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Filing State Income Taxes

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Filing State Income Taxes

Filing state income taxes 3. Filing state income taxes   Environmental Taxes Table of Contents Oil Spill Liability Tax ODCs Imported Taxable Products Floor Stocks Tax Environmental taxes are imposed on crude oil and petroleum products (oil spill liability), the sale or use of ozone-depleting chemicals (ODCs), and imported products containing or manufactured with ODCs. Filing state income taxes In addition, a floor stocks tax is imposed on ODCs held on January 1 by any person (other than the manufacturer or importer of the ODCs) for sale or for use in further manufacture. Filing state income taxes Figure the environmental tax on Form 6627. Filing state income taxes Enter the tax on the appropriate lines of Form 720 and attach Form 6627 to Form 720. Filing state income taxes For environmental tax purposes, United States includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, the continental shelf areas (applying the principles of section 638), and foreign trade zones. Filing state income taxes No one is exempt from the environmental taxes, including the federal government, state and local governments, Indian tribal governments, and nonprofit educational organizations. Filing state income taxes Oil Spill Liability Tax The oil spill liability tax is reported on Form 6627, Environmental Taxes, and Form 720, Quarterly Federal Excise Tax Return (IRS Nos. Filing state income taxes 18 and 21). Filing state income taxes The oil spill liability tax rate is $. Filing state income taxes 08 per barrel and generally applies to crude oil received at a U. Filing state income taxes S. Filing state income taxes refinery and to petroleum products entered into the United States for consumption, use, or warehousing. Filing state income taxes The tax also applies to certain uses and the exportation of domestic crude oil. Filing state income taxes Crude oil includes crude oil condensates and natural gasoline. Filing state income taxes Petroleum products include crude oil, refined and residual oil, and other liquid hydrocarbon refinery products. Filing state income taxes Crude oil. Filing state income taxes   Tax is imposed on crude oil when it is received at a United Sates refinery. Filing state income taxes The operator of the refinery is liable for the tax. Filing state income taxes   Tax is imposed on domestic crude oil used or exported before it is received at a United States refinery. Filing state income taxes However, the use of crude oil for extracting oil or natural gas on the premises where such crude oil was produced is not taxable. Filing state income taxes The user or exporter is liable for the tax. Filing state income taxes Imported petroleum products. Filing state income taxes   Tax is imposed on petroleum products when they enter the United States for consumption, use, or warehousing. Filing state income taxes The person entering the petroleum product into the country is liable for the tax, including the tax on imported crude oil, even if it is subsequently received at a U. Filing state income taxes S. Filing state income taxes refinery. Filing state income taxes   Tax is imposed only once on any imported petroleum product. Filing state income taxes Thus, the operator of a U. Filing state income taxes S. Filing state income taxes refinery that receives imported crude oil must establish that the petroleum tax has already been imposed on such crude oil in order not to be liable for the tax. Filing state income taxes ODCs For a list of the taxable ODCs and tax rates, see the Form 6627 instructions. Filing state income taxes Taxable event. Filing state income taxes   Tax is imposed on an ODC when it is first used or sold by its manufacturer or importer. Filing state income taxes The manufacturer or importer is liable for the tax. Filing state income taxes Use of ODCs. Filing state income taxes   You use an ODC if you put it into service in a trade or business or for the production of income. Filing state income taxes Also, an ODC is used if you use it in the making of an article, including incorporation into the article, chemical transformation, or release into the air. Filing state income taxes The loss, destruction, packaging, repackaging, or warehousing of ODCs is not a use of the ODC. Filing state income taxes   The creation of a mixture containing an ODC is treated as a taxable use of the ODC contained in the mixture. Filing state income taxes An ODC is contained in a mixture only if the chemical identity of the ODC is not changed. Filing state income taxes Generally, tax is imposed when the mixture is created and not on its sale or use. Filing state income taxes However, you can choose to have the tax imposed on its sale or use by checking the appropriate box on Form 6627. Filing state income taxes You can revoke this choice only with IRS consent. Filing state income taxes   The creation of a mixture for export or for use as a feedstock is not a taxable use of the ODCs contained in the mixture. Filing state income taxes Exceptions. Filing state income taxes   The following may be exempt from the tax on ODCs. Filing state income taxes Metered-dose inhalers. Filing state income taxes Recycled ODCs. Filing state income taxes Exported ODCs. Filing state income taxes ODCs used as feedstock. Filing state income taxes Metered-dose inhalers. Filing state income taxes   There is no tax on ODCs used or sold for use as propellants in metered-dose inhalers. Filing state income taxes For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Filing state income taxes The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Filing state income taxes 4682-2(d)(5). Filing state income taxes The certificate may be included as part of the sales documentation. Filing state income taxes Keep the certificate with your records. Filing state income taxes Recycled ODCs. Filing state income taxes   There is no tax on any ODC diverted or recovered in the United States as part of a recycling process (and not as part of the original manufacturing or production process). Filing state income taxes There is no tax on recycled Halon-1301 or recycled Halon-2402 imported from a country that has signed the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). Filing state income taxes   The Montreal Protocol is administered by the United Nations (U. Filing state income taxes N. Filing state income taxes ). Filing state income taxes To determine if a country has signed the Montreal Protocol, contact the U. Filing state income taxes N. Filing state income taxes The website is untreaty. Filing state income taxes un. Filing state income taxes org. Filing state income taxes Exported ODCs. Filing state income taxes   Generally, there is no tax on ODCs sold for export if certain requirements are met. Filing state income taxes For a sale to be nontaxable, you and the purchaser must be registered. Filing state income taxes See Form 637, Application for Registration (for Certain Excise Tax Activities). Filing state income taxes Also, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Filing state income taxes Keep the certificate with your records. Filing state income taxes The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Filing state income taxes 4682-5(d)(3). Filing state income taxes The tax benefit of this exemption is limited. Filing state income taxes For more information, see Regulations section 52. Filing state income taxes 4682-5. Filing state income taxes ODCs used as feedstock. Filing state income taxes   There is no tax on ODCs sold for use or used as a feedstock. Filing state income taxes An ODC is used as a feedstock only if the ODC is entirely consumed in the manufacture of another chemical. Filing state income taxes The transformation of an ODC into one or more new compounds qualifies as use as a feedstock, but use of an ODC in a mixture does not qualify. Filing state income taxes   For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Filing state income taxes The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Filing state income taxes 4682-2(d)(2). Filing state income taxes Keep the certificate with your records. Filing state income taxes Credits or refunds. Filing state income taxes   A credit or refund (without interest) of tax paid on ODCs may be claimed if a taxed ODC is: Used as a propellant in a metered-dose inhaler (the person who used the ODC as a propellant may file a claim), Exported (the manufacturer may file a claim), or Used as a feedstock (the person who used the ODC may file a claim). Filing state income taxes For information on how to file for credits or refunds, see the Instructions for Form 720 or Schedule 6 (Form 8849). Filing state income taxes Conditions to allowance for ODCs exported. Filing state income taxes   To claim a credit or refund for ODCs that are exported, you must have repaid or agreed to repay the tax to the exporter, or obtained the exporter's written consent to allowance of the credit or refund. Filing state income taxes You must also have the evidence required by the EPA as proof that the ODCs were exported. Filing state income taxes Imported Taxable Products An imported product containing or manufactured with ODCs is subject to tax if it is entered into the United States for consumption, use, or warehousing and is listed in the Imported Products Table. Filing state income taxes The Imported Products Table is listed in Regulations section 52. Filing state income taxes 4682-3(f)(6). Filing state income taxes The tax is based on the weight of the ODCs used in the manufacture of the product. Filing state income taxes Use the following methods to figure the ODC weight. Filing state income taxes The actual (exact) weight of each ODC used as a material in manufacturing the product. Filing state income taxes If the actual weight cannot be determined, the ODC weight listed for the product in the Imported Products Table. Filing state income taxes However, if you cannot determine the actual weight and the table does not list an ODC weight for the product, the rate of tax is 1% of the entry value of the product. Filing state income taxes Taxable event. Filing state income taxes   Tax is imposed on an imported taxable product when the product is first sold or used by its importer. Filing state income taxes The importer is liable for the tax. Filing state income taxes Use of imported products. Filing state income taxes   You use an imported product if you put it into service in a trade or business or for the production of income or use it in the making of an article, including incorporation into the article. Filing state income taxes The loss, destruction, packaging, repackaging, warehousing, or repair of an imported product is not a use of that product. Filing state income taxes Entry as use. Filing state income taxes   The importer may choose to treat the entry of a product into the United States as the use of the product. Filing state income taxes Tax is imposed on the date of entry instead of when the product is sold or used. Filing state income taxes The choice applies to all imported taxable products that you own and have not used when you make the choice and all later entries. Filing state income taxes Make the choice by checking the box in Part II of Form 6627. Filing state income taxes The choice is effective as of the beginning of the calendar quarter to which the Form 6627 applies. Filing state income taxes You can revoke this choice only with IRS consent. Filing state income taxes Sale of article incorporating imported product. Filing state income taxes   The importer may treat the sale of an article manufactured or assembled in the United States as the first sale or use of an imported taxable product incorporated in that article if both the following apply. Filing state income taxes The importer has consistently treated the sale of similar items as the first sale or use of similar taxable imported products. Filing state income taxes The importer has not chosen to treat entry into the United States as use of the product. Filing state income taxes Imported products table. Filing state income taxes   The table lists all the products that are subject to the tax on imported taxable products and specifies the ODC weight (discussed later) of each product. Filing state income taxes   Each listing in the table identifies a product by name and includes only products that are described by that name. Filing state income taxes Most listings identify a product by both name and Harmonized Tariff Schedule (HTS) heading. Filing state income taxes In those cases, a product is included in that listing only if the product is described by that name and the rate of duty on the product is determined by reference to that HTS heading. Filing state income taxes A product is included in the listing even if it is manufactured with or contains a different ODC than the one specified in the table. Filing state income taxes   Part II of the table lists electronic items that are not included within any other list in the table. Filing state income taxes An imported product is included in this list only if the product meets one of the following tests. Filing state income taxes It is an electronic component whose operation involves the use of nonmechanical amplification or switching devices such as tubes, transistors, and integrated circuits. Filing state income taxes It contains components described in (1), which account for more than 15% of the cost of the product. Filing state income taxes   These components do not include passive electrical devices, such as resistors and capacitors. Filing state income taxes Items such as screws, nuts, bolts, plastic parts, and similar specially fabricated parts that may be used to construct an electronic item are not themselves included in the listing for electronic items. Filing state income taxes Rules for listing products. Filing state income taxes   Products are listed in the table according to the following rules. Filing state income taxes A product is listed in Part I of the table if it is a mixture containing ODCs. Filing state income taxes A product is listed in Part II of the table if the Commissioner has determined that the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components. Filing state income taxes A product is listed in Part III of the table if the Commissioner has determined that the product meets both the following tests. Filing state income taxes It is not an imported taxable product. Filing state income taxes It would otherwise be included within a list in Part II of the table. Filing state income taxes   For example, floppy disk drive units are listed in Part III because they are not imported taxable products and would have been included in the Part II list for electronic items not specifically identified, but for their listing in Part III. Filing state income taxes ODC weight. Filing state income taxes   The Table ODC weight of a product is the weight, determined by the Commissioner, of the ODCs used as materials in the manufacture of the product under the predominant method of manufacturing. Filing state income taxes The ODC weight is listed in Part II in pounds per single unit of product unless otherwise specified. Filing state income taxes Modifying the table. Filing state income taxes   A manufacturer or importer of a product may request the IRS add a product and its ODC weight to the table. Filing state income taxes They also may request the IRS remove a product from the table, or change or specify the ODC weight of a product. Filing state income taxes To request a modification, see Regulations section 52. Filing state income taxes 4682-3(g) for the mailing address and information that must be included in the request. Filing state income taxes Floor Stocks Tax Tax is imposed on any ODC held (other than by the manufacturer or importer of the ODC) on January 1 for sale or use in further manufacturing. Filing state income taxes The person holding title (as determined under local law) to the ODC is liable for the tax, whether or not delivery has been made. Filing state income taxes These chemicals are taxable without regard to the type or size of storage container in which the ODCs are held. Filing state income taxes The tax may apply to an ODC whether it is in a 14-ounce can or a 30-pound tank. Filing state income taxes You are liable for the floor stocks tax if you hold any of the following on January 1. Filing state income taxes At least 400 pounds of ODCs other than halons or methyl chloroform, At least 50 pounds of halons, or At least 1,000 pounds of methyl chloroform. Filing state income taxes If you are liable for the tax, prepare an inventory on January 1 of the taxable ODCs held on that date for sale or for use in further manufacturing. Filing state income taxes You must pay this floor stocks tax by June 30 of each year. Filing state income taxes Report the tax on Form 6627 and Part II of Form 720 for the second calendar quarter. Filing state income taxes For the tax rates, see the Form 6627 instructions. Filing state income taxes ODCs not subject to floor stocks tax. Filing state income taxes   The floor stocks tax is not imposed on any of the following ODCs. Filing state income taxes ODCs mixed with other ingredients that contribute to achieving the purpose for which the mixture will be used, unless the mixture contains only ODCs and one or more stabilizers. Filing state income taxes ODCs contained in a manufactured article in which the ODCs will be used for their intended purpose without being released from the article. Filing state income taxes ODCs that have been reclaimed or recycled. Filing state income taxes ODCs sold in a qualifying sale for: Use as a feedstock, Export, or Use as a propellant in a metered-dose inhaler. Filing state income taxes Prev  Up  Next   Home   More Online Publications
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Employment-Related Identity Theft

If you have experienced one of the following, this may be an indication your Social Security number or other personal information may have been used by another person without your permission for employment purposes.    

  1. You received a letter 4491C from the Internal Revenue Service stating that you were the victim of employment related identity theft or
  2. You received a notice from the Internal Revenue Service stating that you received wages that you did not earn or
  3. You receive a Form W-2 or 1099 from an employer for whom you did not work or
  4. You receive your annual “Notice of Earnings” statement from the Social Security Administration and the income showing on the statement is more than you have earned or
  5. Your Social Security benefits have been adjusted/denied because of wages that you did not earn

What you should do:

  • Contact the IRS at the number or fax listed on the letter or notice if you received an IRS letter or notice.
  • Contact the Social Security Administration if you received a Form W-2 from an unknown employer, your “Annual Notice of Earnings” from the Social Security Administration shows more wages than you earned or you had your Social Security benefits adjusted/denied. They will review your earnings with you to ensure their records are correct.
  • Review earnings posted to your record on your Social Security Statement. Workers, age 18 and older, may create an account to get their Statement

Additional steps you should take if you suspect that you are the victim of employment related identity theft

  • File a report with your local police department. 
  • Place a fraud alert on your credit reports by contacting any one of the three nationwide credit reporting companies: 

                        Equifax: 800-525-6285  www.equifax.com

                        Experian: 888-397-3742  www.experian.com

                        Trans Union: 800-916-8800  www.transunion.com

                            Federal Trade Commission
                            600 Pennsylvania Avenue NW
                            Washington, DC  20580  

  • Contact any banks or other financial institutions to close any accounts that are unused, have been tampered with or opened without your permission. 
  • If you have information about the identity thief that impacted your personal information negatively, file an online complaint with the Internet Crime Complaint Center (IC3). The IC3 gives victims of cyber-crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. IC3 sends every complaint to one or more law enforcement or regulatory agencies that have jurisdiction over the matter.

If you are unable to file your tax return because another person has already filed a return under your SSN

  • You are encouraged to contact the IRS at the Identity Theft Specialized Unit (IPSU), toll free at 1-800-908-4490 so we can take steps to further secure your compromised tax account.  Assistors in this unit are specially trained in Identity Theft issues. 
  • Complete Form 14039  or Form 14039SP (Española) to report the identity theft incident, and have an identity theft indicator placed on your account to allow IRS to take protective actions.  

The IPSU hours of Operation:  Monday – Friday 7 a.m. – 7 p.m. your local time (Alaska & Hawaii follow Pacific Time)

For Additional Information

Page Last Reviewed or Updated: 07-Jan-2014

The Filing State Income Taxes

Filing state income taxes 10. Filing state income taxes   Retirement Plans, Pensions, and Annuities Table of Contents What's New Reminder IntroductionThe General Rule. Filing state income taxes Individual retirement arrangements (IRAs). Filing state income taxes Civil service retirement benefits. Filing state income taxes Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. Filing state income taxes How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. Filing state income taxes Exclusion not limited to cost. Filing state income taxes Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. Filing state income 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 state income taxes However, these distributions are taken into account when determining the modified adjusted gross income threshold. Filing state income taxes Distributions from a nonqualified retirement plan are included in net investment income. Filing state income taxes See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Filing state income 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 state income taxes For more information, see Designated Roth accounts discussed later. Filing state income 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 state income taxes What is not covered in this chapter. Filing state income taxes   The following topics are not discussed in this chapter. Filing state income taxes The General Rule. Filing state income taxes   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). Filing state income taxes For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Filing state income taxes For more information about the General Rule, see Publication 939, General Rule for Pensions and Annuities. Filing state income taxes Individual retirement arrangements (IRAs). Filing state income taxes   Information on the tax treatment of amounts you receive from an IRA is in chapter 17. Filing state income taxes Civil service retirement benefits. Filing state income taxes    If you are retired from the federal government (regular, phased, or disability retirement), see Publication 721, Tax Guide to U. Filing state income taxes S. Filing state income taxes Civil Service Retirement Benefits. Filing state income 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 state income taxes Useful Items - You may want to see: Publication 575 Pension and Annuity Income 721 Tax Guide to U. Filing state income taxes S. Filing state income 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 state income 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 state income 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 state income taxes Elective deferrals that are designated as Roth contributions are included in your income. Filing state income taxes However, qualified distributions are not included in your income. Filing state income taxes See Publication 575 for more information. Filing state income taxes In-plan rollovers to designated Roth accounts. Filing state income 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 state income taxes The rollover of any untaxed amounts must be included in income. Filing state income taxes See Publication 575 for more information. Filing state income taxes More than one program. Filing state income 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 state income 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 state income taxes Section 457 deferred compensation plans. Filing state income 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 state income 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 state income 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 state income 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 state income taxes   Your 457(b) plan may have a designated Roth account option. Filing state income taxes If so, you may be able to roll over amounts to the designated Roth account or make contributions. Filing state income taxes Elective deferrals to a designated Roth account are included in your income. Filing state income taxes Qualified distributions from a designated Roth account are not subject to tax. Filing state income taxes   This chapter covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Filing state income taxes For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525, Taxable and Nontaxable Income. Filing state income taxes   For general information on these deferred compensation plans, see Section 457 Deferred Compensation Plans in Publication 575. Filing state income taxes Disability pensions. Filing state income 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 state income 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 state income taxes Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Filing state income taxes    You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Filing state income taxes For information on the credit for the elderly or the disabled, see chapter 33. Filing state income taxes   Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Filing state income taxes Report the payments on Form 1040, lines 16a and 16b, or on Form 1040A, lines 12a and 12b. Filing state income 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 state income taxes For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Filing state income taxes   For more information on how to report disability pensions, including military and certain government disability pensions, see chapter 5. Filing state income taxes Retired public safety officers. Filing state income 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 state income taxes See Insurance Premiums for Retired Public Safety Officers in Publication 575 for more information. Filing state income taxes Railroad retirement benefits. Filing state income 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 state income taxes For information about railroad retirement benefits treated as social security benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Filing state income taxes For information about railroad retirement benefits treated as an employee pension, see Railroad Retirement Benefits in Publication 575. Filing state income taxes Withholding and estimated tax. Filing state income 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 state income taxes You can tell the payer how much to withhold, or not to withhold, by filing Form W-4P. Filing state income 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 state income taxes   If you receive an eligible rollover distribution, you cannot choose not to have tax withheld. Filing state income taxes Generally, 20% will be withheld, but no tax will be withheld on a direct rollover of an eligible rollover distribution. Filing state income taxes See Direct rollover option under Rollovers, later. Filing state income taxes   For more information, see Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Filing state income taxes Qualified plans for self-employed individuals. Filing state income taxes   Qualified plans set up by self-employed individuals are sometimes called Keogh or H. Filing state income taxes R. Filing state income taxes 10 plans. Filing state income taxes Qualified plans can be set up by sole proprietors, partnerships (but not a partner), and corporations. Filing state income taxes They can cover self-employed persons, such as the sole proprietor or partners, as well as regular (common-law) employees. Filing state income taxes    Distributions from a qualified plan are usually fully taxable because most recipients have no cost basis. Filing state income 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 state income taxes For more information about qualified plans, see Publication 560, Retirement Plans for Small Business. Filing state income taxes Purchased annuities. Filing state income 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 state income taxes For more information about the General Rule, get Publication 939. Filing state income taxes Also, see Variable Annuities in Publication 575 for the special provisions that apply to these annuity contracts. Filing state income taxes Loans. Filing state income 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 state income 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 state income taxes This means that you must include in income all or part of the amount borrowed. Filing state income 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 state income taxes For details, see Loans Treated as Distributions in Publication 575. Filing state income taxes For information on the deductibility of interest, see chapter 23. Filing state income taxes Tax-free exchange. Filing state income 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 state income 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 state income taxes See Transfers of Annuity Contracts in Publication 575 for more information about exchanges of annuity contracts. Filing state income taxes How To Report If you file Form 1040, report your total annuity on line 16a and the taxable part on line 16b. Filing state income taxes If your pension or annuity is fully taxable, enter it on line 16b; do not make an entry on line 16a. Filing state income taxes If you file Form 1040A, report your total annuity on line 12a and the taxable part on line 12b. Filing state income taxes If your pension or annuity is fully taxable, enter it on line 12b; do not make an entry on line 12a. Filing state income taxes More than one annuity. Filing state income 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 state income 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 state income taxes Joint return. Filing state income 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 state income 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 state income taxes Your total cost in the plan includes the total premiums, contributions, or other amounts you paid. Filing state income taxes This includes the amounts your employer contributed that were taxable to you when paid. Filing state income taxes Cost does not include any amounts you deducted or were excluded from your income. Filing state income 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 state income 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 state income taxes Designated Roth accounts. Filing state income 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 state income taxes Your cost will also include any in-plan Roth rollovers you included in income. Filing state income taxes Foreign employment contributions. Filing state income taxes   If you worked in a foreign country and contributions were made to your retirement plan, special rules apply in determining your cost. Filing state income taxes See Foreign employment contributions under Cost (Investment in the Contract) in Publication 575. Filing state income taxes Taxation of Periodic Payments Fully taxable payments. Filing state income 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 state income taxes You must report them on your income tax return. Filing state income taxes Partly taxable payments. Filing state income 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 state income taxes The rest of the amount you receive is generally taxable. Filing state income taxes You figure the tax-free part of the payment using either the Simplified Method or the General Rule. Filing state income taxes Your annuity starting date and whether or not your plan is qualified determine which method you must or may use. Filing state income 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 state income 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 state income 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 state income 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 state income taxes Exclusion limit. Filing state income taxes   Your annuity starting date determines the total amount of annuity payments that you can exclude from your taxable income over the years. Filing state income taxes Once your annuity starting date is determined, it does not change. Filing state income 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 state income taxes That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Filing state income taxes Exclusion limited to cost. Filing state income 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 state income 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 state income taxes This deduction is not subject to the 2%-of-adjusted-gross-income limit. Filing state income taxes Exclusion not limited to cost. Filing state income 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 state income 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 state income taxes The total exclusion may be more than your cost. Filing state income 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 state income 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 state income taxes For any other annuity, this number is the number of monthly annuity payments under the contract. Filing state income taxes Who must use the Simplified Method. Filing state income 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 state income taxes Guaranteed payments. Filing state income 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 state income 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 state income taxes How to use the Simplified Method. Filing state income taxes    Complete the Simplified Method Worksheet in Publication 575 to figure your taxable annuity for 2013. Filing state income taxes Single-life annuity. Filing state income 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 state income taxes Enter on line 3 the number shown for your age at the annuity starting date. Filing state income taxes Multiple-lives annuity. Filing state income 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 state income 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 state income taxes   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Filing state income 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 state income taxes    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity next year. Filing state income taxes Example. Filing state income taxes Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Filing state income taxes Bill's annuity starting date is January 1, 2013. Filing state income taxes The benefits are to be paid for the joint lives of Bill and his wife Kathy, age 65. Filing state income taxes Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Filing state income 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 state income 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 state income 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 state income taxes His completed worksheet is shown in Worksheet 10-A. Filing state income taxes Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Filing state income 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 state income taxes The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Filing state income 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 state income taxes This deduction is not subject to the 2%-of-adjusted- gross-income limit. Filing state income taxes Worksheet 10-A. Filing state income taxes Simplified Method Worksheet for Bill Smith 1. Filing state income taxes Enter the total pension or annuity payments received this year. Filing state income taxes Also, add this amount to the total for Form 1040, line 16a, or Form 1040A, line 12a 1. Filing state income taxes 14,400 2. Filing state income taxes Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion*. Filing state income taxes See Cost (Investment in the Contract) , earlier 2. Filing state income 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 state income taxes Otherwise, go to line 3. Filing state income taxes         3. Filing state income taxes Enter the appropriate number from Table 1 below. Filing state income 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 state income taxes 310     4. Filing state income taxes Divide line 2 by the number on line 3 4. Filing state income taxes 100     5. Filing state income taxes Multiply line 4 by the number of months for which this year's payments were made. Filing state income 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 state income taxes Otherwise, go to line 6 5. Filing state income taxes 1,200     6. Filing state income taxes Enter any amounts previously recovered tax free in years after 1986. Filing state income taxes This is the amount shown on line 10 of your worksheet for last year 6. Filing state income taxes -0-     7. Filing state income taxes Subtract line 6 from line 2 7. Filing state income taxes 31,000     8. Filing state income taxes Enter the smaller of line 5 or line 7 8. Filing state income taxes 1,200 9. Filing state income taxes Taxable amount for year. Filing state income taxes Subtract line 8 from line 1. Filing state income taxes Enter the result, but not less than zero. Filing state income taxes Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b 9. Filing state income taxes 13,200   Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Filing state income 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 state income taxes     10. Filing state income taxes Was your annuity starting date before 1987? □ Yes. Filing state income taxes STOP. Filing state income taxes Do not complete the rest of this worksheet. Filing state income taxes  ☑ No. Filing state income taxes Add lines 6 and 8. Filing state income taxes This is the amount you have recovered tax free through 2013. Filing state income taxes You will need this number if you need to fill out this worksheet next year 10. Filing state income taxes 1,200 11. Filing state income taxes Balance of cost to be recovered. Filing state income taxes Subtract line 10 from line 2. Filing state income taxes If zero, you will not have to complete this worksheet next year. Filing state income taxes The payments you receive next year will generally be fully taxable 11. Filing state income taxes 29,800 TABLE 1 FOR LINE 3 ABOVE   AND your annuity starting date was— IF the age at annuity starting date was. Filing state income taxes . Filing state income taxes . Filing state income taxes before November 19, 1996, enter on line 3. Filing state income taxes . Filing state income taxes . Filing state income taxes after November 18, 1996, enter on line 3. Filing state income taxes . Filing state income taxes . Filing state income 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 state income taxes . Filing state income taxes . Filing state income taxes   THEN enter on line 3. Filing state income taxes . Filing state income taxes . Filing state income 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 state income taxes Who must use the General Rule. Filing state income 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 state income taxes Annuity starting before November 19, 1996. Filing state income 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 state income taxes You also had to use it for any fixed-period annuity. Filing state income taxes If you did not have to use the General Rule, you could have chosen to use it. Filing state income 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 state income 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 state income taxes Who cannot use the General Rule. Filing state income 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 state income taxes See Who must use the Simplified Method , earlier. Filing state income taxes More information. Filing state income taxes   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Filing state income taxes Taxation of Nonperiodic Payments Nonperiodic distributions are also known as amounts not received as an annuity. Filing state income taxes They include all payments other than periodic payments and corrective distributions. Filing state income 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 state income taxes Corrective distributions of excess plan contributions. Filing state income 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 state income taxes To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Filing state income 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 state income taxes Figuring the taxable amount of nonperiodic payments. Filing state income 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 state income 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 state income 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 state income taxes Annuity starting date. Filing state income 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 state income taxes Distribution on or after annuity starting date. Filing state income 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 state income taxes Distribution before annuity starting date. Filing state income 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 state income taxes You exclude from your gross income the part that you allocate to the cost. Filing state income taxes You include the remainder in your gross income. Filing state income 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 state income taxes This allocation rule applies, for example, to a commercial annuity contract you bought directly from the issuer. Filing state income taxes    Distributions from nonqualified plans are subject to the net investment income tax. Filing state income taxes See the Instructions for Form 8960. Filing state income taxes   For more information, see Figuring the Taxable Amount under Taxation of Nonperiodic Payments in Publication 575. Filing state income taxes Lump-Sum Distributions This section on lump-sum distributions only applies if the plan participant was born before January 2, 1936. Filing state income taxes If the plan participant was born after January 1, 1936, the taxable amount of this nonperiodic payment is reported as discussed earlier. Filing state income 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 state income 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 state income taxes The participant's entire balance from a plan does not include certain forfeited amounts. Filing state income taxes It also does not include any deductible voluntary employee contributions allowed by the plan after 1981 and before 1987. Filing state income 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 state income 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 state income taxes The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Filing state income 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 state income taxes You may be able to use the 10-year tax option, discussed later, to figure tax on the ordinary income part. Filing state income taxes Use Form 4972 to figure the separate tax on a lump-sum distribution using the optional methods. Filing state income taxes The tax figured on Form 4972 is added to the regular tax figured on your other income. Filing state income 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 state income taxes How to treat the distribution. Filing state income taxes   If you receive a lump-sum distribution, you may have the following options for how you treat the taxable part. Filing state income 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 state income 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 state income taxes Use the 10-year tax option to figure the tax on the total taxable amount (if you qualify). Filing state income taxes Roll over all or part of the distribution. Filing state income taxes See Rollovers , later. Filing state income taxes No tax is currently due on the part rolled over. Filing state income taxes Report any part not rolled over as ordinary income. Filing state income taxes Report the entire taxable part of the distribution as ordinary income on your tax return. Filing state income taxes   The first three options are explained in the following discussions. Filing state income taxes Electing optional lump-sum treatment. Filing state income taxes   You can choose to use the 10-year tax option or capital gain treatment only once after 1986 for any plan participant. Filing state income taxes If you make this choice, you cannot use either of these optional treatments for any future distributions for the participant. Filing state income taxes Taxable and tax-free parts of the distribution. Filing state income taxes    The taxable part of a lump-sum distribution is the employer's contributions and income earned on your account. Filing state income taxes You may recover your cost in the lump sum and any net unrealized appreciation (NUA) in employer securities tax free. Filing state income taxes Cost. Filing state income 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 state income taxes You must reduce this cost by amounts previously distributed tax free. Filing state income taxes Net unrealized appreciation (NUA). Filing state income 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 state income taxes (For more information, see Distributions of employer securities under Taxation of Nonperiodic Payments in Publication 575. Filing state income 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 state income taxes The amount treated as capital gain is taxed at a 20% rate. Filing state income 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 state income taxes Complete Part II of Form 4972 to choose the 20% capital gain election. Filing state income taxes For more information, see Capital Gain Treatment under Lump-Sum Distributions in Publication 575. Filing state income 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 state income taxes You pay the tax only once, for the year in which you receive the distribution, not over the next 10 years. Filing state income 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 state income 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 state income 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 state income taxes Complete Part III of Form 4972 to choose the 10-year tax option. Filing state income taxes You must use the special Tax Rate Schedule shown in the instructions for Part III to figure the tax. Filing state income taxes Publication 575 illustrates how to complete Form 4972 to figure the separate tax. Filing state income 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 state income taxes For this purpose, the following plans are qualified retirement plans. Filing state income taxes A qualified employee plan. Filing state income taxes A qualified employee annuity. Filing state income taxes A tax-sheltered annuity plan (403(b) plan). Filing state income taxes An eligible state or local government section 457 deferred compensation plan. Filing state income taxes Eligible rollover distributions. Filing state income 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 state income taxes For information about exceptions to eligible rollover distributions, see Publication 575. Filing state income taxes Rollover of nontaxable amounts. Filing state income 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 state income 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 state income 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 state income taxes   Any after-tax contributions that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Filing state income taxes To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Filing state income taxes For more information, see the Form 8606 instructions. Filing state income taxes Direct rollover option. Filing state income 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 state income 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 state income taxes Payment to you option. Filing state income taxes   If an eligible rollover distribution is paid to you, 20% generally will be withheld for income tax. Filing state income taxes However, the full amount is treated as distributed to you even though you actually receive only 80%. Filing state income 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 state income taxes (See Pensions and Annuities under Tax Withholding for 2014 in chapter 4. Filing state income 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 state income taxes Time for making rollover. Filing state income 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 state income 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 state income 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 state income 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 state income taxes Qualified domestic relations order (QDRO). Filing state income 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 state income 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 state income taxes You can roll over the distribution from the plan into a traditional IRA or to another eligible retirement plan. Filing state income taxes See Rollovers in Publication 575 for more information on benefits received under a QDRO. Filing state income taxes Rollover by surviving spouse. Filing state income 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 state income taxes The rollover rules apply to you as if you were the employee. Filing state income taxes You can roll over a distribution into a qualified retirement plan or a traditional or Roth IRA. Filing state income taxes For a rollover to a Roth IRA, see Rollovers to Roth IRAs , later. Filing state income taxes    A distribution paid to a beneficiary other than the employee's surviving spouse is generally not an eligible rollover distribution. Filing state income taxes However, see Rollovers by nonspouse beneficiary next. Filing state income taxes Rollovers by nonspouse beneficiary. Filing state income 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 state income 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 state income taxes The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an inherited IRA. Filing state income taxes For information on inherited IRAs, see What if You Inherit an IRA? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs). Filing state income taxes Retirement bonds. Filing state income 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 state income taxes Designated Roth accounts. Filing state income taxes   You can roll over an eligible rollover distribution from a designated Roth account into another designated Roth account or a Roth IRA. Filing state income 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 state income taxes For more information on rollovers from designated Roth accounts, see Rollovers in Publication 575. Filing state income taxes In-plan rollovers to designated Roth accounts. Filing state income 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 state income taxes The rollover of any untaxed amounts must be included in income. Filing state income taxes See Designated Roth accounts under Rollovers in Publication 575 for more information. Filing state income taxes Rollovers to Roth IRAs. Filing state income taxes   You can roll over distributions directly from a qualified retirement plan (other than a designated Roth account) to a Roth IRA. Filing state income 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 state income 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 state income taxes In addition, the 10% tax on early distributions does not apply. Filing state income taxes More information. Filing state income taxes   For more information on the rules for rolling over distributions, see Rollovers in Publication 575. Filing state income 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 state income 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 state income taxes These special additional taxes are the taxes on: Early distributions, and Excess accumulation (not receiving minimum distributions). Filing state income taxes These taxes are discussed in the following sections. Filing state income taxes If you must pay either of these taxes, report them on Form 5329. Filing state income 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 state income 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 state income 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 state income 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 state income 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 state income taxes This tax applies to the part of the distribution that you must include in gross income. Filing state income 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 state income taxes 5% rate on certain early distributions from deferred annuity contracts. Filing state income taxes   If an early withdrawal from a deferred annuity is otherwise subject to the 10% additional tax, a 5% rate may apply instead. Filing state income 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 state income taxes On line 4 of Form 5329, multiply the line 3 amount by 5% instead of 10%. Filing state income taxes Attach an explanation to your return. Filing state income taxes Distributions from Roth IRAs allocable to a rollover from an eligible retirement plan within the 5-year period. Filing state income 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 state income 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 state income taxes The additional tax is figured on Form 5329. Filing state income taxes For more information, see Form 5329 and its instructions. Filing state income taxes For information on qualified distributions from Roth IRAs, see Additional Tax on Early Distributions in chapter 2 of Publication 590. Filing state income taxes Distributions from designated Roth accounts allocable to in-plan Roth rollovers within the 5-year period. Filing state income 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 state income 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 state income taxes The additional tax is figured on Form 5329. Filing state income taxes For more information, see Form 5329 and its instructions. Filing state income taxes For information on qualified distributions from designated Roth accounts, see Designated Roth accounts under Taxation of Periodic Payments in Publication 575. Filing state income taxes Exceptions to tax. Filing state income taxes    Certain early distributions are excepted from the early distribution tax. Filing state income 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 state income 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 state income taxes Enter the taxable amount of the distribution shown in box 2a of your Form 1099-R on line 1 of Form 5329. Filing state income taxes On line 2, enter the amount that can be excluded and the exception number shown in the Form 5329 instructions. Filing state income 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 state income taxes Enter exception number “12” on line 2. Filing state income taxes General exceptions. Filing state income 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 state income taxes Additional exceptions for qualified retirement plans. Filing state income 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 state income 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 state income taxes See Pub. Filing state income taxes 721 for more information on the phased retirement program. Filing state income taxes Qualified public safety employees. Filing state income 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 state income 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 state income taxes Qualified reservist distributions. Filing state income taxes   A qualified reservist distribution is not subject to the additional tax on early distributions. Filing state income 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 state income taxes You must have been ordered or called to active duty after September 11, 2001. Filing state income taxes For more information, see Qualified reservist distributions under Special Additional Taxes in Publication 575. Filing state income taxes Additional exceptions for nonqualified annuity contracts. Filing state income 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 state income 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 state income taxes The payments each year cannot be less than the required minimum distribution. Filing state income taxes Required distributions not made. Filing state income 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 state income taxes The tax equals 50% of the part of the required minimum distribution that was not distributed. Filing state income 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 state income taxes Waiver. Filing state income 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 state income taxes See the Instructions for Form 5329 for the procedure to follow if you believe you qualify for a waiver of this tax. Filing state income taxes State insurer delinquency proceedings. Filing state income 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 state income taxes If your payments are reduced below the minimum due to these proceedings, you should contact your plan administrator. Filing state income taxes Under certain conditions, you will not have to pay the 50% excise tax. Filing state income taxes Required beginning date. Filing state income 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 state income 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 state income taxes   If you reached age 70½ in 2013, you may be required to receive your first distribution by April 1, 2014. Filing state income taxes Your required distribution then must be made for 2014 by December 31, 2014. Filing state income taxes 5% owners. Filing state income 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 state income 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 state income taxes Age 70½. Filing state income taxes   You reach age 70½ on the date that is 6 calendar months after the date of your 70th birthday. Filing state income 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 state income taxes If your 70th birthday was on July 1, 2013, you reached age 70½ on January 1, 2014. Filing state income taxes Required distributions. Filing state income 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 state income taxes Additional information. Filing state income taxes   For more information on this rule, see Tax on Excess Accumulation in Publication 575. Filing state income taxes Form 5329. Filing state income 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 state income taxes Survivors and Beneficiaries Generally, a survivor or beneficiary reports pension or annuity income in the same way the plan participant would have. Filing state income taxes However, some special rules apply. Filing state income taxes See Publication 575 for more information. Filing state income taxes Survivors of employees. Filing state income 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 state income 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 state income taxes Survivors of retirees. Filing state income 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 state income 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 state income 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 state income taxes The resulting tax-free amount will then remain fixed. Filing state income taxes Any increases in the survivor annuity are fully taxable. Filing state income 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 state income taxes This amount remains fixed even if the annuity payments are increased or decreased. Filing state income taxes See Simplified Method , earlier. Filing state income 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 state income taxes Estate tax deduction. Filing state income 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 state income taxes You can deduct the part of the total estate tax that was based on the annuity. Filing state income taxes The deceased annuitant must have died after the annuity starting date. Filing state income taxes (For details, see section 1. Filing state income taxes 691(d)-1 of the regulations. Filing state income taxes ) Deduct it in equal amounts over your remaining life expectancy. Filing state income 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 state income taxes   You can take the estate tax deduction as an itemized deduction on Schedule A, Form 1040. Filing state income taxes This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Filing state income taxes See Publication 559, Survivors, Executors, and Administrators, for more information on the estate tax deduction. Filing state income taxes Prev  Up  Next   Home   More Online Publications