part of each annuity payment remains the same. File taxes online 1040ez free    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 taxes online 1040ez free C. File taxes online 1040ez free calling area must call 202-606-0500). File taxes online 1040ez free Exclusion limit. File taxes online 1040ez free   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. File taxes online 1040ez free Annuity starting date after 1986. File taxes online 1040ez free   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 taxes online 1040ez free Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. File taxes online 1040ez free Example. File taxes online 1040ez free Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. File taxes online 1040ez free If your cost is $12,000, the exclusion ends after 10 years (120 months). File taxes online 1040ez free Thereafter, your entire annuity is generally fully taxable. File taxes online 1040ez free Annuity starting date before 1987. File taxes online 1040ez free   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 taxes online 1040ez free If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. File taxes online 1040ez free The total exclusion may be more than your cost. File taxes online 1040ez free Deduction of unrecovered cost. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. File taxes online 1040ez free 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 taxes online 1040ez free (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. File taxes online 1040ez free ) 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 taxes online 1040ez free The Simplified Method does not apply if your annuity starting date is before July 2, 1986. File taxes online 1040ez free 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 taxes online 1040ez free This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. File taxes online 1040ez free 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 taxes online 1040ez free Worksheet A. File taxes online 1040ez free   Use Worksheet A. File taxes online 1040ez free Simplified Method (near the end of this publication), to figure your taxable annuity. File taxes online 1040ez free Be sure to keep the completed worksheet. File taxes online 1040ez free It will help you figure your taxable amounts for later years. File taxes online 1040ez free 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 taxes online 1040ez free However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. File taxes online 1040ez free Line 2. File taxes online 1040ez free   See Your cost , earlier, for an explanation of your cost in the plan. File taxes online 1040ez free 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 taxes online 1040ez free Line 3. File taxes online 1040ez free   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. File taxes online 1040ez free 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 taxes online 1040ez free If your annuity starting date is before 1998, use Table 1. File taxes online 1040ez free Line 6. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free Example. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free He must use the Simplified Method to figure the tax-free part of his annuity benefits. File taxes online 1040ez free Bill's monthly annuity benefit is $1,000. File taxes online 1040ez free He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. File taxes online 1040ez free At his annuity starting date, he was 65 and Kathy was 57. File taxes online 1040ez free Bill's completed Worksheet A is shown later. File taxes online 1040ez free 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 taxes online 1040ez free Bill keeps a copy of the completed worksheet for his records. File taxes online 1040ez free It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. File taxes online 1040ez free Bill's tax-free monthly amount is $100. File taxes online 1040ez free (See line 4 of the worksheet. File taxes online 1040ez free ) 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free Figuring this percentage is complex and requires the use of actuarial tables. File taxes online 1040ez free For these tables and other information about using the General Rule, see Publication 939. File taxes online 1040ez free 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 taxes online 1040ez free Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. File taxes online 1040ez free After your cost was recovered, all payments became fully taxable. File taxes online 1040ez free You cannot use another rule to again exclude amounts from income. File taxes online 1040ez free The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. File taxes online 1040ez free Worksheet A. File taxes online 1040ez free Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. File taxes online 1040ez free 1. File taxes online 1040ez free Enter the total pension or annuity payments received this year. File taxes online 1040ez free Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File taxes online 1040ez free $ 8,000 2. File taxes online 1040ez free Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File taxes online 1040ez free See Your cost in Part II, Rules for Retirees, earlier 2. File taxes online 1040ez free 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 taxes online 1040ez free Otherwise, go to line 3. File taxes online 1040ez free   3. File taxes online 1040ez free Enter the appropriate number from Table 1 below. File taxes online 1040ez free 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 taxes online 1040ez free 3. File taxes online 1040ez free 310 4. File taxes online 1040ez free Divide line 2 by the number on line 3 4. File taxes online 1040ez free 100 5. File taxes online 1040ez free Multiply line 4 by the number of months for which this year's payments were made. File taxes online 1040ez free If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File taxes online 1040ez free Otherwise, go to line 6 5. File taxes online 1040ez free 800 6. File taxes online 1040ez free Enter any amounts previously recovered tax free in years after 1986. File taxes online 1040ez free This is the amount shown on line 10 of your worksheet for last year 6. File taxes online 1040ez free 0 7. File taxes online 1040ez free Subtract line 6 from line 2 7. File taxes online 1040ez free 31,000 8. File taxes online 1040ez free Enter the smaller of line 5 or line 7 8. File taxes online 1040ez free 800 9. File taxes online 1040ez free Taxable amount for year. File taxes online 1040ez free Subtract line 8 from line 1. File taxes online 1040ez free Enter the result, but not less than zero. File taxes online 1040ez free Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File taxes online 1040ez free If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File taxes online 1040ez free If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File taxes online 1040ez free 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 taxes online 1040ez free $7,200 10. File taxes online 1040ez free Was your annuity starting date before 1987?   Yes. File taxes online 1040ez free Do not complete the rest of this worksheet. File taxes online 1040ez free    No. File taxes online 1040ez free Add lines 6 and 8. File taxes online 1040ez free This is the amount you have recovered tax free through 2013. File taxes online 1040ez free You will need this number if you need to fill out this worksheet next year 10. File taxes online 1040ez free 800 11. File taxes online 1040ez free Balance of cost to be recovered. File taxes online 1040ez free Subtract line 10 from line 2. File taxes online 1040ez free If zero, you will not have to complete this worksheet next year. File taxes online 1040ez free The payments you receive next year will generally be fully taxable 11. File taxes online 1040ez free $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 taxes online 1040ez free Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. File taxes online 1040ez free 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 taxes online 1040ez free You are eligible to make this choice if you meet all of the following requirements. File taxes online 1040ez free You are retiring, but not on disability. File taxes online 1040ez free You have a life-threatening illness or other critical medical condition. File taxes online 1040ez free You do not have a former spouse entitled to court ordered benefits based on your service. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free The tax-free part represents part of your cost. File taxes online 1040ez free The taxable part represents part of the earnings on your annuity contract. File taxes online 1040ez free 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 taxes online 1040ez free Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. File taxes online 1040ez free Your taxable amount may therefore be more than the lump-sum payment you receive. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free See Rollover Rules , later, for information on how to make a rollover. File taxes online 1040ez free OPM can make a direct rollover only up to the amount of the lump-sum payment. File taxes online 1040ez free Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File taxes online 1040ez free Worksheet B. File taxes online 1040ez free   Use Worksheet B. File taxes online 1040ez free Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. File taxes online 1040ez free Be sure to keep the completed worksheet for your records. File taxes online 1040ez free   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 taxes online 1040ez free Lump-sum credit. File taxes online 1040ez free   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). File taxes online 1040ez free 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 taxes online 1040ez free Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. File taxes online 1040ez free Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. File taxes online 1040ez free 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 taxes online 1040ez free Present value of your annuity contract. File taxes online 1040ez free   The present value of your annuity contract is figured using actuarial tables provided by the IRS. File taxes online 1040ez free 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 taxes online 1040ez free Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. File taxes online 1040ez free , NW Washington, DC 20224-0002 Example. File taxes online 1040ez free David Brown retired from the federal government in 2013, one month after his 55th birthday. File taxes online 1040ez free 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 taxes online 1040ez free The present value of his annuity contract was $155,000. File taxes online 1040ez free The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. File taxes online 1040ez free 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 taxes online 1040ez free See Reduced Annuity , later. File taxes online 1040ez free Worksheet B. File taxes online 1040ez free Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . File taxes online 1040ez free  1. File taxes online 1040ez free Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. File taxes online 1040ez free $ 31,000 2. File taxes online 1040ez free Enter the present value of your annuity contract 2. File taxes online 1040ez free 155,000 3. File taxes online 1040ez free Divide line 1 by line 2 3. File taxes online 1040ez free . File taxes online 1040ez free 20 4. File taxes online 1040ez free Tax-free amount. File taxes online 1040ez free Multiply line 1 by line 3. File taxes online 1040ez free (Caution: Do not include this amount on line 6 of Worksheet A in this publication. File taxes online 1040ez free ) 4. File taxes online 1040ez free $6,200 5. File taxes online 1040ez free Taxable amount (net cost in the plan). File taxes online 1040ez free Subtract line 4 from line 1. File taxes online 1040ez free Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. File taxes online 1040ez free Also, enter this amount on line 2 of Worksheet A in this publication. File taxes online 1040ez free 5. File taxes online 1040ez free $24,800   Lump-sum payment in installments. File taxes online 1040ez free   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. File taxes online 1040ez free You will receive the first installment after you make the choice upon retirement. File taxes online 1040ez free The second installment will be paid to you, with interest, in the next calendar year. File taxes online 1040ez free (Exceptions to the installment rule are provided for cases of critical medical need. File taxes online 1040ez free )   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 taxes online 1040ez free If the payment has a tax-free part, you must treat the taxable part as received first. File taxes online 1040ez free How to report. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free    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 taxes online 1040ez free 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 taxes online 1040ez free These annuity payments each will have a tax-free and a taxable part. File taxes online 1040ez free To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). File taxes online 1040ez free For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. File taxes online 1040ez free 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 taxes online 1040ez free Enter as your net cost on line 2 the amount from Worksheet B, line 5. File taxes online 1040ez free 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 taxes online 1040ez free Example. File taxes online 1040ez free The facts are the same as in the example for David Brown in the preceding discussion. File taxes online 1040ez free In addition, David received 10 annuity payments in 2013 of $1,200 each. File taxes online 1040ez free Using Worksheet A, he figures the taxable part of his annuity payments. File taxes online 1040ez free He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. File taxes online 1040ez free His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). File taxes online 1040ez free He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. File taxes online 1040ez free David's filled-in Worksheet A is shown on the next page. File taxes online 1040ez free Worksheet A. File taxes online 1040ez free Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . File taxes online 1040ez free 1. File taxes online 1040ez free Enter the total pension or annuity payments received this year. File taxes online 1040ez free Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. File taxes online 1040ez free $ 12,000 2. File taxes online 1040ez free Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. File taxes online 1040ez free See Your cost in Part II, Rules for Retirees, earlier 2. File taxes online 1040ez free 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 taxes online 1040ez free Otherwise, go to line 3. File taxes online 1040ez free   3. File taxes online 1040ez free Enter the appropriate number from Table 1 below. File taxes online 1040ez free 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 taxes online 1040ez free 3. File taxes online 1040ez free 360 4. File taxes online 1040ez free Divide line 2 by the number on line 3 4. File taxes online 1040ez free 68. File taxes online 1040ez free 89 5. File taxes online 1040ez free Multiply line 4 by the number of months for which this year's payments were made. File taxes online 1040ez free If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. File taxes online 1040ez free Otherwise, go to line 6 5. File taxes online 1040ez free 688. File taxes online 1040ez free 90 6. File taxes online 1040ez free Enter any amounts previously recovered tax free in years after 1986. File taxes online 1040ez free This is the amount shown on line 10 of your worksheet for last year 6. File taxes online 1040ez free 0 7. File taxes online 1040ez free Subtract line 6 from line 2 7. File taxes online 1040ez free 24,800 8. File taxes online 1040ez free Enter the smaller of line 5 or line 7 8. File taxes online 1040ez free 688. File taxes online 1040ez free 90 9. File taxes online 1040ez free Taxable amount for year. File taxes online 1040ez free Subtract line 8 from line 1. File taxes online 1040ez free Enter the result, but not less than zero. File taxes online 1040ez free Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. File taxes online 1040ez free If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. File taxes online 1040ez free If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. File taxes online 1040ez free 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 taxes online 1040ez free $11,311. File taxes online 1040ez free 10 10. File taxes online 1040ez free Was your annuity starting date before 1987?   Yes. File taxes online 1040ez free Do not complete the rest of this worksheet. File taxes online 1040ez free    No. File taxes online 1040ez free Add lines 6 and 8. File taxes online 1040ez free This is the amount you have recovered tax free through 2013. File taxes online 1040ez free You will need this number if you need to fill out this worksheet next year 10. File taxes online 1040ez free 688. File taxes online 1040ez free 90 11. File taxes online 1040ez free Balance of cost to be recovered. File taxes online 1040ez free Subtract line 10 from line 2. File taxes online 1040ez free If zero, you will not have to complete this worksheet next year. File taxes online 1040ez free The payments you receive next year will generally be fully taxable 11. File taxes online 1040ez free $24,111. File taxes online 1040ez free 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 taxes online 1040ez free Reemployment after choosing the alternative annuity option. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free Annuity starting date before November 19, 1996. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free The gift may be taxable for gift tax purposes. File taxes online 1040ez free The value of the gift is equal to the value of the annuity. File taxes online 1040ez free Joint and survivor annuity. File taxes online 1040ez free   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 taxes online 1040ez free This will eliminate any gift tax liability with regard to that gift. File taxes online 1040ez free   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 taxes online 1040ez free This may result in a taxable gift. File taxes online 1040ez free More information. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free Annual leave. File taxes online 1040ez free   A payment for accrued annual leave received on retirement is a salary payment. File taxes online 1040ez free It is taxable as wages in the tax year you receive it. File taxes online 1040ez free Voluntary contributions. File taxes online 1040ez free   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. File taxes online 1040ez free 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 taxes online 1040ez free Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. File taxes online 1040ez free See Thrift Savings Plan , later. File taxes online 1040ez free Additional annuity benefit. File taxes online 1040ez free   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 taxes online 1040ez free This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. File taxes online 1040ez free It does not matter that you receive only one monthly check covering both benefits. File taxes online 1040ez free 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 taxes online 1040ez free   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 taxes online 1040ez free Refund of voluntary contributions. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free See Rollover Rules , later. File taxes online 1040ez free The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. File taxes online 1040ez free 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 taxes online 1040ez free For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. File taxes online 1040ez free Community property laws. File taxes online 1040ez free   State community property laws apply to your annuity. File taxes online 1040ez free These laws will affect your income tax only if you file a return separately from your spouse. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free   At any time, you have only one domicile even though you may have more than one home. File taxes online 1040ez free 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 taxes online 1040ez free The question of your domicile is mainly a matter of your intentions as indicated by your actions. File taxes online 1040ez free   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. File taxes online 1040ez free The division is based on your periods of service and domicile in community and noncommunity property states while you were married. File taxes online 1040ez free   For more information, see Publication 555, Community Property. File taxes online 1040ez free 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 taxes online 1040ez free The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. File taxes online 1040ez free This amount is taxable as wages. File taxes online 1040ez free Your annuity will continue to be taxed just as it was before. File taxes online 1040ez free If you are still recovering your cost, you continue to do so. File taxes online 1040ez free If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. File taxes online 1040ez free 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 taxes online 1040ez free A nonresident alien is an individual who is not a citizen or a resident alien of the United States. File taxes online 1040ez free Special rule for figuring your total contributions. File taxes online 1040ez free   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. File taxes online 1040ez free   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 taxes online 1040ez free Limit on taxable amount. File taxes online 1040ez free   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 taxes online 1040ez free Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. File taxes online 1040ez free The numerator of the fraction is the retiree's total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay, other than tax-exempt pay for services performed outside the United States. File taxes online 1040ez free The denominator is the retiree's total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay for all services. File taxes online 1040ez free    Basic pay includes regular pay plus any standby differential. File taxes online 1040ez free It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. File taxes online 1040ez free   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. File taxes online 1040ez free (For an annuity, first complete Worksheet A in this publication. File taxes online 1040ez free ) Worksheet C. File taxes online 1040ez free Limited Taxable Amount for Nonresident Alien 1. File taxes online 1040ez free 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 taxes online 1040ez free   2. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File taxes online 1040ez free   3. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay for all services 3. File taxes online 1040ez free   4. File taxes online 1040ez free Divide line 2 by line 3 4. File taxes online 1040ez free   5. File taxes online 1040ez free Limited taxable amount. File taxes online 1040ez free Multiply line 1 by line 4. File taxes online 1040ez free Enter this amount on Form 1040NR, line 17b 5. File taxes online 1040ez free   Example 1. File taxes online 1040ez free You are a nonresident alien who performed all services for the U. File taxes online 1040ez free S. File taxes online 1040ez free Government abroad as a nonresident alien. File taxes online 1040ez free You retired and began to receive a monthly annuity of $200. File taxes online 1040ez free Your total basic pay for all services for the U. File taxes online 1040ez free S. File taxes online 1040ez free Government was $100,000. File taxes online 1040ez free All of your basic pay was tax exempt because it was not U. File taxes online 1040ez free S. File taxes online 1040ez free source income. File taxes online 1040ez free The taxable amount of your annuity using Worksheet A in this publication is $720. File taxes online 1040ez free You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File taxes online 1040ez free Worksheet C. File taxes online 1040ez free Limited Taxable Amount for Nonresident Alien — Example 1 1. File taxes online 1040ez free 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 taxes online 1040ez free $ 720 2. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File taxes online 1040ez free 0 3. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay for all services 3. File taxes online 1040ez free 100,000 4. File taxes online 1040ez free Divide line 2 by line 3 4. File taxes online 1040ez free 0 5. File taxes online 1040ez free Limited taxable amount. File taxes online 1040ez free Multiply line 1 by line 4. File taxes online 1040ez free Enter this amount on Form 1040NR, line 17b 5. File taxes online 1040ez free 0 Example 2. File taxes online 1040ez free You are a nonresident alien who performed services for the U. File taxes online 1040ez free S. File taxes online 1040ez free Government as a nonresident alien both within the United States and abroad. File taxes online 1040ez free You retired and began to receive a monthly annuity of $240. File taxes online 1040ez free Your total basic pay for your services for the U. File taxes online 1040ez free S. File taxes online 1040ez free 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 taxes online 1040ez free The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. File taxes online 1040ez free S. File taxes online 1040ez free source income. File taxes online 1040ez free The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. File taxes online 1040ez free You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. File taxes online 1040ez free Worksheet C. File taxes online 1040ez free Limited Taxable Amount for Nonresident Alien — Example 2 1. File taxes online 1040ez free 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 taxes online 1040ez free $ 1,980 2. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay other than tax-exempt pay for services performed outside the United States 2. File taxes online 1040ez free 40,000 3. File taxes online 1040ez free Enter the total U. File taxes online 1040ez free S. File taxes online 1040ez free Government basic pay for all services 3. File taxes online 1040ez free 120,000 4. File taxes online 1040ez free Divide line 2 by line 3 4. File taxes online 1040ez free . File taxes online 1040ez free 333 5. File taxes online 1040ez free Limited taxable amount. File taxes online 1040ez free Multiply line 1 by line 4. File taxes online 1040ez free Enter this amount on Form 1040NR, line 17b 5. File taxes online 1040ez free 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. File taxes online 1040ez free (However, see Roth TSP balance and Uniformed services TSP accounts, next. File taxes online 1040ez free ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. File taxes online 1040ez free The way that you withdraw your account balance determines when you must pay the tax. File taxes online 1040ez free Roth TSP balance. File taxes online 1040ez free   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. File taxes online 1040ez free This means Roth TSP contributions are included in your income. File taxes online 1040ez free The contribution limits are the same as the traditional TSP. File taxes online 1040ez free You can elect to have part or all of your TSP contributions designated as a Roth TSP. File taxes online 1040ez free Agency contributions will be part of your traditional TSP balance. File taxes online 1040ez free Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. File taxes online 1040ez free   Qualified distributions from your Roth TSP are not included in income. File taxes online 1040ez free This applies to both your cost in the account and income earned on that account. File taxes online 1040ez free 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 taxes online 1040ez free   For more information, go to the TSP website, www. File taxes online 1040ez free tsp. File taxes online 1040ez free gov, or the TSP Service Office. File taxes online 1040ez free See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. File taxes online 1040ez free Uniformed services TSP accounts. File taxes online 1040ez free   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 taxes online 1040ez free However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. File taxes online 1040ez free See Roth TSP balance discussed previously to get more information about Roth contributions. File taxes online 1040ez free 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 taxes online 1040ez free You can get more information from the TSP website, www. File taxes online 1040ez free tsp. File taxes online 1040ez free gov, or the TSP Service Office. File taxes online 1040ez free Direct rollover by the TSP. File taxes online 1040ez free   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 taxes online 1040ez free However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File taxes online 1040ez free Also, see Rollover Rules , later. File taxes online 1040ez free Direct rollover by the TSP to a Roth IRA. File taxes online 1040ez free   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 taxes online 1040ez free However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. File taxes online 1040ez free Also, see Rollovers to Roth IRAs for more information, later. File taxes online 1040ez free Note. File taxes online 1040ez free 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 taxes online 1040ez free This is because you already paid tax on those contributions. File taxes online 1040ez free You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. File taxes online 1040ez free TSP annuity. File taxes online 1040ez free   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 taxes online 1040ez free The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. File taxes online 1040ez free 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 taxes online 1040ez free See Roth TSP balance , earlier. File taxes online 1040ez free This is because you already paid tax on those contributions. File taxes online 1040ez free Cash withdrawals. File taxes online 1040ez free   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 taxes online 1040ez free (See Rollover Rules , later. File taxes online 1040ez free ) 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 taxes online 1040ez free See Lump-Sum Distributions in Publication 575 for details. File taxes online 1040ez free 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 taxes online 1040ez free See Roth TSP balance , earlier. File taxes online 1040ez free    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. File taxes online 1040ez free 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 taxes online 1040ez free See Roth TSP balance , earlier, for a discussion of those conditions. File taxes online 1040ez free Tax on early distributions. File taxes online 1040ez free   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 taxes online 1040ez free However, this additional tax does not apply in certain situations, including any of the following. File taxes online 1040ez free You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. File taxes online 1040ez free You choose to receive your account balance in monthly payments based on your life expectancy. File taxes online 1040ez free You are totally and permanently disabled. File taxes online 1040ez free You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). File taxes online 1040ez free The earnings may be subject to the 10% tax depending on whether you met certain conditions. File taxes online 1040ez free See Roth TSP balance , earlier. File taxes online 1040ez free   For more information, see Tax on Early Distributions in Publication 575. File taxes online 1040ez free Outstanding loan. File taxes online 1040ez free   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 taxes online 1040ez free The distribution also may be subject to the additional 10% tax on early distributions. File taxes online 1040ez free 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 taxes online 1040ez free See Rollover Rules , later. File taxes online 1040ez free   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 taxes online 1040ez free However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. File taxes online 1040ez free See Roth TSP balance , earlier. File taxes online 1040ez free More information. File taxes online 1040ez free   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. File taxes online 1040ez free 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 taxes online 1040ez free    The above documents are also available on the TSP website at www. File taxes online 1040ez free tsp. File taxes online 1040ez free gov. File taxes online 1040ez free Select “Forms & Publications. File taxes online 1040ez free ” 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 taxes online 1040ez free You do not include the amount rolled over in your income, and you cannot take a deduction for it. File taxes online 1040ez free The amount rolled over is taxed later as the new program pays that amount to you. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. File taxes online 1040ez free You can also roll over a distribution from a qualified retirement plan into a Roth IRA. File taxes online 1040ez free 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 taxes online 1040ez free See Rollovers to Roth IRAs , later, for more information. File taxes online 1040ez free Qualified retirement plan. File taxes online 1040ez free   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 taxes online 1040ez free The CSRS, FERS, and TSP are considered qualified retirement plans. File taxes online 1040ez free Distributions eligible for rollover treatment. File taxes online 1040ez free   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 taxes online 1040ez free You cannot roll over any part of your CSRS or FERS annuity payments. File taxes online 1040ez free   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 taxes online 1040ez free   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. File taxes online 1040ez free However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. File taxes online 1040ez free Direct rollover option. File taxes online 1040ez free   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 taxes online 1040ez free   There is an automatic rollover requirement for mandatory distributions. File taxes online 1040ez free A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. File taxes online 1040ez free The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. File taxes online 1040ez free 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 taxes online 1040ez free If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. File taxes online 1040ez free No tax withheld. File taxes online 1040ez free   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 taxes online 1040ez free 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 taxes online 1040ez free Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. File taxes online 1040ez free Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. File taxes online 1040ez free Payment to you option. File taxes online 1040ez free   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 taxes online 1040ez free However, the full amount is treated as distributed to you even though you actually receive only 80%. File taxes online 1040ez free 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 taxes online 1040ez free Rollovers to Roth IRAs are generally included in income. File taxes online 1040ez free Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. File taxes online 1040ez free 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 taxes online 1040ez free 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 taxes online 1040ez free Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. File taxes online 1040ez free See Roth TSP balance , earlier. File taxes online 1040ez free Also, see Tax on Early Distributions in Publication 575. File taxes online 1040ez free Exception to withholding. File taxes online 1040ez free   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. File taxes online 1040ez free Partial rollovers. File taxes online 1040ez free   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 taxes online 1040ez free See Lump-Sum Distributions in Publication 575. File taxes online 1040ez free However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. File taxes online 1040ez free Rolling over more than amount received. File taxes online 1040ez free   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 taxes online 1040ez free Example. File taxes online 1040ez free You left government service at age 53. File taxes online 1040ez free On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you