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Filing Back State Taxes

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Filing Back State Taxes

Filing back state taxes Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Filing back state taxes Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Filing back state taxes The care must be for one or more qualifying persons who are identified on Form 2441. Filing back state taxes (See Qualifying Person Test. Filing back state taxes ) You (and your spouse if filing jointly) must have earned income during the year. Filing back state taxes (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Filing back state taxes ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Filing back state taxes (See Work-Related Expense Test, later. Filing back state taxes ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Filing back state taxes If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Filing back state taxes You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Filing back state taxes See Payments to Relatives or Dependents under Work-Related Expense Test, later. Filing back state taxes Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Filing back state taxes If you are married, you must file a joint return, unless an exception applies to you. Filing back state taxes See Joint Return Test, later. Filing back state taxes You must identify the care provider on your tax return. Filing back state taxes (See Provider Identification Test, later. Filing back state taxes ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Filing back state taxes (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Filing back state taxes See Reduced Dollar Limit under How To Figure the Credit, later. Filing back state taxes ) These tests are presented in Figure A and are also explained in detail in this publication. Filing back state taxes Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Filing back state taxes A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Filing back state taxes Dependent defined. Filing back state taxes   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Filing back state taxes To be your dependent, a person must be your qualifying child (or your qualifying relative). Filing back state taxes Qualifying child. Filing back state taxes   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Filing back state taxes More information. Filing back state taxes   For more information about who is a dependent or a qualifying child, see Publication 501. Filing back state taxes Physically or mentally not able to care for oneself. Filing back state taxes   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Filing back state taxes Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Filing back state taxes Person qualifying for part of year. Filing back state taxes   You determine a person's qualifying status each day. Filing back state taxes For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Filing back state taxes Also see Yearly limit under Dollar Limit, later. Filing back state taxes Birth or death of otherwise qualifying person. Filing back state taxes   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Filing back state taxes Taxpayer identification number. Filing back state taxes   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Filing back state taxes If the correct information is not shown, the credit may be reduced or disallowed. Filing back state taxes Individual taxpayer identification number (ITIN) for aliens. Filing back state taxes   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Filing back state taxes The ITIN is entered wherever an SSN is requested on a tax return. Filing back state taxes If the alien does not have an ITIN, he or she must apply for one. Filing back state taxes See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Filing back state taxes   An ITIN is for tax use only. Filing back state taxes It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Filing back state taxes S. Filing back state taxes law. Filing back state taxes Adoption taxpayer identification number (ATIN). Filing back state taxes   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Filing back state taxes File Form W-7A, Application for Taxpayer Identification Number for Pending U. Filing back state taxes S. Filing back state taxes Adoptions. Filing back state taxes Child of divorced or separated parents or parents living apart. Filing back state taxes   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Filing back state taxes   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Filing back state taxes If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Filing back state taxes For details and an exception for a parent who works at night, see Publication 501. Filing back state taxes   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Filing back state taxes Please click here for the text description of the image. Filing back state taxes Figure a. Filing back state taxes Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Filing back state taxes Earned income. Filing back state taxes   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Filing back state taxes A net loss from self-employment reduces earned income. Filing back state taxes Earned income also includes strike benefits and any disability pay you report as wages. Filing back state taxes   Generally, only taxable compensation is included. Filing back state taxes However, you can elect to include nontaxable combat pay in earned income. Filing back state taxes If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Filing back state taxes (In other words, if one of you makes the election, the other one can also make it but does not have to. Filing back state taxes ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Filing back state taxes You should figure your credit both ways and make the election if it gives you a greater tax benefit. Filing back state taxes    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Filing back state taxes Members of certain religious faiths opposed to social security. Filing back state taxes   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Filing back state taxes These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Filing back state taxes   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Filing back state taxes For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Filing back state taxes Form 4361. Filing back state taxes   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Filing back state taxes This includes wages, salaries, tips, and other taxable employee compensation. Filing back state taxes   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Filing back state taxes Examples include fees for performing marriages and honoraria for delivering speeches. Filing back state taxes   Any amount you received for work that is not related to your ministerial duties is earned income. Filing back state taxes Form 4029. Filing back state taxes   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Filing back state taxes   However, amounts you received as a self-employed individual do not count as earned income. Filing back state taxes What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Filing back state taxes S. Filing back state taxes trade or business, or Any amount received for work while an inmate in a penal institution. Filing back state taxes Rule for student-spouse or spouse not able to care for self. Filing back state taxes   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Filing back state taxes (Your spouse also must live with you for more than half the year. Filing back state taxes )   If you are filing a joint return, this rule also applies to you. Filing back state taxes You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Filing back state taxes   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Filing back state taxes   This rule applies to only one spouse for any one month. Filing back state taxes If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Filing back state taxes Full-time student. Filing back state taxes    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Filing back state taxes You must have been a full-time student for some part of each of 5 calendar months during the year. Filing back state taxes (The months need not be consecutive. Filing back state taxes ) School. Filing back state taxes   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Filing back state taxes A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Filing back state taxes Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Filing back state taxes Expenses are considered work-related only if both of the following are true. Filing back state taxes They allow you (and your spouse if filing jointly) to work or look for work. Filing back state taxes They are for a qualifying person's care. Filing back state taxes Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Filing back state taxes If you are married, generally both you and your spouse must work or look for work. Filing back state taxes One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Filing back state taxes Your work can be for others or in your own business or partnership. Filing back state taxes It can be either full time or part time. Filing back state taxes Work also includes actively looking for work. Filing back state taxes However, if you do not find a job and have no earned income for the year, you cannot take this credit. Filing back state taxes See Earned Income Test, earlier. Filing back state taxes An expense is not considered work-related merely because you had it while you were working. Filing back state taxes The purpose of the expense must be to allow you to work. Filing back state taxes Whether your expenses allow you to work or look for work depends on the facts. Filing back state taxes Example 1. Filing back state taxes The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Filing back state taxes Example 2. Filing back state taxes You work during the day. Filing back state taxes Your spouse works at night and sleeps during the day. Filing back state taxes You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Filing back state taxes Your expenses are considered work-related. Filing back state taxes Volunteer work. Filing back state taxes   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Filing back state taxes Work for part of year. Filing back state taxes   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Filing back state taxes For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Filing back state taxes However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Filing back state taxes Temporary absence from work. Filing back state taxes   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Filing back state taxes Instead, you can figure your credit including the expenses you paid for the period of absence. Filing back state taxes   An absence of 2 weeks or less is a short, temporary absence. Filing back state taxes An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Filing back state taxes Example. Filing back state taxes You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Filing back state taxes You become ill and miss 4 months of work but receive sick pay. Filing back state taxes You continue to pay the nanny to care for the children while you are ill. Filing back state taxes Your absence is not a short, temporary absence, and your expenses are not considered work-related. Filing back state taxes Part-time work. Filing back state taxes   If you work part-time, you generally must figure your expenses for each day. Filing back state taxes However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Filing back state taxes Any day when you work at least 1 hour is a day of work. Filing back state taxes Example 1. Filing back state taxes You work 3 days a week. Filing back state taxes While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Filing back state taxes You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Filing back state taxes Your child attends the center 5 days a week. Filing back state taxes Your work-related expenses are limited to $150 a week. Filing back state taxes Example 2. Filing back state taxes The facts are the same as in Example 1 except the center does not offer a 3-day option. Filing back state taxes The entire $250 weekly fee may be a work-related expense. Filing back state taxes Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Filing back state taxes You do not have to choose the least expensive way of providing the care. Filing back state taxes The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Filing back state taxes Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Filing back state taxes Expenses for household services qualify if part of the services is for the care of qualifying persons. Filing back state taxes See Household Services, later. Filing back state taxes Expenses not for care. Filing back state taxes   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Filing back state taxes However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Filing back state taxes Otherwise, see the discussion of Expenses partly work-related, later. Filing back state taxes   Child support payments are not for care and do not qualify for the credit. Filing back state taxes Education. Filing back state taxes   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Filing back state taxes   Expenses to attend kindergarten or a higher grade are not expenses for care. Filing back state taxes Do not use these expenses to figure your credit. Filing back state taxes   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Filing back state taxes   Summer school and tutoring programs are not for care. Filing back state taxes Example 1. Filing back state taxes You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Filing back state taxes The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Filing back state taxes You can count the total cost when you figure the credit. Filing back state taxes Example 2. Filing back state taxes You place your 10-year-old child in a boarding school so you can work full time. Filing back state taxes Only the part of the boarding school expense that is for the care of your child is a work-related expense. Filing back state taxes You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Filing back state taxes You cannot count any part of the amount you pay the school for your child's education. Filing back state taxes Care outside your home. Filing back state taxes   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Filing back state taxes Dependent care center. Filing back state taxes   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Filing back state taxes   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Filing back state taxes Camp. Filing back state taxes   The cost of sending your child to an overnight camp is not considered a work-related expense. Filing back state taxes    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Filing back state taxes Transportation. Filing back state taxes   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Filing back state taxes This includes transportation by bus, subway, taxi, or private car. Filing back state taxes However, transportation not provided by a care provider is not for the care of a qualifying person. Filing back state taxes Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Filing back state taxes Fees and deposits. Filing back state taxes   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Filing back state taxes However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Filing back state taxes Example 1. Filing back state taxes You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Filing back state taxes The fee you paid is a work-related expense. Filing back state taxes Example 2. Filing back state taxes You placed a deposit with a preschool to reserve a place for your 3-year-old child. Filing back state taxes You later sent your child to a different preschool and forfeited the deposit. Filing back state taxes The forfeited deposit is not for care and so is not a work-related expense. Filing back state taxes Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Filing back state taxes Definition. Filing back state taxes   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Filing back state taxes They include the services of a housekeeper, maid, or cook. Filing back state taxes However, they do not include the services of a chauffeur, bartender, or gardener. Filing back state taxes Housekeeper. Filing back state taxes   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Filing back state taxes Expenses partly work-related. Filing back state taxes   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Filing back state taxes To figure your credit, count only the part that is work-related. Filing back state taxes However, you do not have to divide the expense if only a small part is for other purposes. Filing back state taxes Example. Filing back state taxes You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Filing back state taxes The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Filing back state taxes You do not have to divide the expenses. Filing back state taxes You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Filing back state taxes Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Filing back state taxes However, the dollar limit (discussed later) is based on one qualifying person, not two. Filing back state taxes Meals and lodging provided for housekeeper. Filing back state taxes   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Filing back state taxes If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Filing back state taxes Example. Filing back state taxes To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Filing back state taxes You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Filing back state taxes However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Filing back state taxes Taxes paid on wages. Filing back state taxes   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Filing back state taxes For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Filing back state taxes Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Filing back state taxes However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Filing back state taxes Joint Return Test Generally, married couples must file a joint return to take the credit. Filing back state taxes However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Filing back state taxes Legally separated. Filing back state taxes   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Filing back state taxes You may be eligible to take the credit on your return using head of household filing status. Filing back state taxes Married and living apart. Filing back state taxes   You are not considered married and are eligible to take the credit if all the following apply. Filing back state taxes You file a return apart from your spouse. Filing back state taxes Your home is the home of a qualifying person for more than half the year. Filing back state taxes You pay more than half the cost of keeping up your home for the year. Filing back state taxes Your spouse does not live in your home for the last 6 months of the year. Filing back state taxes Costs of keeping up a home. Filing back state taxes   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Filing back state taxes   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Filing back state taxes   They also do not include the purchase, permanent improvement, or replacement of property. Filing back state taxes For example, you cannot include the cost of replacing a water heater. Filing back state taxes However, you can include the cost of repairing a water heater. Filing back state taxes Death of spouse. Filing back state taxes   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Filing back state taxes If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Filing back state taxes Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Filing back state taxes Use Form 2441, Part I, to show the information. Filing back state taxes If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Filing back state taxes Information needed. Filing back state taxes   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Filing back state taxes    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Filing back state taxes If the care provider is an organization, then it is the employer identification number (EIN). Filing back state taxes   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Filing back state taxes In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Filing back state taxes   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Filing back state taxes Getting the information. Filing back state taxes    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Filing back state taxes If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Filing back state taxes    You should keep this information with your tax records. Filing back state taxes Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Filing back state taxes Due diligence. Filing back state taxes   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Filing back state taxes However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Filing back state taxes   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Filing back state taxes Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Filing back state taxes Provider refusal. Filing back state taxes    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Filing back state taxes Enter “See Attached Statement” in the columns calling for the information you do not have. Filing back state taxes Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Filing back state taxes Be sure to write your name and social security number on this statement. Filing back state taxes The statement will show that you used due diligence in trying to furnish the necessary information. Filing back state taxes U. Filing back state taxes S. Filing back state taxes citizens and resident aliens living abroad. Filing back state taxes   If you are living abroad, your care provider may not have, and may not be required to get, a U. Filing back state taxes S. Filing back state taxes taxpayer identification number (for example, an SSN or an EIN). Filing back state taxes If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Filing back state taxes How To Figure the Credit Your credit is a percentage of your work-related expenses. Filing back state taxes Your expenses are subject to the earned income limit and the dollar limit. Filing back state taxes The percentage is based on your adjusted gross income. Filing back state taxes Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Filing back state taxes Expenses prepaid in an earlier year. Filing back state taxes   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Filing back state taxes Claim the expenses for the later year as if they were actually paid in that later year. Filing back state taxes Expenses not paid until the following year. Filing back state taxes   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Filing back state taxes You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Filing back state taxes See Payments for prior year's expenses under Amount of Credit, later. Filing back state taxes If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Filing back state taxes You may be able to claim a credit for them on your 2014 return. Filing back state taxes Expenses reimbursed. Filing back state taxes   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Filing back state taxes Example. Filing back state taxes You paid work-related expenses of $3,000. Filing back state taxes You are reimbursed $2,000 by a state social services agency. Filing back state taxes You can use only $1,000 to figure your credit. Filing back state taxes Medical expenses. Filing back state taxes   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Filing back state taxes You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Filing back state taxes   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Filing back state taxes However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Filing back state taxes For information on medical expenses, see Publication 502, Medical and Dental Expenses. Filing back state taxes    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Filing back state taxes Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Filing back state taxes See Reduced Dollar Limit, later. Filing back state taxes But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Filing back state taxes Dependent care benefits. Filing back state taxes    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Filing back state taxes Your salary may have been reduced to pay for these benefits. Filing back state taxes If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Filing back state taxes See Statement for employee, later. Filing back state taxes Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Filing back state taxes   Enter the amount of these benefits on Form 2441, Part III, line 12. Filing back state taxes Exclusion or deduction. Filing back state taxes   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Filing back state taxes Your employer can tell you whether your benefit plan qualifies. Filing back state taxes To claim the exclusion, you must complete Part III of Form 2441. Filing back state taxes You cannot use Form 1040EZ. Filing back state taxes   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Filing back state taxes Therefore, you would not get an exclusion from wages. Filing back state taxes Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Filing back state taxes To claim the deduction, you must use Form 2441. Filing back state taxes   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Filing back state taxes   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Filing back state taxes    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Filing back state taxes Statement for employee. Filing back state taxes   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Filing back state taxes Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Filing back state taxes Effect of exclusion on credit. Filing back state taxes   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Filing back state taxes Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Filing back state taxes Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Filing back state taxes For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Filing back state taxes Example. Filing back state taxes You remarried on December 3. Filing back state taxes Your earned income for the year was $18,000. Filing back state taxes Your new spouse's earned income for the year was $2,000. Filing back state taxes You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Filing back state taxes The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Filing back state taxes Separated spouse. Filing back state taxes   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Filing back state taxes Use only your income in figuring the earned income limit. Filing back state taxes Surviving spouse. Filing back state taxes   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Filing back state taxes Community property laws. Filing back state taxes   Disregard community property laws when you figure earned income for this credit. Filing back state taxes Self-employment earnings. Filing back state taxes   If you are self-employed, include your net earnings in earned income. Filing back state taxes For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Filing back state taxes Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Filing back state taxes Clergy or church employee. Filing back state taxes   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Filing back state taxes Statutory employee. Filing back state taxes   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Filing back state taxes Net loss. Filing back state taxes   You must reduce your earned income by any net loss from self-employment. Filing back state taxes Optional method if earnings are low or a net loss. Filing back state taxes   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Filing back state taxes Get Publication 334, Tax Guide for Small Business, for details. Filing back state taxes If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Filing back state taxes In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Filing back state taxes You or your spouse is a student or not able to care for self. Filing back state taxes   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Filing back state taxes His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Filing back state taxes Spouse works. Filing back state taxes   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Filing back state taxes Spouse qualifies for part of month. Filing back state taxes   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Filing back state taxes You are a student or not able to care for self. Filing back state taxes   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Filing back state taxes For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Filing back state taxes If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Filing back state taxes Both spouses qualify. Filing back state taxes   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Filing back state taxes Example. Filing back state taxes Jim works and keeps up a home for himself and his wife Sharon. Filing back state taxes Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Filing back state taxes During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Filing back state taxes These expenses also qualify as medical expenses. Filing back state taxes Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Filing back state taxes Jim and Sharon's earned income limit is the smallest of the following amounts. Filing back state taxes   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Filing back state taxes However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Filing back state taxes Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Filing back state taxes This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Filing back state taxes If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Filing back state taxes This limit does not need to be divided equally among them. Filing back state taxes For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Filing back state taxes Yearly limit. Filing back state taxes   The dollar limit is a yearly limit. Filing back state taxes The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Filing back state taxes Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Filing back state taxes Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Filing back state taxes Example 1. Filing back state taxes You pay $500 a month for after-school care for your son. Filing back state taxes He turned 13 on May 1 and is no longer a qualifying person. Filing back state taxes You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Filing back state taxes Example 2. Filing back state taxes In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Filing back state taxes You paid $300 per month for the childcare. Filing back state taxes You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Filing back state taxes Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Filing back state taxes Your reduced dollar limit is figured on Form 2441, Part III. Filing back state taxes See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Filing back state taxes Example 1. Filing back state taxes George is a widower with one child and earns $24,000 a year. Filing back state taxes He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Filing back state taxes His employer pays an additional $1,000 under a qualified dependent care benefit plan. Filing back state taxes This $1,000 is excluded from George's income. Filing back state taxes Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Filing back state taxes This is because his dollar limit is reduced as shown next. Filing back state taxes   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Filing back state taxes Randall is married and both he and his wife are employed. Filing back state taxes Each has earned income in excess of $6,000. Filing back state taxes They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Filing back state taxes Randall's work-related expenses are $6,000 for the year. Filing back state taxes Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Filing back state taxes Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Filing back state taxes Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Filing back state taxes This is because his dollar limit is reduced as shown next. Filing back state taxes   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Filing back state taxes This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Filing back state taxes The following table shows the percentage to use based on adjusted gross income. Filing back state taxes   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Filing back state taxes You should show the expenses for each person on Form 2441, line 2, column (c). Filing back state taxes However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Filing back state taxes You should list -0- for the one person and the actual amount for the second person. Filing back state taxes The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Filing back state taxes Example. Filing back state taxes Roger and Megan Paris have two qualifying children. Filing back state taxes They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Filing back state taxes They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Filing back state taxes Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Filing back state taxes Line 30 tells them to complete line 2 without including any dependent care benefits. Filing back state taxes They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Filing back state taxes Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Filing back state taxes 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Filing back state taxes However, their son James has special needs and they paid $18,500 for his care. Filing back state taxes Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Filing back state taxes Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Filing back state taxes Payments for prior year's expenses. Filing back state taxes   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Filing back state taxes Attach a statement to your form showing how you figured the additional amount from 2012. Filing back state taxes Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Filing back state taxes Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Filing back state taxes Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Filing back state taxes See Worksheet A. Filing back state taxes Example. Filing back state taxes In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Filing back state taxes Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Filing back state taxes Their adjusted gross income for 2012 was $30,000. Filing back state taxes Sam's earned income of $14,000 was less than Kate's earned income. Filing back state taxes A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Filing back state taxes It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Filing back state taxes The filled-in Worksheet A they used to figure this credit is shown later. Filing back state taxes Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Filing back state taxes They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Filing back state taxes Worksheet A. Filing back state taxes Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Filing back state taxes 1. Filing back state taxes   Enter your 2012 qualified expenses paid in 2012 1. Filing back state taxes     2. Filing back state taxes   Enter your 2012 qualified expenses paid in 2013 2. Filing back state taxes     3. Filing back state taxes   Add the amounts on lines 1 and 2 3. Filing back state taxes     4. Filing back state taxes   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Filing back state taxes     5. Filing back state taxes   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Filing back state taxes     6. Filing back state taxes   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Filing back state taxes     7. Filing back state taxes   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Filing back state taxes     8. Filing back state taxes   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Filing back state taxes     9. Filing back state taxes   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Filing back state taxes     10. Filing back state taxes   Subtract the amount on line 9 from the amount on line 8 and enter the result. Filing back state taxes If zero or less, stop here. Filing back state taxes You cannot increase your 2013 credit by any previous year's expenses 10. Filing back state taxes     11. Filing back state taxes   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Filing back state taxes     12. Filing back state taxes   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Filing back state taxes             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Filing back state taxes 35                 15,000 — 17,000     . Filing back state taxes 34                 17,000 — 19,000     . Filing back state taxes 33                 19,000 — 21,000     . Filing back state taxes 32                 21,000 — 23,000     . Filing back state taxes 31                 23,000 — 25,000     . Filing back state taxes 30                 25,000 — 27,000     . Filing back state taxes 29                 27,000 — 29,000     . Filing back state taxes 28                 29,000 — 31,000     . Filing back state taxes 27                 31,000 — 33,000     . Filing back state taxes 26                 33,000 — 35,000     . Filing back state taxes 25                 35,000 — 37,000     . Filing back state taxes 24                 37,000 — 39,000     . Filing back state taxes 23                 39,000 — 41,000     . Filing back state taxes 22                 41,000 — 43,000     . Filing back state taxes 21                 43,000 — No limit     . Filing back state taxes 20           13. Filing back state taxes   Multiply line 10 by line 12. Filing back state taxes Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Filing back state taxes Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Filing back state taxes       Worksheet A. Filing back state taxes Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Filing back state taxes 1. Filing back state taxes   Enter your 2012 qualified expenses paid in 2012 1. Filing back state taxes   $2,000 2. Filing back state taxes   Enter your 2012 qualified expenses paid in 2013 2. Filing back state taxes   600 3. Filing back state taxes   Add the amounts on lines 1 and 2 3. Filing back state taxes   2,600 4. Filing back state taxes   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Filing back state taxes   3,000 5. Filing back state taxes   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Filing back state taxes   0 6. Filing back state taxes   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Filing back state taxes   3,000 7. Filing back state taxes   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Filing back state taxes   14,000 8. Filing back state taxes   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Filing back state taxes   2,600 9. Filing back state taxes   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Filing back state taxes   2,000 10. Filing back state taxes   Subtract the amount on line 9 from the amount on line 8 and enter the result. Filing back state taxes If zero or less, stop here. Filing back state taxes You cannot increase your 2013 credit by any previous year's expenses 10. Filing back state taxes   600 11. Filing back state taxes   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Filing back state taxes   30,000 12. Filing back state taxes   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Filing back state taxes   . Filing back state taxes 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Filing back state taxes 35                 15,000 — 17,000     . Filing back state taxes 34                 17,000 — 19,000     . Filing back state taxes 33                 19,000 — 21,000     . Filing back state taxes 32                 21,000 — 23,000     . Filing back state taxes 31                 23,000 — 25,000     . Filing back state taxes 30                 25,000 — 27,000     . Filing back state taxes 29                 27,000 — 29,000     . Filing back state taxes 28                 29,000 — 31,000     . Filing back state taxes 27                 31,000 — 33,000     . Filing back state taxes 26                 33,000 — 35,000     . Filing back state taxes 25                 35,000 — 37,000     . Filing back state taxes 24                 37,000 — 39,000     . Filing back state taxes 23                 39,000 — 41,000     . Filing back state taxes 22                 41,000 — 43,000     . Filing back state taxes 21                 43,000 — No limit     . Filing back state taxes 20           13. Filing back state taxes   Multiply line 10 by line 12. Filing back state taxes Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Filing back state taxes Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Filing back state taxes   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Filing back state taxes You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Filing back state taxes Form 1040, Form 1040A, or Form 1040NR. Filing back state taxes    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Filing back state taxes Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Filing back state taxes Limit on credit. Filing back state taxes    The amount of credit you can claim is limited to your tax. Filing back state taxes For more information, see the Instructions for Form 2441. Filing back state taxes Tax credit not refundable. Filing back state taxes   You cannot get a refund for any part of the credit that is more than this limit. Filing back state taxes Recordkeeping. Filing back state taxes You should keep records of your work-related expenses. Filing back state taxes Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Filing back state taxes Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Filing back state taxes Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Filing back state taxes If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Filing back state taxes If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Filing back state taxes Self-employed persons who are in business for themselves are not household employees. Filing back state taxes Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Filing back state taxes If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Filing back state taxes This control could include providing rules of conduct and appearance and requiring regular reports. Filing back state taxes In this case, you do not have to pay employment taxes. Filing back state taxes But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Filing back state taxes If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Filing back state taxes Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Filing back state taxes Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Filing back state taxes Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Filing back state taxes For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Filing back state taxes State employment tax. Filing back state taxes   You may also have to pay state unemployment tax. Filing back state taxes Contact your state unemployment tax office for information. Filing back state taxes You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Filing back state taxes For a list of state unemployment tax agencies, visit the U. Filing back state taxes S. Filing back state taxes Department of Labor's website. Filing back state taxes To find that website, use the link in Publication 926 or search online. Filing back state taxes How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Filing back state taxes Free help with your tax return. Filing back state taxes   You can get free help preparing your return nationwide from IRS-certified volunteers. Filing back state taxes The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Filing back state taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Filing back state taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Filing back state taxes In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Filing back state taxes To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Filing back state taxes gov, download the IRS2Go app, or call 1-800-906-9887. Filing back state taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Filing back state taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Filing back state taxes aarp. Filing back state taxes org/money/taxaide or call 1-888-227-7669. Filing back state taxes For more information on these programs, go to IRS. Filing back state taxes gov and enter “VITA” in the search box. Filing back state taxes Internet. Filing back state taxes    IRS. Filing back state taxes gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Filing back state taxes Download the free IRS2Go app from the iTunes app store or from Google Play. Filing back state taxes Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Filing back state taxes Check the status of your 2013 refund with the Where's My Refund? application on IRS. Filing back state taxes gov or download the IRS2Go app and select the Refund Status option. Filing back state taxes The IRS issues more than 9 out of 10 refunds in less than 21 days. Filing back state taxes Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Filing back state taxes You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filing back state taxes The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Filing back state taxes Use the Interactive Tax Assistant (ITA) to research your tax questions. Filing back state taxes No need to wait on the phone or stand in line. Filing back state taxes The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Filing back state taxes When you reach the response screen, you can print the entire interview and the final response for your records. Filing back state taxes New subject areas are added on a regular basis. Filing back state taxes  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Filing back state taxes gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Filing back state taxes You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Filing back state taxes The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Filing back state taxes When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Filing back state taxes Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Filing back state taxes You can also ask the IRS to mail a return or an account transcript to you. Filing back state taxes Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Filing back state taxes gov or by calling 1-800-908-9946. Filing back state taxes Tax return and tax account transcripts are generally available for the current year and the past three years. Filing back state taxes Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Filing back state taxes Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Filing back state taxes If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Filing back state taxes Check the status of your amended return using Where's My Amended Return? Go to IRS. Filing back state taxes gov and enter Where's My Amended Return? in the search box. Filing back state taxes You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Filing back state taxes It can take up to 3 weeks from the date you mailed it to show up in our system. Filing back state taxes Make a payment using one of several safe and convenient electronic payment options available on IRS. Filing back state taxes gov. Filing back state taxes Select the Payment tab on the front page of IRS. Filing back state taxes gov for more information. Filing back state taxes Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Filing back state taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Filing back state taxes gov. Filing back state taxes Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Filing back state taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Filing back state taxes gov. Filing back state taxes Request an Electronic Filing PIN by going to IRS. Filing back state taxes gov and entering Electronic Filing PIN in the search box. Filing back state taxes Download forms, instructions and publications, including accessible versions for people with disabilities. Filing back state taxes Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Filing back state taxes gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Filing back state taxes An employee can answer questions about your tax account or help you set up a payment plan. Filing back state taxes Before you visit, check the Office Locator on IRS. Filing back state taxes gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Filing back state taxes If you have a special need, such as a disability, you can request an appointment. Filing back state taxes Call the local number listed in the Office Locator, or look in the phone book under Unit
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Taxpayer Rights

Whether you file a Form 1040EZ or a complicated corporate return, you will benefit from knowing your rights as a taxpayer and being familiar with the IRS' obligations to protect them. The goal of the Taxpayer Rights Corner is to be your one-stop shop for taxpayer rights information during every step of your interaction with the IRS.


Know Your Rights

You have rights as a taxpayer when dealing with the IRS.


Your Civil Rights Are Protected

Under no circumstances will the Internal Revenue Service tolerate discrimination by its employees, grantees, contractors, and/or subcontractors. NO ONE shall be excluded from participating in, be denied the benefits of, or be subject to discrimination because of: race, color, sex, national origin, disability, reprisal, or age in programs or activities funded by the Department of Treasury - Internal Revenue Service.


Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an IRS program that provides an independent system to assure that tax problems, which have not been resolved through normal channels, are promptly and fairly handled.


Notices

What should you do if you receive a notice from the IRS?


Your Rights to Representation

Learn more about granting power of attorney.

You are entitled to similar protection of confidentiality with respect to tax advice given by a federally authorized tax practitioner as with an attorney.

Every taxpayer is entitled to have access to representation. The Low Income Tax Clinic grant program is designed to help accredited academic institutions and non-profit organizations provide low to no-cost tax assistance (such as representing the taxpayer during an audit or tax collection effort) and/or tax outreach to taxpayers for whom English is a second language. 

  • Frequently Asked Questions

Examination

We accept most taxpayer's returns as filed. If we inquire about your return or select it for examination, it does not suggest that you are dishonest. The inquiry or examination may or may not result in more tax. To learn about your rights during the examination process, and for information about how audits are conducted;


Appeal Rights

It is your right to appeal any action taken by the IRS to change your account.


Collection Process

Learn about the process IRS may follow to collect overdue taxes, including a summary of your rights and other important information about the collection process.


Innocent Spouse

The Reform Act of 1998, broadened the relief from joint liability available to spouses who file joint returns.


Refund Offset

If you are due a refund but have not paid certain amounts you owe, all or part of your refund may be used to pay all or part of the past-due amount. This includes past-due federal income tax, other federal debts (such as student loans), state income tax, and child and spousal support payments.


Where To Go For 1040 Help?

The IRS sponsors volunteer assistance programs and offers help to taxpayers in many of its offices and other community locations.

Page Last Reviewed or Updated: 14-Mar-2014

The Filing Back State Taxes

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