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Free Federal And State Tax Filing 2012 Online

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Free federal and state tax filing 2012 online Publication 575 - Main Content Table of Contents General InformationPension. Free federal and state tax filing 2012 online Annuity. Free federal and state tax filing 2012 online Qualified employee plan. Free federal and state tax filing 2012 online Qualified employee annuity. Free federal and state tax filing 2012 online Designated Roth account. Free federal and state tax filing 2012 online Tax-sheltered annuity plan. Free federal and state tax filing 2012 online Fixed-period annuities. Free federal and state tax filing 2012 online Annuities for a single life. Free federal and state tax filing 2012 online Joint and survivor annuities. Free federal and state tax filing 2012 online Variable annuities. Free federal and state tax filing 2012 online Disability pensions. Free federal and state tax filing 2012 online Variable Annuities Section 457 Deferred Compensation Plans Disability Pensions Insurance Premiums for Retired Public Safety Officers Railroad Retirement Benefits Withholding Tax and Estimated Tax Cost (Investment in the Contract)Foreign employment contributions while a nonresident alien. Free federal and state tax filing 2012 online Taxation of Periodic PaymentsPeriod of participation. Free federal and state tax filing 2012 online Fully Taxable Payments Partly Taxable Payments Taxation of Nonperiodic PaymentsFiguring the Taxable Amount Loans Treated as Distributions Transfers of Annuity Contracts Lump-Sum Distributions RolloversExceptions. Free federal and state tax filing 2012 online No tax withheld. Free federal and state tax filing 2012 online Partial rollovers. Free federal and state tax filing 2012 online Frozen deposits. Free federal and state tax filing 2012 online Reasonable period of time. Free federal and state tax filing 2012 online 20% Mandatory withholding. Free federal and state tax filing 2012 online How to report. Free federal and state tax filing 2012 online How to report. Free federal and state tax filing 2012 online Special rule for Roth IRAs and designated Roth accounts. Free federal and state tax filing 2012 online Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and BeneficiariesGuaranteed payments. Free federal and state tax filing 2012 online How To Get Tax HelpLow Income Taxpayer Clinics General Information Definitions. Free federal and state tax filing 2012 online   Some of the terms used in this publication are defined in the following paragraphs. Free federal and state tax filing 2012 online Pension. Free federal and state tax filing 2012 online   A pension is generally a series of definitely determinable payments made to you after you retire from work. Free federal and state tax filing 2012 online Pension payments are made regularly and are based on such factors as years of service and prior compensation. Free federal and state tax filing 2012 online Annuity. Free federal and state tax filing 2012 online   An annuity is a series of payments under a contract made at regular intervals over a period of more than one full year. Free federal and state tax filing 2012 online They can be either fixed (under which you receive a definite amount) or variable (not fixed). Free federal and state tax filing 2012 online You can buy the contract alone or with the help of your employer. Free federal and state tax filing 2012 online Qualified employee plan. Free federal and state tax filing 2012 online   A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries and that meets Internal Revenue Code requirements. Free federal and state tax filing 2012 online It qualifies for special tax benefits, such as tax deferral for employer contributions and capital gain treatment or the 10-year tax option for lump-sum distributions (if participants qualify). Free federal and state tax filing 2012 online To determine whether your plan is a qualified plan, check with your employer or the plan administrator. Free federal and state tax filing 2012 online Qualified employee annuity. Free federal and state tax filing 2012 online   A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Free federal and state tax filing 2012 online Designated Roth account. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Elective deferrals that are designated as Roth contributions are included in your income. Free federal and state tax filing 2012 online However, qualified distributions (explained later) are not included in your income. Free federal and state tax filing 2012 online You should check with your plan administrator to determine if your plan will accept designated Roth contributions. Free federal and state tax filing 2012 online Tax-sheltered annuity plan. Free federal and state tax filing 2012 online   A tax-sheltered annuity plan (often referred to as a 403(b) plan or a tax-deferred annuity plan) is a retirement plan for employees of public schools and certain tax-exempt organizations. Free federal and state tax filing 2012 online Generally, a tax-sheltered annuity plan provides retirement benefits by purchasing annuity contracts for its participants. Free federal and state tax filing 2012 online Types of pensions and annuities. Free federal and state tax filing 2012 online   Pensions and annuities include the following types. Free federal and state tax filing 2012 online Fixed-period annuities. Free federal and state tax filing 2012 online   You receive definite amounts at regular intervals for a specified length of time. Free federal and state tax filing 2012 online Annuities for a single life. Free federal and state tax filing 2012 online   You receive definite amounts at regular intervals for life. Free federal and state tax filing 2012 online The payments end at death. Free federal and state tax filing 2012 online Joint and survivor annuities. Free federal and state tax filing 2012 online   The first annuitant receives a definite amount at regular intervals for life. Free federal and state tax filing 2012 online After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Free federal and state tax filing 2012 online The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Free federal and state tax filing 2012 online Variable annuities. Free federal and state tax filing 2012 online   You receive payments that may vary in amount for a specified length of time or for life. Free federal and state tax filing 2012 online The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds, cost-of-living indexes, or earnings from a mutual fund. Free federal and state tax filing 2012 online Disability pensions. Free federal and state tax filing 2012 online   You receive disability payments because you retired on disability and have not reached minimum retirement age. Free federal and state tax filing 2012 online More than one program. Free federal and state tax filing 2012 online   You may receive employee plan benefits from more than one program under a single trust or plan of your employer. Free federal and state tax filing 2012 online If you participate in more than one program, you may have to treat each as a separate pension or annuity contract, depending upon the facts in each case. Free federal and state tax filing 2012 online Also, you may be considered to have received more than one pension or annuity. Free federal and state tax filing 2012 online Your former employer or the plan administrator should be able to tell you if you have more than one contract. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Your employer set up a noncontributory profit-sharing plan for its employees. Free federal and state tax filing 2012 online The plan provides that the amount held in the account of each participant will be paid when that participant retires. Free federal and state tax filing 2012 online Your employer also set up a contributory defined benefit pension plan for its employees providing for the payment of a lifetime pension to each participant after retirement. Free federal and state tax filing 2012 online The amount of any distribution from the profit-sharing plan depends on the contributions (including allocated forfeitures) made for the participant and the earnings from those contributions. Free federal and state tax filing 2012 online Under the pension plan, however, a formula determines the amount of the pension benefits. Free federal and state tax filing 2012 online The amount of contributions is the amount necessary to provide that pension. Free federal and state tax filing 2012 online Each plan is a separate program and a separate contract. Free federal and state tax filing 2012 online If you get benefits from these plans, you must account for each separately, even though the benefits from both may be included in the same check. Free federal and state tax filing 2012 online Distributions from a designated Roth account are treated separately from other distributions from the plan. Free federal and state tax filing 2012 online Qualified domestic relations order (QDRO). Free federal and state tax filing 2012 online   A QDRO is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of a participant in a retirement plan. Free federal and state tax filing 2012 online The QDRO must contain certain specific information, such as the name and last known mailing address of the participant and each alternate payee, and the amount or percentage of the participant's benefits to be paid to each alternate payee. Free federal and state tax filing 2012 online A QDRO may not award an amount or form of benefit that is not available under the plan. Free federal and state tax filing 2012 online   A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if he or she were a plan participant. Free federal and state tax filing 2012 online The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction. Free federal and state tax filing 2012 online The numerator of the fraction is the present value of the benefits payable to the spouse or former spouse. Free federal and state tax filing 2012 online The denominator is the present value of all benefits payable to the participant. Free federal and state tax filing 2012 online   A distribution that is paid to a child or other dependent under a QDRO is taxed to the plan participant. Free federal and state tax filing 2012 online Variable Annuities The tax rules in this publication apply both to annuities that provide fixed payments and to annuities that provide payments that vary in amount based on investment results or other factors. Free federal and state tax filing 2012 online For example, they apply to commercial variable annuity contracts, whether bought by an employee retirement plan for its participants or bought directly from the issuer by an individual investor. Free federal and state tax filing 2012 online Under these contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. Free federal and state tax filing 2012 online The earnings are not taxed until distributed either in a withdrawal or in annuity payments. Free federal and state tax filing 2012 online The taxable part of a distribution is treated as ordinary income. Free federal and state tax filing 2012 online Net investment income tax. Free federal and state tax filing 2012 online   Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). Free federal and state tax filing 2012 online For information see the Instructions for Form 8960, Net Investment Income Tax — Individuals, Estates and Trusts. Free federal and state tax filing 2012 online For information on the tax treatment of a transfer or exchange of a variable annuity contract, see Transfers of Annuity Contracts under Taxation of Nonperiodic Payments, later. Free federal and state tax filing 2012 online Withdrawals. Free federal and state tax filing 2012 online   If you withdraw funds before your annuity starting date and your annuity is under a qualified retirement plan, a ratable part of the amount withdrawn is tax free. Free federal and state tax filing 2012 online The tax-free part is based on the ratio of your cost (investment in the contract) to your account balance under the plan. Free federal and state tax filing 2012 online   If your annuity is under a nonqualified plan (including a contract you bought directly from the issuer), the amount withdrawn is allocated first to earnings (the taxable part) and then to your cost (the tax-free part). Free federal and state tax filing 2012 online However, if you bought your annuity contract before August 14, 1982, a different allocation applies to the investment before that date and the earnings on that investment. Free federal and state tax filing 2012 online To the extent the amount withdrawn does not exceed that investment and earnings, it is allocated first to your cost (the tax-free part) and then to earnings (the taxable part). Free federal and state tax filing 2012 online   If you withdraw funds (other than as an annuity) on or after your annuity starting date, the entire amount withdrawn is generally taxable. Free federal and state tax filing 2012 online   The amount you receive in a full surrender of your annuity contract at any time is tax free to the extent of any cost that you have not previously recovered tax free. Free federal and state tax filing 2012 online The rest is taxable. Free federal and state tax filing 2012 online   For more information on the tax treatment of withdrawals, see Taxation of Nonperiodic Payments , later. Free federal and state tax filing 2012 online If you withdraw funds from your annuity before you reach age 59½, also see Tax on Early Distributions under Special Additional Taxes, later. Free federal and state tax filing 2012 online Annuity payments. Free federal and state tax filing 2012 online   If you receive annuity payments under a variable annuity plan or contract, you recover your cost tax free under either the Simplified Method or the General Rule, as explained under Taxation of Periodic Payments , later. Free federal and state tax filing 2012 online For a variable annuity paid under a qualified plan, you generally must use the Simplified Method. Free federal and state tax filing 2012 online For a variable annuity paid under a nonqualified plan (including a contract you bought directly from the issuer), you must use a special computation under the General Rule. Free federal and state tax filing 2012 online For more information, see Variable annuities in Publication 939 under Computation Under the General Rule. Free federal and state tax filing 2012 online Death benefits. Free federal and state tax filing 2012 online    If you receive a single-sum distribution from a variable annuity contract because of the death of the owner or annuitant, the distribution is generally taxable only to the extent it is more than the unrecovered cost of the contract. Free federal and state tax filing 2012 online If you choose to receive an annuity, the payments are subject to tax as described above. Free federal and state tax filing 2012 online If the contract provides a joint and survivor annuity and the primary annuitant had received annuity payments before death, you figure the tax-free part of annuity payments you receive as the survivor in the same way the primary annuitant did. Free federal and state tax filing 2012 online See Survivors and Beneficiaries , later. Free federal and state tax filing 2012 online Section 457 Deferred Compensation Plans 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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online You are generally taxed on amounts deferred in an eligible state or local government plan only when they are distributed from the plan. Free federal and state tax filing 2012 online You are taxed on amounts deferred in an eligible tax-exempt organization plan when they are distributed or otherwise made available to you. Free federal and state tax filing 2012 online Your 457(b) plan may have a designated Roth account option. Free federal and state tax filing 2012 online If so, you may be able to roll over amounts to the designated Roth account or make contributions. Free federal and state tax filing 2012 online Elective deferrals to a designated Roth account are included in your income. Free federal and state tax filing 2012 online Qualified distributions (explained later) are not included in your income. Free federal and state tax filing 2012 online See the Designated Roth accounts discussion under Taxation of Periodic Payments, later. Free federal and state tax filing 2012 online This publication covers the tax treatment of benefits under eligible section 457 plans, but it does not cover the treatment of deferrals. Free federal and state tax filing 2012 online For information on deferrals under section 457 plans, see Retirement Plan Contributions under Employee Compensation in Publication 525. Free federal and state tax filing 2012 online Is your plan eligible?   To find out if your plan is an eligible plan, check with your employer. Free federal and state tax filing 2012 online Plans that are not eligible section 457 plans include the following: Bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plans. Free federal and state tax filing 2012 online Nonelective deferred compensation plans for nonemployees (independent contractors). Free federal and state tax filing 2012 online Deferred compensation plans maintained by churches. Free federal and state tax filing 2012 online Length of service award plans for bona fide volunteer firefighters and emergency medical personnel. Free federal and state tax filing 2012 online An exception applies if the total amount paid to a volunteer exceeds $3,000 for any year of service. Free federal and state tax filing 2012 online Disability Pensions 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. Free federal and state tax filing 2012 online You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. Free federal and state tax filing 2012 online Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Free federal and state tax filing 2012 online You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Free federal and state tax filing 2012 online For information on this credit, see Publication 524. Free federal and state tax filing 2012 online Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Free federal and state tax filing 2012 online Report the payments on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online For more information about payments to survivors of terrorist attacks, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Free federal and state tax filing 2012 online Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. Free federal and state tax filing 2012 online The premiums can be for coverage for you, your spouse, or dependents. Free federal and state tax filing 2012 online The distribution must be made directly from the plan to the insurance provider. Free federal and state tax filing 2012 online You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Free federal and state tax filing 2012 online You can only make this election for amounts that would otherwise be included in your income. Free federal and state tax filing 2012 online The amount excluded from your income cannot be used to claim a medical expense deduction. Free federal and state tax filing 2012 online An eligible retirement plan is a governmental plan that is: a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan. Free federal and state tax filing 2012 online If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Free federal and state tax filing 2012 online The amount shown in box 2a of Form 1099-R does not reflect this exclusion. Free federal and state tax filing 2012 online Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Free federal and state tax filing 2012 online Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Free federal and state tax filing 2012 online Enter “PSO” next to the appropriate line on which you report the taxable amount. Free federal and state tax filing 2012 online If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line. Free federal and state tax filing 2012 online Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Free federal and state tax filing 2012 online These categories are treated differently for income tax purposes. Free federal and state tax filing 2012 online The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. Free federal and state tax filing 2012 online This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes like social security benefits. Free federal and state tax filing 2012 online If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2013, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien) from the U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Railroad Retirement Board (RRB). Free federal and state tax filing 2012 online For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Publication 915. Free federal and state tax filing 2012 online The second category contains the rest of the tier 1 railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). Free federal and state tax filing 2012 online It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Free federal and state tax filing 2012 online Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. Free federal and state tax filing 2012 online This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. Free federal and state tax filing 2012 online (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R. Free federal and state tax filing 2012 online ) Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Free federal and state tax filing 2012 online See Taxation of Periodic Payments , later, for information on how to report your benefits and how to recover the employee contributions tax free. Free federal and state tax filing 2012 online Form RRB-1099-R is used for U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizens, resident aliens, and nonresident aliens. Free federal and state tax filing 2012 online Nonresident aliens. Free federal and state tax filing 2012 online   A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Free federal and state tax filing 2012 online Nonresident aliens are subject to mandatory U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online tax withholding unless exempt under a tax treaty between the United States and their country of legal residency. Free federal and state tax filing 2012 online A tax treaty exemption may reduce or eliminate tax withholding from railroad retirement benefits. Free federal and state tax filing 2012 online See Tax withholding next for more information. Free federal and state tax filing 2012 online   If you are a nonresident alien and your tax withholding rate changed or your country of legal residence changed during the year, you may receive more than one Form RRB-1042S or Form RRB-1099-R. Free federal and state tax filing 2012 online To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year. Free federal and state tax filing 2012 online For information on filing requirements for aliens, see Publication 519, U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Tax Guide for Aliens. Free federal and state tax filing 2012 online For information on tax treaties between the United States and other countries that may reduce or eliminate U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online tax on your benefits, see Publication 901, U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Tax Treaties. Free federal and state tax filing 2012 online Tax withholding. Free federal and state tax filing 2012 online   To request or change your income tax withholding from SSEB payments, U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. Free federal and state tax filing 2012 online To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments. Free federal and state tax filing 2012 online If you are a nonresident alien or a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online tax withholding. Free federal and state tax filing 2012 online Nonresident U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizens cannot elect to be exempt from withholding on payments delivered outside of the U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Help from the RRB. Free federal and state tax filing 2012 online   To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 1-877-772-5772 for the nearest field office) or U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online consulate/Embassy if you reside outside the United States. Free federal and state tax filing 2012 online You can visit the RRB on the Internet at www. Free federal and state tax filing 2012 online rrb. Free federal and state tax filing 2012 online gov. Free federal and state tax filing 2012 online Form RRB-1099-R. Free federal and state tax filing 2012 online   The following discussion explains the items shown on Form RRB-1099-R. Free federal and state tax filing 2012 online The amounts shown on this form are before any deduction for: Federal income tax withholding, Medicare premiums, Legal process garnishment payments, Recovery of a prior year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit, or Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity. Free federal and state tax filing 2012 online   The amounts shown on this form are after any offset for: Social Security benefits, Age reduction, Public Service pensions or public disability benefits, Dual railroad retirement entitlement under another RRB claim number, Work deductions, Legal process partition deductions, Actuarial adjustment, Annuity waiver, or Recovery of a current-year overpayment of NSSEB, tier 2, VDB, or supplemental annuity benefits. Free federal and state tax filing 2012 online   The amounts shown on Form RRB-1099-R do not reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. Free federal and state tax filing 2012 online To determine if any of these rules apply to your benefits, see the discussions about them later. Free federal and state tax filing 2012 online   Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. Free federal and state tax filing 2012 online Use distribution code “7” if you are asked for a distribution code. Free federal and state tax filing 2012 online Distribution codes are not shown on Form RRB-1099-R. Free federal and state tax filing 2012 online   There are three copies of this form. Free federal and state tax filing 2012 online Copy B is to be included with your income tax return if federal income tax is withheld. Free federal and state tax filing 2012 online Copy C is for your own records. Free federal and state tax filing 2012 online Copy 2 is filed with your state, city, or local income tax return, when required. Free federal and state tax filing 2012 online See the illustrated Copy B (Form RRB-1099-R) above. Free federal and state tax filing 2012 online       Each beneficiary will receive his or her own Form RRB-1099-R. Free federal and state tax filing 2012 online If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. Free federal and state tax filing 2012 online So that you get your form timely, make sure the RRB always has your current mailing address. Free federal and state tax filing 2012 online Please click here for the text description of the image. Free federal and state tax filing 2012 online Form RRB-1099-R Box 1—Claim Number and Payee Code. Free federal and state tax filing 2012 online   Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. Free federal and state tax filing 2012 online This is the number under which the RRB paid your benefits. Free federal and state tax filing 2012 online Your payee code follows your claim number and is the last number in this box. Free federal and state tax filing 2012 online It is used by the RRB to identify you under your claim number. Free federal and state tax filing 2012 online In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box. Free federal and state tax filing 2012 online Box 2—Recipient's Identification Number. Free federal and state tax filing 2012 online   This is the recipient's U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online taxpayer identification number. Free federal and state tax filing 2012 online It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient. Free federal and state tax filing 2012 online If you are a resident or nonresident alien who must furnish a taxpayer identification number to the IRS and are not eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. Free federal and state tax filing 2012 online The Instructions for Form W-7 explain how and when to apply. Free federal and state tax filing 2012 online Box 3—Employee Contributions. Free federal and state tax filing 2012 online   This is the amount of taxes withheld from the railroad employee's earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. Free federal and state tax filing 2012 online This amount is the employee's cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). Free federal and state tax filing 2012 online (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later. Free federal and state tax filing 2012 online ) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. Free federal and state tax filing 2012 online It is the latest amount reported for 2013 and may have increased or decreased from a previous Form RRB-1099-R. Free federal and state tax filing 2012 online If this amount has changed, the change is retroactive. Free federal and state tax filing 2012 online You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2013 and prior tax years. Free federal and state tax filing 2012 online If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable. Free federal and state tax filing 2012 online    If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount. Free federal and state tax filing 2012 online Box 4—Contributory Amount Paid. Free federal and state tax filing 2012 online   This is the gross amount of the NSSEB and tier 2 benefit you received in 2013, less any 2013 benefits you repaid in 2013. Free federal and state tax filing 2012 online (Any benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Free federal and state tax filing 2012 online ) This amount is the total contributory pension paid in 2013. Free federal and state tax filing 2012 online It may be partly taxable and partly tax free or fully taxable. Free federal and state tax filing 2012 online If you determine you are eligible to compute a tax-free part as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost. Free federal and state tax filing 2012 online Box 5—Vested Dual Benefit. Free federal and state tax filing 2012 online   This is the gross amount of vested dual benefit (VDB) payments paid in 2013, less any 2013 VDB payments you repaid in 2013. Free federal and state tax filing 2012 online It is fully taxable. Free federal and state tax filing 2012 online VDB payments you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Free federal and state tax filing 2012 online Note. Free federal and state tax filing 2012 online The amounts shown in boxes 4 and 5 may represent payments for 2013 and/or other years after 1983. Free federal and state tax filing 2012 online Box 6—Supplemental Annuity. Free federal and state tax filing 2012 online   This is the gross amount of supplemental annuity benefits paid in 2013, less any 2013 supplemental annuity benefits you repaid in 2013. Free federal and state tax filing 2012 online It is fully taxable. Free federal and state tax filing 2012 online Supplemental annuity benefits you repaid in 2013 for an earlier year or for an unknown year are shown in box 8. Free federal and state tax filing 2012 online Box 7—Total Gross Paid. Free federal and state tax filing 2012 online   This is the sum of boxes 4, 5, and 6. Free federal and state tax filing 2012 online The amount represents the total pension paid in 2013. Free federal and state tax filing 2012 online Include this amount on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Free federal and state tax filing 2012 online Box 8—Repayments. Free federal and state tax filing 2012 online   This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2013 for years before 2013 or for unknown years. Free federal and state tax filing 2012 online The amount shown in this box has not been deducted from the amounts shown in boxes 4, 5, and 6. Free federal and state tax filing 2012 online It only includes repayments of benefits that were taxable to you. Free federal and state tax filing 2012 online This means it only includes repayments in 2013 of NSSEB benefits paid after 1985, tier 2 and VDB benefits paid after 1983, and supplemental annuity benefits paid in any year. Free federal and state tax filing 2012 online If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. Free federal and state tax filing 2012 online For more information about repayments, see Repayment of benefits received in an earlier year , later. Free federal and state tax filing 2012 online    You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment. Free federal and state tax filing 2012 online Box 9—Federal Income Tax Withheld. Free federal and state tax filing 2012 online   This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. Free federal and state tax filing 2012 online Include this on your income tax return as tax withheld. Free federal and state tax filing 2012 online If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2013, you will receive more than one Form RRB-1099-R for 2013. Free federal and state tax filing 2012 online Determine the total amount of U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online federal income tax withheld from your 2013 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2013 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive. Free federal and state tax filing 2012 online Box 10—Rate of Tax. Free federal and state tax filing 2012 online   If you are taxed as a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen or resident alien, this box does not apply to you. Free federal and state tax filing 2012 online If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2013. Free federal and state tax filing 2012 online If you are a nonresident alien whose tax was withheld at more than one rate during 2013, you will receive a separate Form RRB-1099-R for each rate change during 2013. Free federal and state tax filing 2012 online Box 11—Country. Free federal and state tax filing 2012 online   If you are taxed as a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen or resident alien, this box does not apply to you. Free federal and state tax filing 2012 online If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2013. Free federal and state tax filing 2012 online If you are a nonresident alien who was a resident of more than one country during 2013, you will receive a separate Form RRB-1099-R for each country of residence during 2013. Free federal and state tax filing 2012 online Box 12—Medicare Premium Total. Free federal and state tax filing 2012 online   This is for information purposes only. Free federal and state tax filing 2012 online The amount shown in this box represents the total amount of Part B Medicare premiums deducted from your railroad retirement annuity payments in 2013. Free federal and state tax filing 2012 online Medicare premium refunds are not included in the Medicare total. Free federal and state tax filing 2012 online The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). Free federal and state tax filing 2012 online However, if Form RRB-1099 or Form RRB-1042S is not required for 2013, then this total will be shown on Form RRB-1099-R. Free federal and state tax filing 2012 online If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total will not be shown in this box. Free federal and state tax filing 2012 online Repayment of benefits received in an earlier year. Free federal and state tax filing 2012 online   If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it. Free federal and state tax filing 2012 online   If you repaid $3,000 or less in 2013, deduct it on Schedule A (Form 1040), line 23. Free federal and state tax filing 2012 online The 2%-of-adjusted-gross-income limit applies to this deduction. Free federal and state tax filing 2012 online You cannot take this deduction if you file Form 1040A. Free federal and state tax filing 2012 online    If you repaid more than $3,000 in 2013, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 28 or you can take a credit against your tax. Free federal and state tax filing 2012 online For more information, see Repayments in Publication 525. Free federal and state tax filing 2012 online Withholding Tax and Estimated Tax Your retirement plan distributions are subject to federal income tax withholding. Free federal and state tax filing 2012 online However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. Free federal and state tax filing 2012 online (These are distributions, described later under Rollovers, that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Free federal and state tax filing 2012 online ) If you choose not to have tax withheld or if you do not have enough tax withheld, you may have to make estimated tax payments. Free federal and state tax filing 2012 online See Estimated tax , later. Free federal and state tax filing 2012 online The withholding rules apply to the taxable part of payments you receive from: An employer pension, annuity, profit-sharing, or stock bonus plan, Any other deferred compensation plan, A traditional individual retirement arrangement (IRA), or A commercial annuity. Free federal and state tax filing 2012 online For this purpose, a commercial annuity means an annuity, endowment, or life insurance contract issued by an insurance company. Free federal and state tax filing 2012 online There will be no withholding on any part of a distribution where it is reasonable to believe that it will not be includible in gross income. Free federal and state tax filing 2012 online Choosing no withholding. Free federal and state tax filing 2012 online   You can choose not to have income tax withheld from retirement plan payments unless they are eligible rollover distributions. Free federal and state tax filing 2012 online You can make this choice on Form W-4P for periodic and nonperiodic payments. Free federal and state tax filing 2012 online This choice generally remains in effect until you revoke it. Free federal and state tax filing 2012 online   The payer will ignore your choice not to have tax withheld if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer, before the payment is made, that you gave an incorrect social security number. Free federal and state tax filing 2012 online   To choose not to have tax withheld, a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen or resident alien must give the payer a home address in the United States or its possessions. Free federal and state tax filing 2012 online Without that address, the payer must withhold tax. Free federal and state tax filing 2012 online For example, the payer has to withhold tax if the recipient has provided a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online address for a nominee, trustee, or agent to whom the benefits are delivered, but has not provided his or her own U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online home address. Free federal and state tax filing 2012 online   If you do not give the payer a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to the payer that you are not a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen, a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online resident alien, or someone who left the country to avoid tax. Free federal and state tax filing 2012 online But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Free federal and state tax filing 2012 online This 30% rate will not apply if you are exempt or subject to a reduced rate by treaty. Free federal and state tax filing 2012 online For details, get Publication 519. Free federal and state tax filing 2012 online Periodic payments. Free federal and state tax filing 2012 online   Unless you choose no withholding, your annuity or similar periodic payments (other than eligible rollover distributions) will be treated like wages for withholding purposes. Free federal and state tax filing 2012 online Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Free federal and state tax filing 2012 online You should give the payer a completed withholding certificate (Form W-4P or a similar form provided by the payer). Free federal and state tax filing 2012 online If you do not, tax will be withheld as if you were married and claiming three withholding allowances. Free federal and state tax filing 2012 online   Tax will be withheld as if you were single and were claiming no withholding allowances if: You do not give the payer your social security number (in the required manner), or The IRS notifies the payer (before any payment is made) that you gave an incorrect social security number. Free federal and state tax filing 2012 online   You must file a new withholding certificate to change the amount of withholding. Free federal and state tax filing 2012 online Nonperiodic distributions. Free federal and state tax filing 2012 online    Unless you choose no withholding, the withholding rate for a nonperiodic distribution (a payment other than a periodic payment) that is not an eligible rollover distribution is 10% of the distribution. Free federal and state tax filing 2012 online You can also ask the payer to withhold an additional amount using Form W-4P. Free federal and state tax filing 2012 online The part of any loan treated as a distribution (except an offset amount to repay the loan), explained later, is subject to withholding under this rule. Free federal and state tax filing 2012 online Eligible rollover distribution. Free federal and state tax filing 2012 online    If you receive an eligible rollover distribution, 20% of it generally will be withheld for income tax. Free federal and state tax filing 2012 online You cannot choose not to have tax withheld from an eligible rollover distribution. Free federal and state tax filing 2012 online However, tax will not be withheld if you have the plan administrator pay the eligible rollover distribution directly to another qualified plan or an IRA in a direct rollover. Free federal and state tax filing 2012 online For more information about eligible rollover distributions, see Rollovers , later. Free federal and state tax filing 2012 online Estimated tax. Free federal and state tax filing 2012 online   Your estimated tax is the total of your expected income tax, self-employment tax, and certain other taxes for the year, minus your expected credits and withheld tax. Free federal and state tax filing 2012 online Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax (after subtracting your withholding and credits) and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 return, or 100% of the tax shown on your 2013 return. Free federal and state tax filing 2012 online If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Free federal and state tax filing 2012 online For more information, get Publication 505, Tax Withholding and Estimated Tax. Free federal and state tax filing 2012 online In figuring your withholding or estimated tax, remember that a part of your monthly social security or equivalent tier 1 railroad retirement benefits may be taxable. Free federal and state tax filing 2012 online See Publication 915. Free federal and state tax filing 2012 online You can choose to have income tax withheld from those benefits. Free federal and state tax filing 2012 online Use Form W-4V to make this choice. Free federal and state tax filing 2012 online Cost (Investment in the Contract) Distributions from your pension or annuity plan may include amounts treated as a recovery of your cost (investment in the contract). Free federal and state tax filing 2012 online If any part of a distribution is treated as a recovery of your cost under the rules explained in this publication, that part is tax free. Free federal and state tax filing 2012 online Therefore, the first step in figuring how much of a distribution is taxable is to determine the cost of your pension or annuity. Free federal and state tax filing 2012 online In general, your cost is your net investment in the contract as of the annuity starting date (or the date of the distribution, if earlier). Free federal and state tax filing 2012 online To find this amount, you must first figure the total premiums, contributions, or other amounts you paid. Free federal and state tax filing 2012 online This includes the amounts your employer contributed that were taxable to you when paid. Free federal and state tax filing 2012 online (However, see Foreign employment contributions , later. Free federal and state tax filing 2012 online ) It does not include amounts withheld from your pay on a tax-deferred basis (money that was taken out of your gross pay before taxes were deducted). Free federal and state tax filing 2012 online It also does not include amounts you contributed for health and accident benefits (including any additional premiums paid for double indemnity or disability benefits). Free federal and state tax filing 2012 online From this total cost you must subtract the following amounts. Free federal and state tax filing 2012 online Any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income and that you received by the later of the annuity starting date or the date on which you received your first payment. Free federal and state tax filing 2012 online Any other tax-free amounts you received under the contract or plan by the later of the dates in (1). Free federal and state tax filing 2012 online If you must use the Simplified Method for your annuity payments, the tax-free part of any single-sum payment received in connection with the start of the annuity payments, regardless of when you received it. Free federal and state tax filing 2012 online (See Simplified Method , later, for information on its required use. Free federal and state tax filing 2012 online ) If you use the General Rule for your annuity payments, the value of the refund feature in your annuity contract. Free federal and state tax filing 2012 online (See General Rule , later, for information on its use. Free federal and state tax filing 2012 online ) Your annuity contract has a refund feature if the annuity payments are for your life (or the lives of you and your survivor) and payments in the nature of a refund of the annuity's cost will be made to your beneficiary or estate if all annuitants die before a stated amount or a stated number of payments are made. Free federal and state tax filing 2012 online For more information, see Publication 939. Free federal and state tax filing 2012 online The tax treatment of the items described in (1) through (3) is discussed later under Taxation of Nonperiodic Payments . Free federal and state tax filing 2012 online Form 1099-R. Free federal and state tax filing 2012 online If you began receiving periodic payments of a life annuity in 2013, the payer should show your total contributions to the plan in box 9b of your 2013 Form 1099-R. Free federal and state tax filing 2012 online Annuity starting date defined. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online On January 1, you completed all your payments required under an annuity contract providing for monthly payments starting on August 1 for the period beginning July 1. Free federal and state tax filing 2012 online The annuity starting date is July 1. Free federal and state tax filing 2012 online This is the date you use in figuring the cost of the contract and selecting the appropriate number from Table 1 for line 3 of the Simplified Method Worksheet. Free federal and state tax filing 2012 online Designated Roth accounts. Free federal and state tax filing 2012 online   Your cost in these accounts is your designated Roth contributions that were included in your income as wages subject to applicable withholding requirements. Free federal and state tax filing 2012 online Your cost will also include any in-plan Roth rollovers you included in income. Free federal and state tax filing 2012 online Foreign employment contributions. Free federal and state tax filing 2012 online   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. Free federal and state tax filing 2012 online The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (not including the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) but only if the contributions would be excludible from your gross income had they been paid directly to you. Free federal and state tax filing 2012 online Foreign employment contributions while a nonresident alien. Free federal and state tax filing 2012 online   In determining your cost, special rules apply if you are a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen or resident alien who received distributions in 2013 from a plan to which contributions were made while you were a nonresident alien. Free federal and state tax filing 2012 online Your contributions and your employer's contributions are not included in your cost if the contribution: Was made based on compensation which was for services performed outside the United States while you were a nonresident alien, and Was not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if paid as cash compensation when the services were performed. Free federal and state tax filing 2012 online Taxation of Periodic Payments This section explains how the periodic payments you receive from a pension or annuity plan are taxed. Free federal and state tax filing 2012 online Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). Free federal and state tax filing 2012 online These payments are also known as amounts received as an annuity. Free federal and state tax filing 2012 online If you receive an amount from your plan that is not a periodic payment, see Taxation of Nonperiodic Payments , later. Free federal and state tax filing 2012 online In general, you can recover the cost of your pension or annuity tax free over the period you are to receive the payments. Free federal and state tax filing 2012 online The amount of each payment that is more than the part that represents your cost is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Free federal and state tax filing 2012 online Designated Roth accounts. Free federal and state tax filing 2012 online   If you receive a qualified distribution from a designated Roth account, the distribution is not included in your gross income. Free federal and state tax filing 2012 online This applies to both your cost in the account and income earned on that account. Free federal and state tax filing 2012 online A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Free federal and state tax filing 2012 online   If the distribution is not a qualified distribution, the rules discussed in this section apply. Free federal and state tax filing 2012 online The designated Roth account is treated as a separate contract. Free federal and state tax filing 2012 online Period of participation. Free federal and state tax filing 2012 online   The 5-tax-year period of participation is the 5-tax-year period beginning with the first tax year for which the participant made a designated Roth contribution to the plan. Free federal and state tax filing 2012 online Therefore, for designated Roth contributions made for 2013, the first year for which a qualified distribution can be made is 2018. Free federal and state tax filing 2012 online   However, if a direct rollover is made to the plan from a designated Roth account under another plan, the 5-tax-year period for the recipient plan begins with the first tax year for which the participant first had designated Roth contributions made to the other plan. Free federal and state tax filing 2012 online   Your 401(k), 403(b), or 457(b) plan may permit you to roll over amounts from those plans to a designated Roth account within the same plan. Free federal and state tax filing 2012 online This is known as an in-plan Roth rollover. Free federal and state tax filing 2012 online For more details, see In-plan Roth rollovers , later. Free federal and state tax filing 2012 online Fully Taxable Payments The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations applies to you (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Free federal and state tax filing 2012 online You did not pay anything or are not considered to have paid anything for your pension or annuity. Free federal and state tax filing 2012 online Amounts withheld from your pay on a tax-deferred basis are not considered part of the cost of the pension or annuity payment. Free federal and state tax filing 2012 online Your employer did not withhold contributions from your salary. Free federal and state tax filing 2012 online You got back all of your contributions tax free in prior years (however, see Exclusion not limited to cost under Partly Taxable Payments, later). Free federal and state tax filing 2012 online Report the total amount you got on Form 1040, line 16b; Form 1040A, line 12b; or on Form 1040NR, line 17b. Free federal and state tax filing 2012 online You should make no entry on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Free federal and state tax filing 2012 online Deductible voluntary employee contributions. Free federal and state tax filing 2012 online   Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. Free federal and state tax filing 2012 online Accumulated deductible voluntary employee contributions include net earnings on the contributions. Free federal and state tax filing 2012 online If distributed as part of a lump sum, they do not qualify for the 10-year tax option or capital gain treatment, explained later. Free federal and state tax filing 2012 online Partly Taxable Payments If you have a cost to recover from your pension or annuity plan (see Cost (Investment in the Contract) , earlier), you can exclude part of each annuity payment from income as a recovery of your cost. Free federal and state tax filing 2012 online This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. Free federal and state tax filing 2012 online The rest of each payment is taxable (however, see Insurance Premiums for Retired Public Safety Officers , earlier). Free federal and state tax filing 2012 online You figure the tax-free part of the payment using one of the following methods. Free federal and state tax filing 2012 online Simplified Method. Free federal and state tax filing 2012 online You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). Free federal and state tax filing 2012 online You cannot use this method if your annuity is paid under a nonqualified plan. Free federal and state tax filing 2012 online General Rule. Free federal and state tax filing 2012 online You must use this method if your annuity is paid under a nonqualified plan. Free federal and state tax filing 2012 online You generally cannot use this method if your annuity is paid under a qualified plan. Free federal and state tax filing 2012 online You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. Free federal and state tax filing 2012 online If you had more than one partly taxable pension or annuity, figure the tax-free part and the taxable part of each separately. Free federal and state tax filing 2012 online Qualified plan annuity starting before November 19, 1996. Free federal and state tax filing 2012 online   If your annuity is paid under a qualified plan and your annuity starting date (defined earlier under Cost (Investment in the Contract) ) is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the Simplified Method or the General Rule. Free federal and state tax filing 2012 online If your annuity starting date is before July 2, 1986, you use the General Rule unless your annuity qualified for the Three-Year Rule. Free federal and state tax filing 2012 online If you used the Three-Year Rule (which was repealed for annuities starting after July 1, 1986), your annuity payments are generally now fully taxable. Free federal and state tax filing 2012 online Exclusion limit. Free federal and state tax filing 2012 online   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Free federal and state tax filing 2012 online Once your annuity starting date is determined, it does not change. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online That recovery period begins on your annuity starting date and is not affected by the date you first complete the worksheet. Free federal and state tax filing 2012 online Exclusion limited to cost. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online This deduction is not subject to the 2%-of-adjusted-gross-income limit. Free federal and state tax filing 2012 online Example 1. Free federal and state tax filing 2012 online Your annuity starting date is after 1986, and you exclude $100 a month ($1,200 a year) under the Simplified Method. Free federal and state tax filing 2012 online The total cost of your annuity is $12,000. Free federal and state tax filing 2012 online Your exclusion ends when you have recovered your cost tax free, that is, after 10 years (120 months). Free federal and state tax filing 2012 online After that, your annuity payments are generally fully taxable. Free federal and state tax filing 2012 online Example 2. Free federal and state tax filing 2012 online The facts are the same as in Example 1, except you die (with no surviving annuitant) after the eighth year of retirement. Free federal and state tax filing 2012 online You have recovered tax free only $9,600 (8 × $1,200) of your cost. Free federal and state tax filing 2012 online An itemized deduction for your unrecovered cost of $2,400 ($12,000 – $9,600) can be taken on your final return. Free federal and state tax filing 2012 online Exclusion not limited to cost. Free federal and state tax filing 2012 online   If your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online The total exclusion may be more than your cost. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online For any other annuity, this number is the number of monthly annuity payments under the contract. Free federal and state tax filing 2012 online Who must use the Simplified Method. Free federal and state tax filing 2012 online   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you meet both of the following conditions. Free federal and state tax filing 2012 online You receive your pension or annuity payments from any of the following plans. Free federal and state tax filing 2012 online A qualified employee plan. Free federal and state tax filing 2012 online A qualified employee annuity. Free federal and state tax filing 2012 online A tax-sheltered annuity plan (403(b) plan). Free federal and state tax filing 2012 online On your annuity starting date, at least one of the following conditions applies to you. Free federal and state tax filing 2012 online You are under age 75. Free federal and state tax filing 2012 online You are entitled to less than 5 years of guaranteed payments. Free federal and state tax filing 2012 online Guaranteed payments. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online Annuity starting before November 19, 1996. Free federal and state tax filing 2012 online   If your annuity starting date is after July 1, 1986, and before November 19, 1996, and you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Free federal and state tax filing 2012 online You could have chosen to use the Simplified Method if your annuity is payable for your life (or the lives of you and your survivor annuitant) and you met both of the conditions listed earlier under Who must use the Simplified Method . Free federal and state tax filing 2012 online Who cannot use the Simplified Method. Free federal and state tax filing 2012 online   You cannot use the Simplified Method if you receive your pension or annuity from a nonqualified plan or otherwise do not meet the conditions described in the preceding discussion. Free federal and state tax filing 2012 online See General Rule , later. Free federal and state tax filing 2012 online How to use the Simplified Method. Free federal and state tax filing 2012 online    Complete Worksheet A in the back of this publication to figure your taxable annuity for 2013. Free federal and state tax filing 2012 online Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Free federal and state tax filing 2012 online   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Free federal and state tax filing 2012 online How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Free federal and state tax filing 2012 online For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. Free federal and state tax filing 2012 online    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. Free federal and state tax filing 2012 online Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Free federal and state tax filing 2012 online Single-life annuity. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Enter on line 3 the number shown for your age on your annuity starting date. Free federal and state tax filing 2012 online This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Free federal and state tax filing 2012 online Multiple-lives annuity. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Free federal and state tax filing 2012 online For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. Free federal and state tax filing 2012 online For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. Free federal and state tax filing 2012 online Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Free federal and state tax filing 2012 online   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Free federal and state tax filing 2012 online Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Free federal and state tax filing 2012 online This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Free federal and state tax filing 2012 online Fixed-period annuity. Free federal and state tax filing 2012 online   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. Free federal and state tax filing 2012 online Line 6. Free federal and state tax filing 2012 online   The amount on line 6 should include all amounts that could have been recovered in prior years. Free federal and state tax filing 2012 online If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Bill Smith, age 65, began receiving retirement benefits in 2013 under a joint and survivor annuity. Free federal and state tax filing 2012 online Bill's annuity starting date is January 1, 2013. Free federal and state tax filing 2012 online The benefits are to be paid for the joint lives of Bill and his wife, Kathy, age 65. Free federal and state tax filing 2012 online Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online 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 Worksheet A in completing line 3 of the worksheet. Free federal and state tax filing 2012 online His completed worksheet is shown later. Free federal and state tax filing 2012 online Bill's tax-free monthly amount is $100 ($31,000 ÷ 310) as shown on line 4 of the worksheet. Free federal and state tax filing 2012 online Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Free federal and state tax filing 2012 online The full amount of any annuity payments received after 310 payments are paid must be included in gross income. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online This deduction is not subject to the 2%-of-adjusted-gross-income limit. Free federal and state tax filing 2012 online Worksheet A. Free federal and state tax filing 2012 online Simplified Method Worksheet for Bill Smith 1. Free federal and state tax filing 2012 online Enter the total pension or annuity payments received this year. Free federal and state tax filing 2012 online Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Free federal and state tax filing 2012 online $14,400 2. Free federal and state tax filing 2012 online Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. Free federal and state tax filing 2012 online * See Cost (Investment in the Contract) , earlier 2. Free federal and state tax filing 2012 online 31,000   Note. Free federal and state tax filing 2012 online 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). Free federal and state tax filing 2012 online Otherwise, go to line 3. Free federal and state tax filing 2012 online     3. Free federal and state tax filing 2012 online Enter the appropriate number from Table 1 below. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online 310 4. Free federal and state tax filing 2012 online Divide line 2 by the number on line 3 4. Free federal and state tax filing 2012 online 100 5. Free federal and state tax filing 2012 online Multiply line 4 by the number of months for which this year's payments were made. Free federal and state tax filing 2012 online If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Free federal and state tax filing 2012 online Otherwise, go to line 6 5. Free federal and state tax filing 2012 online 1,200 6. Free federal and state tax filing 2012 online Enter any amount previously recovered tax free in years after 1986. Free federal and state tax filing 2012 online This is the amount shown on line 10 of your worksheet for last year 6. Free federal and state tax filing 2012 online -0- 7. Free federal and state tax filing 2012 online Subtract line 6 from line 2 7. Free federal and state tax filing 2012 online 31,000 8. Free federal and state tax filing 2012 online Enter the smaller of line 5 or line 7 8. Free federal and state tax filing 2012 online 1,200 9. Free federal and state tax filing 2012 online Taxable amount for year. Free federal and state tax filing 2012 online Subtract line 8 from line 1. Free federal and state tax filing 2012 online Enter the result, but not less than zero. Free federal and state tax filing 2012 online Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Free federal and state tax filing 2012 online Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Free federal and state tax filing 2012 online If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers , earlier, before entering an amount on your tax return 9. Free federal and state tax filing 2012 online $13,200 10. Free federal and state tax filing 2012 online Was your annuity starting date before 1987? □ Yes. Free federal and state tax filing 2012 online STOP. Free federal and state tax filing 2012 online Do not complete the rest of this worksheet. Free federal and state tax filing 2012 online  ☑ No. Free federal and state tax filing 2012 online Add lines 6 and 8. Free federal and state tax filing 2012 online This is the amount you have recovered tax free through 2013. Free federal and state tax filing 2012 online You will need this number if you need to fill out this worksheet next year 10. Free federal and state tax filing 2012 online 1,200 11. Free federal and state tax filing 2012 online Balance of cost to be recovered. Free federal and state tax filing 2012 online Subtract line 10 from line 2. Free federal and state tax filing 2012 online If zero, you will not have to complete this worksheet next year. Free federal and state tax filing 2012 online The payments you receive next year will generally be fully taxable 11. Free federal and state tax filing 2012 online $29,800         * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Free federal and state tax filing 2012 online           Table 1 for Line 3 Above       AND your annuity starting date was—     IF the age at annuity starting date was. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online BEFORE November 19, 1996, enter on line 3. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online AFTER November 18, 1996, enter on line 3. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online     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. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online THEN enter on line 3. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online     110 or under   410     111-120   360     121-130   310     131-140   260     141 or older   210   Multiple annuitants. Free federal and state tax filing 2012 online   If you and one or more other annuitants receive payments at the same time, you exclude from each annuity payment a pro rata share of the monthly tax-free amount. Free federal and state tax filing 2012 online Figure your share by taking the following steps. Free federal and state tax filing 2012 online Complete your worksheet through line 4 to figure the monthly tax-free amount. Free federal and state tax filing 2012 online Divide the amount of your monthly payment by the total amount of the monthly payments to all annuitants. Free federal and state tax filing 2012 online Multiply the amount on line 4 of your worksheet by the amount figured in (2) above. Free federal and state tax filing 2012 online The result is your share of the monthly tax-free amount. Free federal and state tax filing 2012 online   Replace the amount on line 4 of the worksheet with the result in (3) above. Free federal and state tax filing 2012 online Enter that amount on line 4 of your worksheet each year. Free federal and state tax filing 2012 online General Rule Under the General Rule, you determine the tax-free part of each annuity payment based on the ratio of the cost of the contract to the total expected return. Free federal and state tax filing 2012 online Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Free federal and state tax filing 2012 online To figure it, you must use life expectancy (actuarial) tables prescribed by the IRS. Free federal and state tax filing 2012 online Who must use the General Rule. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Annuity starting before November 19, 1996. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online You also had to use it for any fixed-period annuity. Free federal and state tax filing 2012 online If you did not have to use the General Rule, you could have chosen to use it. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Who cannot use the General Rule. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online See Simplified Method , earlier. Free federal and state tax filing 2012 online More information. Free federal and state tax filing 2012 online   For complete information on using the General Rule, including the actuarial tables you need, see Publication 939. Free federal and state tax filing 2012 online Taxation of Nonperiodic Payments This section of the publication explains how any nonperiodic distributions you receive under a pension or annuity plan are taxed. Free federal and state tax filing 2012 online Nonperiodic distributions are also known as amounts not received as an annuity. Free federal and state tax filing 2012 online They include all payments other than periodic payments and corrective distributions. Free federal and state tax filing 2012 online For example, the following items are treated as nonperiodic distributions. Free federal and state tax filing 2012 online Cash withdrawals. Free federal and state tax filing 2012 online Distributions of current earnings (dividends) on your investment. Free federal and state tax filing 2012 online However, do not include these distributions in your income to the extent the insurer keeps them to pay premiums or other consideration for the contract. Free federal and state tax filing 2012 online Certain loans. Free federal and state tax filing 2012 online See Loans Treated as Distributions , later. Free federal and state tax filing 2012 online The value of annuity contracts transferred without full and adequate consideration. Free federal and state tax filing 2012 online See Transfers of Annuity Contracts , later. Free federal and state tax filing 2012 online Corrective distributions of excess plan contributions. Free federal and state tax filing 2012 online   Generally, if the contributions made for you during the year to certain retirement plans exceed certain limits, the excess is taxable to you. Free federal and state tax filing 2012 online To correct an excess, your plan may distribute it to you (along with any income earned on the excess). Free federal and state tax filing 2012 online Although the plan reports the corrective distributions on Form 1099-R, the distribution is not treated as a nonperiodic distribution from the plan. Free federal and state tax filing 2012 online It is not subject to the allocation rules explained in the following discussion, it cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Free federal and state tax filing 2012 online    If your retirement plan made a corrective distribution of excess amounts (excess deferrals, excess contributions, or excess annual additions), your Form 1099-R should have the code “8,” “B,” “P,” or “E” in box 7. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Figuring the Taxable Amount 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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online 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. Free federal and state tax filing 2012 online You may be able to roll over the taxable amount of a nonperiodic distribution from a qualified retirement plan into another qualified retirement plan or a traditional IRA tax free. Free federal and state tax filing 2012 online See Rollovers, later. Free federal and state tax filing 2012 online If you do not make a tax-free rollover and the distribution qualifies as a lump-sum distribution, you may be able to elect an optional method of figuring the tax on the taxable amount. Free federal and state tax filing 2012 online See Lump-Sum Distributions, later. Free federal and state tax filing 2012 online Annuity starting date. Free federal and state tax filing 2012 online   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. Free federal and state tax filing 2012 online Distributions of employer securities. Free federal and state tax filing 2012 online    If you receive a distribution of employer securities from a qualified retirement plan, you may be able to defer the tax on the net unrealized appreciation (NUA) in the securities. Free federal and state tax filing 2012 online The NUA is the net increase in the securities' value while they were in the trust. Free federal and state tax filing 2012 online This tax deferral applies to distributions of the employer corporation's stocks, bonds, registered debentures, and debentures with interest coupons attached. Free federal and state tax filing 2012 online   If the distribution is a lump-sum distribution, tax is deferred on all of the NUA unless you choose to include it in your income for the year of the distribution. Free federal and state tax filing 2012 online    A lump-sum distribution for this purpose is the distribution or payment of a plan participant's entire balance (within a single tax year) from all of the employer's qualified plans of one kind (pension, profit-sharing, or stock bonus plans), but only if paid: Because of the plan participant's death, After the participant reaches age 59½, Because the participant, if an employee, separates from service, or After the participant, if a self-employed individual, becomes totally and permanently disabled. Free federal and state tax filing 2012 online    If you choose to include NUA in your income for the year of the distribution and the participant was born before January 2, 1936, you may be able to figure the tax on the NUA using the optional methods described und
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The Free Federal And State Tax Filing 2012 Online

Free federal and state tax filing 2012 online Publication 929 - Main Content Table of Contents Part 1. Free federal and state tax filing 2012 online Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. Free federal and state tax filing 2012 online Designated as representative. Free federal and state tax filing 2012 online IRS notice. Free federal and state tax filing 2012 online Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Free federal and state tax filing 2012 online Part 2. Free federal and state tax filing 2012 online Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. Free federal and state tax filing 2012 online Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Free federal and state tax filing 2012 online Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Free federal and state tax filing 2012 online Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Free federal and state tax filing 2012 online Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. Free federal and state tax filing 2012 online Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. Free federal and state tax filing 2012 online A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. Free federal and state tax filing 2012 online See Other Filing Requirements, later. Free federal and state tax filing 2012 online The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Free federal and state tax filing 2012 online  To find out whether a dependent must file, read the section that applies, or use Table 1. Free federal and state tax filing 2012 online Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. Free federal and state tax filing 2012 online Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online William is 16. Free federal and state tax filing 2012 online His mother claims an exemption for him on her income tax return. Free federal and state tax filing 2012 online He worked part time on weekends during the school year and full time during the summer. Free federal and state tax filing 2012 online He earned $7,000 in wages. Free federal and state tax filing 2012 online He did not have any unearned income. Free federal and state tax filing 2012 online He must file a tax return because he has earned income only and his gross income is more than $6,100. Free federal and state tax filing 2012 online If he is blind, he does not have to file a return because his gross income is not more than $7,600. Free federal and state tax filing 2012 online Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. Free federal and state tax filing 2012 online Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Sarah is 18 and single. Free federal and state tax filing 2012 online Her parents can claim an exemption for her on their income tax return. Free federal and state tax filing 2012 online She received $1,970 of taxable interest and dividend income. Free federal and state tax filing 2012 online She did not work during the year. Free federal and state tax filing 2012 online She must file a tax return because she has unearned income only and her gross income is more than $1,000. Free federal and state tax filing 2012 online If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. Free federal and state tax filing 2012 online Election to report child's unearned income on parent's return. Free federal and state tax filing 2012 online   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. Free federal and state tax filing 2012 online See Parent's Election To Report Child's Interest and Dividends in Part 2. Free federal and state tax filing 2012 online If the parent makes this election, the child does not have to file a return. Free federal and state tax filing 2012 online Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. Free federal and state tax filing 2012 online Filing Requirement Worksheet for Most Dependents 1. Free federal and state tax filing 2012 online Enter dependent's earned income plus $350     2. Free federal and state tax filing 2012 online Minimum amount   $1,000 3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger amount     4. Free federal and state tax filing 2012 online Maximum amount   6,100 5. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount     6. Free federal and state tax filing 2012 online Enter the dependent's gross income. Free federal and state tax filing 2012 online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing 2012 online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing 2012 online       Table 1. Free federal and state tax filing 2012 online 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Free federal and state tax filing 2012 online   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Free federal and state tax filing 2012 online   Single dependents—Were you either age 65 or older or blind?     No. Free federal and state tax filing 2012 online You must file a return if any of the following apply. Free federal and state tax filing 2012 online       Your unearned income was over $1,000. Free federal and state tax filing 2012 online Your earned income was over $6,100. Free federal and state tax filing 2012 online Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free federal and state tax filing 2012 online         Yes. Free federal and state tax filing 2012 online You must file a return if any of the following apply. Free federal and state tax filing 2012 online     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Free federal and state tax filing 2012 online       Married dependents—Were you either age 65 or older or blind?     No. Free federal and state tax filing 2012 online You must file a return if any of the following apply. Free federal and state tax filing 2012 online       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free federal and state tax filing 2012 online Your unearned income was over $1,000. Free federal and state tax filing 2012 online Your earned income was over $6,100. Free federal and state tax filing 2012 online Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free federal and state tax filing 2012 online       Yes. Free federal and state tax filing 2012 online You must file a return if any of the following apply. Free federal and state tax filing 2012 online       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free federal and state tax filing 2012 online Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Free federal and state tax filing 2012 online       Example 1. Free federal and state tax filing 2012 online Joe is 20, single, not blind, and a full-time college student. Free federal and state tax filing 2012 online He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. Free federal and state tax filing 2012 online He received $200 taxable interest income and earned $2,750 from a part-time job. Free federal and state tax filing 2012 online He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). Free federal and state tax filing 2012 online Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. Free federal and state tax filing 2012 online Enter dependent's earned income plus $350   $ 3,100 2. Free federal and state tax filing 2012 online Minimum amount   1,000 3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger amount   3,100 4. Free federal and state tax filing 2012 online Maximum amount   6,100 5. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount   3,100 6. Free federal and state tax filing 2012 online Enter the dependent's gross income. Free federal and state tax filing 2012 online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing 2012 online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing 2012 online   $ 2,950   Example 2. Free federal and state tax filing 2012 online The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Free federal and state tax filing 2012 online He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). Free federal and state tax filing 2012 online Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Free federal and state tax filing 2012 online Enter dependent's earned income plus $350   $ 3,100 2. Free federal and state tax filing 2012 online Minimum amount   1,000 3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger amount   3,100 4. Free federal and state tax filing 2012 online Maximum amount   6,100 5. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount   3,100 6. Free federal and state tax filing 2012 online Enter the dependent's gross income. Free federal and state tax filing 2012 online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing 2012 online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing 2012 online   $ 3,350   Age 65 or older or blind. Free federal and state tax filing 2012 online A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. Free federal and state tax filing 2012 online Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free federal and state tax filing 2012 online Enter dependent's earned income plus $350     2. Free federal and state tax filing 2012 online Minimum amount   $1,000 3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger amount     4. Free federal and state tax filing 2012 online Maximum amount   6,100 5. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount     6. Free federal and state tax filing 2012 online Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free federal and state tax filing 2012 online Add lines 5 and 6. Free federal and state tax filing 2012 online Enter the total     8. Free federal and state tax filing 2012 online Enter the dependent's gross income. Free federal and state tax filing 2012 online If line 8 is more than line 7, the dependent must file an income tax return. Free federal and state tax filing 2012 online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. Free federal and state tax filing 2012 online The facts are the same as in Example 2 except that Joe is also blind. Free federal and state tax filing 2012 online He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). Free federal and state tax filing 2012 online   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free federal and state tax filing 2012 online Enter dependent's earned income plus $350   $3,100 2. Free federal and state tax filing 2012 online Minimum amount   1,000 3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger amount   3,100 4. Free federal and state tax filing 2012 online Maximum amount   6,100 5. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount   3,100 6. Free federal and state tax filing 2012 online Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free federal and state tax filing 2012 online Add lines 5 and 6. Free federal and state tax filing 2012 online Enter the total   4,600 8. Free federal and state tax filing 2012 online Enter the dependent's gross income. Free federal and state tax filing 2012 online If line 8 is more than line 7, the dependent must file an income tax return. Free federal and state tax filing 2012 online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. Free federal and state tax filing 2012 online A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Free federal and state tax filing 2012 online But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Free federal and state tax filing 2012 online A dependent must also file a tax return if he or she: Had wages of $108. Free federal and state tax filing 2012 online 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. Free federal and state tax filing 2012 online Spouse itemizes. Free federal and state tax filing 2012 online   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing 2012 online Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. Free federal and state tax filing 2012 online Income tax was withheld from his or her income. Free federal and state tax filing 2012 online He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Free federal and state tax filing 2012 online See the tax return instructions to find out who qualifies for these credits. Free federal and state tax filing 2012 online  By filing a return, the dependent can get a refund. Free federal and state tax filing 2012 online Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. Free federal and state tax filing 2012 online If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Free federal and state tax filing 2012 online Signing the child's return. Free federal and state tax filing 2012 online   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. Free federal and state tax filing 2012 online ” Authority of parent or guardian. Free federal and state tax filing 2012 online   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. Free federal and state tax filing 2012 online   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. Free federal and state tax filing 2012 online That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. Free federal and state tax filing 2012 online Third party designee. Free federal and state tax filing 2012 online   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. Free federal and state tax filing 2012 online The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. Free federal and state tax filing 2012 online   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. Free federal and state tax filing 2012 online This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. Free federal and state tax filing 2012 online See the return instructions for more information. Free federal and state tax filing 2012 online Designated as representative. Free federal and state tax filing 2012 online   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. Free federal and state tax filing 2012 online Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Free federal and state tax filing 2012 online See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Free federal and state tax filing 2012 online   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. Free federal and state tax filing 2012 online IRS notice. Free federal and state tax filing 2012 online   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. Free federal and state tax filing 2012 online The notice will show who to contact. Free federal and state tax filing 2012 online The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Free federal and state tax filing 2012 online Child's earnings. Free federal and state tax filing 2012 online   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. Free federal and state tax filing 2012 online This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Free federal and state tax filing 2012 online If the child does not pay the tax due on this income, the parent may be liable for the tax. Free federal and state tax filing 2012 online Child's expenses. Free federal and state tax filing 2012 online   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Free federal and state tax filing 2012 online You made the payments out of your child's earnings. Free federal and state tax filing 2012 online These items can be deducted only on the child's return. Free federal and state tax filing 2012 online Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). Free federal and state tax filing 2012 online However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Free federal and state tax filing 2012 online Certain dependents cannot claim any standard deduction. Free federal and state tax filing 2012 online See Standard Deduction of Zero , later. Free federal and state tax filing 2012 online Worksheet 1. Free federal and state tax filing 2012 online   Use Worksheet 1 to figure the dependent's standard deduction. Free federal and state tax filing 2012 online Worksheet 1. Free federal and state tax filing 2012 online Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Free federal and state tax filing 2012 online If you were 65 or older and/or blind, check the correct number of boxes below. Free federal and state tax filing 2012 online Put the total number of boxes checked in box c and go to line 1. Free federal and state tax filing 2012 online a. Free federal and state tax filing 2012 online You 65 or older   Blind   b. Free federal and state tax filing 2012 online Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Free federal and state tax filing 2012 online Total boxes checked         1. Free federal and state tax filing 2012 online Enter your earned income (defined below) plus $350. Free federal and state tax filing 2012 online If none, enter -0-. Free federal and state tax filing 2012 online 1. Free federal and state tax filing 2012 online     2. Free federal and state tax filing 2012 online Minimum amount. Free federal and state tax filing 2012 online   2. Free federal and state tax filing 2012 online $1,000   3. Free federal and state tax filing 2012 online Compare lines 1 and 2. Free federal and state tax filing 2012 online Enter the larger of the two amounts here. Free federal and state tax filing 2012 online 3. Free federal and state tax filing 2012 online     4. Free federal and state tax filing 2012 online Enter on line 4 the amount shown below for your filing status. Free federal and state tax filing 2012 online       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Free federal and state tax filing 2012 online     5. Free federal and state tax filing 2012 online Standard deduction. Free federal and state tax filing 2012 online         a. Free federal and state tax filing 2012 online Compare lines 3 and 4. Free federal and state tax filing 2012 online Enter the smaller amount here. Free federal and state tax filing 2012 online If under 65 and not blind, stop here. Free federal and state tax filing 2012 online This is your standard deduction. Free federal and state tax filing 2012 online Otherwise, go on to line 5b. Free federal and state tax filing 2012 online 5a. Free federal and state tax filing 2012 online     b. Free federal and state tax filing 2012 online If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Free federal and state tax filing 2012 online Enter the result here. Free federal and state tax filing 2012 online 5b. Free federal and state tax filing 2012 online     c. Free federal and state tax filing 2012 online Add lines 5a and 5b. Free federal and state tax filing 2012 online This is your standard deduction for 2013. Free federal and state tax filing 2012 online 5c. Free federal and state tax filing 2012 online     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Free federal and state tax filing 2012 online It also includes any amount received as a scholarship that you must include in income. Free federal and state tax filing 2012 online   Example 1. Free federal and state tax filing 2012 online Michael is single, age 15, and not blind. Free federal and state tax filing 2012 online His parents can claim him as a dependent on their tax return. Free federal and state tax filing 2012 online He has taxable interest income of $800 and wages of $150. Free federal and state tax filing 2012 online He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing 2012 online On line 3, he enters $1,000, the larger of $500 or $1,000. Free federal and state tax filing 2012 online Michael enters $6,100 on line 4. Free federal and state tax filing 2012 online On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Free federal and state tax filing 2012 online His standard deduction is $1,000. Free federal and state tax filing 2012 online Example 2. Free federal and state tax filing 2012 online Judy, a full-time student, is single, age 22, and not blind. Free federal and state tax filing 2012 online Her parents can claim her as a dependent on their tax return. Free federal and state tax filing 2012 online She has dividend income of $275 and wages of $2,500. Free federal and state tax filing 2012 online She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing 2012 online On line 3, she enters $2,850, the larger of $2,850 or $1,000. Free federal and state tax filing 2012 online She enters $6,100 on line 4. Free federal and state tax filing 2012 online On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Free federal and state tax filing 2012 online Example 3. Free federal and state tax filing 2012 online Amy, who is single, is claimed as a dependent on her parents' tax return. Free federal and state tax filing 2012 online She is 18 years old and blind. Free federal and state tax filing 2012 online She has taxable interest income of $1,000 and wages of $2,000. Free federal and state tax filing 2012 online She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing 2012 online She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. Free federal and state tax filing 2012 online Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Free federal and state tax filing 2012 online She enters $1,500 (the number in box c times $1,500) on line 5b. Free federal and state tax filing 2012 online Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Free federal and state tax filing 2012 online Standard Deduction of Zero The standard deduction for the following dependents is zero. Free federal and state tax filing 2012 online A married dependent filing a separate return whose spouse itemizes deductions. Free federal and state tax filing 2012 online A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. Free federal and state tax filing 2012 online A nonresident or dual-status alien dependent, unless the dependent is married to a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online citizen or resident alien at the end of the year and chooses to be treated as a U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online resident for the year. Free federal and state tax filing 2012 online See Publication 519, U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Tax Guide for Aliens, for information on making this choice. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Free federal and state tax filing 2012 online However, her husband elects to file a separate return and itemize his deductions. Free federal and state tax filing 2012 online Because he itemizes, Jennifer's standard deduction on her return is zero. Free federal and state tax filing 2012 online She can, however, itemize any of her allowable deductions. Free federal and state tax filing 2012 online Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. Free federal and state tax filing 2012 online This is true even if the other taxpayer does not actually claim the exemption. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online James and Barbara can claim their child, Ben, as a dependent on their return. Free federal and state tax filing 2012 online Ben is a college student who works during the summer and must file a tax return. Free federal and state tax filing 2012 online Ben cannot claim his own exemption on his return. Free federal and state tax filing 2012 online This is true even if James and Barbara do not claim him as a dependent on their return. Free federal and state tax filing 2012 online Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Free federal and state tax filing 2012 online If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Free federal and state tax filing 2012 online The exemption from withholding does not apply to social security and Medicare taxes. Free federal and state tax filing 2012 online Conditions for exemption from withholding. Free federal and state tax filing 2012 online   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Free federal and state tax filing 2012 online For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Free federal and state tax filing 2012 online For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Free federal and state tax filing 2012 online Dependents. Free federal and state tax filing 2012 online   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Free federal and state tax filing 2012 online The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Free federal and state tax filing 2012 online The employee's unearned income will be more than $350. Free federal and state tax filing 2012 online Exceptions. Free federal and state tax filing 2012 online   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. Free federal and state tax filing 2012 online The above exceptions do not apply to supplemental wages greater than $1,000,000. Free federal and state tax filing 2012 online For more information, see Exemption From Withholding in chapter 1 of Publication 505. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Guy is 17 and a student. Free federal and state tax filing 2012 online During the summer he works part time at a grocery store. Free federal and state tax filing 2012 online He expects to earn about $1,200 this year. Free federal and state tax filing 2012 online He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. Free federal and state tax filing 2012 online The only other income he expects during the year is $375 interest on a savings account. Free federal and state tax filing 2012 online He expects that his parents will be able to claim him as a dependent on their tax return. Free federal and state tax filing 2012 online He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Free federal and state tax filing 2012 online Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. Free federal and state tax filing 2012 online Claiming exemption from withholding. Free federal and state tax filing 2012 online    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Free federal and state tax filing 2012 online The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Free federal and state tax filing 2012 online Renewing an exemption from withholding. Free federal and state tax filing 2012 online   An exemption from withholding is good for only one year. Free federal and state tax filing 2012 online An employee must file a new Form W-4 by February 15 each year to continue the exemption. Free federal and state tax filing 2012 online Part 2. Free federal and state tax filing 2012 online Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Free federal and state tax filing 2012 online If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. Free federal and state tax filing 2012 online (See Parent's Election To Report Child's Interest and Dividends , later. Free federal and state tax filing 2012 online ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free federal and state tax filing 2012 online (See Tax for Certain Children Who Have Unearned Income , later. Free federal and state tax filing 2012 online ) For these rules, the term “child” includes a legally adopted child and a stepchild. Free federal and state tax filing 2012 online These rules apply whether or not the child is a dependent. Free federal and state tax filing 2012 online These rules do not apply if neither of the child's parents were living at the end of the year. Free federal and state tax filing 2012 online Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. Free federal and state tax filing 2012 online The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . Free federal and state tax filing 2012 online Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. Free federal and state tax filing 2012 online Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Free federal and state tax filing 2012 online Parents are married. Free federal and state tax filing 2012 online   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Free federal and state tax filing 2012 online Parents not living together. Free federal and state tax filing 2012 online   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. Free federal and state tax filing 2012 online If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Free federal and state tax filing 2012 online   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. Free federal and state tax filing 2012 online Parents are divorced. Free federal and state tax filing 2012 online   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. Free federal and state tax filing 2012 online Custodial parent remarried. Free federal and state tax filing 2012 online   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Free federal and state tax filing 2012 online Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Free federal and state tax filing 2012 online Do not use the return of the noncustodial parent. Free federal and state tax filing 2012 online   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Free federal and state tax filing 2012 online If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Free federal and state tax filing 2012 online Parents never married. Free federal and state tax filing 2012 online   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. Free federal and state tax filing 2012 online If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Free federal and state tax filing 2012 online Widowed parent remarried. Free federal and state tax filing 2012 online   If a widow or widower remarries, the new spouse is treated as the child's other parent. Free federal and state tax filing 2012 online The rules explained earlier under Custodial parent remarried apply. Free federal and state tax filing 2012 online Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. Free federal and state tax filing 2012 online If you do, your child will not have to file a return. Free federal and state tax filing 2012 online You can make this election only if all the following conditions are met. Free federal and state tax filing 2012 online Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Free federal and state tax filing 2012 online Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Free federal and state tax filing 2012 online The child's gross income was less than $10,000. Free federal and state tax filing 2012 online The child is required to file a return unless you make this election. Free federal and state tax filing 2012 online The child does not file a joint return for the year. Free federal and state tax filing 2012 online No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. Free federal and state tax filing 2012 online No federal income tax was withheld from your child's income under the backup withholding rules. Free federal and state tax filing 2012 online You are the parent whose return must be used when applying the special tax rules for children. Free federal and state tax filing 2012 online (See Which Parent's Return To Use , earlier. Free federal and state tax filing 2012 online ) These conditions are also shown in Figure 1. Free federal and state tax filing 2012 online Certain January 1 birthdays. Free federal and state tax filing 2012 online   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Free federal and state tax filing 2012 online You cannot make this election for such a child unless the child was a full-time student. Free federal and state tax filing 2012 online   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Free federal and state tax filing 2012 online You cannot make this election for such a child. Free federal and state tax filing 2012 online How to make the election. Free federal and state tax filing 2012 online    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Free federal and state tax filing 2012 online (If you make this election, you cannot file Form 1040A or Form 1040EZ. Free federal and state tax filing 2012 online ) Attach a separate Form 8814 for each child for whom you make the election. Free federal and state tax filing 2012 online You can make the election for one or more children and not for others. Free federal and state tax filing 2012 online Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Free federal and state tax filing 2012 online Rate may be higher. Free federal and state tax filing 2012 online   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. Free federal and state tax filing 2012 online This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Free federal and state tax filing 2012 online However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. Free federal and state tax filing 2012 online Deductions you cannot take. Free federal and state tax filing 2012 online   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. Free federal and state tax filing 2012 online The additional standard deduction if the child is blind. Free federal and state tax filing 2012 online The deduction for a penalty on an early withdrawal of your child's savings. Free federal and state tax filing 2012 online Itemized deductions (such as your child's investment expenses or charitable contributions). Free federal and state tax filing 2012 online Figure 1. Free federal and state tax filing 2012 online Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Free federal and state tax filing 2012 online Figure 1. Free federal and state tax filing 2012 online Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Free federal and state tax filing 2012 online   If you use Form 8814, your child's unearned income is considered your unearned income. Free federal and state tax filing 2012 online To figure the limit on your deductible investment interest, add the child's unearned income to yours. Free federal and state tax filing 2012 online However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. Free federal and state tax filing 2012 online Alternative minimum tax. Free federal and state tax filing 2012 online    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. Free federal and state tax filing 2012 online If it is, you must include it with your own tax preference items when figuring your AMT. Free federal and state tax filing 2012 online See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Free federal and state tax filing 2012 online Reduced deductions or credits. Free federal and state tax filing 2012 online   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Free federal and state tax filing 2012 online Deduction for contributions to a traditional individual retirement arrangement (IRA). Free federal and state tax filing 2012 online Deduction for student loan interest. Free federal and state tax filing 2012 online Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Free federal and state tax filing 2012 online Credit for child and dependent care expenses. Free federal and state tax filing 2012 online Child tax credit. Free federal and state tax filing 2012 online Education tax credits. Free federal and state tax filing 2012 online Earned income credit. Free federal and state tax filing 2012 online Penalty for underpayment of estimated tax. Free federal and state tax filing 2012 online   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. Free federal and state tax filing 2012 online If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. Free federal and state tax filing 2012 online Get Publication 505 for more information. Free federal and state tax filing 2012 online Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Free federal and state tax filing 2012 online Only the amount over $2,000 is added to your income. Free federal and state tax filing 2012 online The amount over $2,000 is shown on Form 8814, line 6. Free federal and state tax filing 2012 online Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Free federal and state tax filing 2012 online Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Free federal and state tax filing 2012 online If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. Free federal and state tax filing 2012 online On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Free federal and state tax filing 2012 online Note. Free federal and state tax filing 2012 online The tax on the first $2,000 is figured on Form 8814, Part II. Free federal and state tax filing 2012 online See Figuring Additional Tax , later. Free federal and state tax filing 2012 online Qualified dividends. Free federal and state tax filing 2012 online   Enter on Form 8814, line 2a, any ordinary dividends your child received. Free federal and state tax filing 2012 online This amount may include qualified dividends. Free federal and state tax filing 2012 online Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. Free federal and state tax filing 2012 online For detailed information about qualified dividends, see Publication 550. Free federal and state tax filing 2012 online   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing 2012 online You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free federal and state tax filing 2012 online   Enter the child's qualified dividends on Form 8814, line 2b. Free federal and state tax filing 2012 online But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing 2012 online Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing 2012 online (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free federal and state tax filing 2012 online ) Capital gain distributions. Free federal and state tax filing 2012 online   Enter on Form 8814, line 3, any capital gain distributions your child received. Free federal and state tax filing 2012 online The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. Free federal and state tax filing 2012 online You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free federal and state tax filing 2012 online   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Free federal and state tax filing 2012 online (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free federal and state tax filing 2012 online ) Collectibles (28% rate) gain. Free federal and state tax filing 2012 online    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. Free federal and state tax filing 2012 online Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing 2012 online The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Free federal and state tax filing 2012 online The denominator is the child's total capital gain distribution. Free federal and state tax filing 2012 online Enter the result on line 4 of the 28% Rate Gain Worksheet. Free federal and state tax filing 2012 online Unrecaptured section 1250 gain. Free federal and state tax filing 2012 online   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. Free federal and state tax filing 2012 online Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing 2012 online The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Free federal and state tax filing 2012 online The denominator is the child's total capital gain distribution. Free federal and state tax filing 2012 online Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Free federal and state tax filing 2012 online Section 1202 gain. Free federal and state tax filing 2012 online   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. Free federal and state tax filing 2012 online (For information about the exclusion, see chapter 4 of Publication 550. Free federal and state tax filing 2012 online ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing 2012 online The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Free federal and state tax filing 2012 online The denominator is the child's total capital gain distribution. Free federal and state tax filing 2012 online Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Free federal and state tax filing 2012 online In some cases, the exclusion is more than 50%. Free federal and state tax filing 2012 online See the instructions for Schedule D for details and information on how to report the exclusion amount. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Fred is 6 years old. Free federal and state tax filing 2012 online In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. Free federal and state tax filing 2012 online (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Free federal and state tax filing 2012 online ) All of the ordinary dividends are qualified dividends. Free federal and state tax filing 2012 online He has no other income and is not subject to backup withholding. Free federal and state tax filing 2012 online No estimated tax payments were made under his name and social security number. Free federal and state tax filing 2012 online Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Free federal and state tax filing 2012 online They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. Free federal and state tax filing 2012 online They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Free federal and state tax filing 2012 online They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Free federal and state tax filing 2012 online They enter the amount of Fred's capital gain distributions, $525, on line 3. Free federal and state tax filing 2012 online Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Free federal and state tax filing 2012 online They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. Free federal and state tax filing 2012 online This is the total amount from Form 8814 to be reported on their return. Free federal and state tax filing 2012 online Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Free federal and state tax filing 2012 online They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Free federal and state tax filing 2012 online They enter the result, . Free federal and state tax filing 2012 online 75, on line 7. Free federal and state tax filing 2012 online They divide the amount on line 3, $525, by the amount on line 4, $2,100. Free federal and state tax filing 2012 online They enter the result, . Free federal and state tax filing 2012 online 25, on line 8. Free federal and state tax filing 2012 online They multiply the amount on line 6, $100, by the decimal on line 7, . Free federal and state tax filing 2012 online 75, and enter the result, $75, on line 9. Free federal and state tax filing 2012 online They multiply the amount on line 6, $100, by the decimal on line 8, . Free federal and state tax filing 2012 online 25, and enter the result, $25, on line 10. Free federal and state tax filing 2012 online They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. Free federal and state tax filing 2012 online They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. Free federal and state tax filing 2012 online They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Free federal and state tax filing 2012 online Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Free federal and state tax filing 2012 online Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. Free federal and state tax filing 2012 online This tax is added to the tax figured on your income. Free federal and state tax filing 2012 online This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Free federal and state tax filing 2012 online Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Free federal and state tax filing 2012 online Check box a on Form 1040, line 44, or Form 1040NR, line 42. Free federal and state tax filing 2012 online Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free federal and state tax filing 2012 online If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Free federal and state tax filing 2012 online Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Free federal and state tax filing 2012 online When Form 8615 must be filed. Free federal and state tax filing 2012 online   Form 8615 must be filed for a child if all of the following statements are true. Free federal and state tax filing 2012 online The child's unearned income was more than $2,000. Free federal and state tax filing 2012 online The child is required to file a return for 2013. Free federal and state tax filing 2012 online The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. Free federal and state tax filing 2012 online At least one of the child's parents was alive at the end of 2013. Free federal and state tax filing 2012 online The child does not file a joint return for 2013. Free federal and state tax filing 2012 online These conditions are also shown in Figure 2. Free federal and state tax filing 2012 online Certain January 1 birthdays. Free federal and state tax filing 2012 online   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Free federal and state tax filing 2012 online IF a child was born on. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online THEN, at the end of 2013, the child is considered to be. Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online . Free federal and state tax filing 2012 online January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Free federal and state tax filing 2012 online The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Free federal and state tax filing 2012 online  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. Free federal and state tax filing 2012 online  ***Do not use Form 8615 for this child. Free federal and state tax filing 2012 online Figure 2. Free federal and state tax filing 2012 online Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Free federal and state tax filing 2012 online Figure 2. Free federal and state tax filing 2012 online Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Free federal and state tax filing 2012 online (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Free federal and state tax filing 2012 online ) On line C, check the box for the parent's filing status. Free federal and state tax filing 2012 online See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Free federal and state tax filing 2012 online Parent with different tax year. Free federal and state tax filing 2012 online   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Free federal and state tax filing 2012 online Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Free federal and state tax filing 2012 online Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Free federal and state tax filing 2012 online Parent's return information not known timely. Free federal and state tax filing 2012 online   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. Free federal and state tax filing 2012 online   You can use any reasonable estimate. Free federal and state tax filing 2012 online This includes using information from last year's return. Free federal and state tax filing 2012 online If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Free federal and state tax filing 2012 online   When you get the correct information, file an amended return on Form 1040X, Amended U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Individual Income Tax Return. Free federal and state tax filing 2012 online Extension of time to file. Free federal and state tax filing 2012 online   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Free federal and state tax filing 2012 online S. Free federal and state tax filing 2012 online Individual Income Tax Return. Free federal and state tax filing 2012 online See the instructions for Form 4868 for details. Free federal and state tax filing 2012 online    An extension of time to file is not an extension of time to pay. Free federal and state tax filing 2012 online You must make an accurate estimate of the tax for 2013. Free federal and state tax filing 2012 online If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. Free federal and state tax filing 2012 online See Form 4868 and its instructions. Free federal and state tax filing 2012 online Parent's return information not available. Free federal and state tax filing 2012 online   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). Free federal and state tax filing 2012 online How to request. Free federal and state tax filing 2012 online   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. Free federal and state tax filing 2012 online (The IRS cannot process a request received before the end of the tax year. Free federal and state tax filing 2012 online )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. Free federal and state tax filing 2012 online   The request must contain all of the following. Free federal and state tax filing 2012 online A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. Free federal and state tax filing 2012 online Proof of the child's age (for example, a copy of the child's birth certificate). Free federal and state tax filing 2012 online Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). Free federal and state tax filing 2012 online The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. Free federal and state tax filing 2012 online    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. Free federal and state tax filing 2012 online Step 1. Free federal and state tax filing 2012 online Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. Free federal and state tax filing 2012 online To do that, use Form 8615, Part I. Free federal and state tax filing 2012 online Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Free federal and state tax filing 2012 online Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Free federal and state tax filing 2012 online Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Free federal and state tax filing 2012 online If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. Free federal and state tax filing 2012 online However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. Free federal and state tax filing 2012 online Alternate Worksheet for Form 8615, Line 1 A. Free federal and state tax filing 2012 online Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Free federal and state tax filing 2012 online Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Free federal and state tax filing 2012 online Enter this total as a positive number (greater than zero)   C. Free federal and state tax filing 2012 online Add line A and line B and  enter the total   D. Free federal and state tax filing 2012 online Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. Free federal and state tax filing 2012 online Subtract line D from line C. Free federal and state tax filing 2012 online Enter the result here and on Form 8615, line 1   Unearned income defined. Free federal and state tax filing 2012 online   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Free federal and state tax filing 2012 online It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Free federal and state tax filing 2012 online Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). Free federal and state tax filing 2012 online Nontaxable income. Free federal and state tax filing 2012 online   For this purpose, unearned income includes only amounts the child must include in gross income. Free federal and state tax filing 2012 online Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Free federal and state tax filing 2012 online Capital loss. Free federal and state tax filing 2012 online   A child's capital losses are taken into account in figuring the child's unearned income. Free federal and state tax filing 2012 online Capital losses are first applied against capital gains. Free federal and state tax filing 2012 online If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. Free federal and state tax filing 2012 online Any difference over $3,000 is carried to the next year. Free federal and state tax filing 2012 online Income from property received as a gift. Free federal and state tax filing 2012 online   A child's unearned income includes all income produced by property belonging to the child. Free federal and state tax filing 2012 online This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. Free federal and state tax filing 2012 online   A child's unearned income includes income produced by property given as a gift to the child. Free federal and state tax filing 2012 online This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Free federal and state tax filing 2012 online Example. Free federal and state tax filing 2012 online Amanda Black, age 13, received the following income. Free federal and state tax filing 2012 online Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. Free federal and state tax filing 2012 online Amanda's unearned income is $2,100. Free federal and state tax filing 2012 online This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Free federal and state tax filing 2012 online Her wages are earned (not unearned) income because they are received for work actually performed. Free federal and state tax filing 2012 online Her tax-exempt interest is not included because it is nontaxable. Free federal and state tax filing 2012 online Trust income. Free federal and state tax filing 2012 online   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. Free federal and state tax filing 2012 online   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Free federal and state tax filing 2012 online See the Form 8615 instructions for details. Free federal and state tax filing 2012 online Adjustment to income. Free federal and state tax filing 2012 online   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. Free federal and state tax filing 2012 online Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Free federal and state tax filing 2012 online If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. Free federal and state tax filing 2012 online Directly connected. Free federal and state tax filing 2012 online   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. Free federal and state tax filing 2012 online These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Free federal and state tax filing 2012 online    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Free federal and state tax filing 2012 online Only the amount greater than 2% of the child's adjusted gross income can be deducted. Free federal and state tax filing 2012 online See Publication 529, Miscellaneous Deductions, for more information. Free federal and state tax filing 2012 online Example 1. Free federal and state tax filing 2012 online Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. Free federal and state tax filing 2012 online His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Free federal and state tax filing 2012 online Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. Free federal and state tax filing 2012 online Example 2. Free federal and state tax filing 2012 online Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Free federal and state tax filing 2012 online She has no other income. Free federal and state tax filing 2012 online She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. Free federal and state tax filing 2012 online Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Free federal and state tax filing 2012 online The amount on line 2 is $2,050. Free federal and state tax filing 2012 online This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Free federal and state tax filing 2012 online Line 3 Subtract line 2 from line 1 and enter the result on this line. Free federal and state tax filing 2012 online If zero or less, do not complete the rest of the form. Free federal and state tax filing 2012 online However, you must still attach Form 8615 to the child's tax return. Free federal and state tax filing 2012 online Figure the tax on the child's taxable income in the normal manner. Free federal and state tax filing 2012 online Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free federal and state tax filing 2012 online Child files Form 2555 or 2555-EZ. Free federal and state tax filing 2012 online   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. Free federal and state tax filing 2012 online Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Free federal and state tax filing 2012 online Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Free federal and state tax filing 2012 online Enter on Form 8615, line 5, the smaller of line 3 or line 4. Free federal and state tax filing 2012 online This is the child's net unearned income. Free federal and state tax filing 2012 online If zero or less, do not complete the rest of the form. Free federal and state tax filing 2012 online However, you must still attach Form 8615 to the child's tax return. Free federal and state tax filing 2012 online Figure the tax on the child's taxable income in the normal manner. Free federal and state tax filing 2012 online Step 2. Free federal and state tax filing 2012 online Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. Free federal and state tax filing 2012 online The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. Free federal and state tax filing 2012 online When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. Free federal and state tax filing 2012 online For example, do not refigure the medical expense deduction. Free federal and state tax filing 2012 online Figure the tentative tax on Form 8615, lines 6 through 13. Free federal and state tax filing 2012 online Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. Free federal and state tax filing 2012 online If the parent's taxable income is zero or less, enter zero on line 6. Free federal and state tax filing 2012 online Parent files Form 2555 or 2555-EZ. Free federal and state tax filing 2012 online   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. Free federal and state tax filing 2012 online Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. Free federal and state tax filing 2012 online Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Free federal and state tax filing 2012 online Do not include the amount from line 5 of the Form 8615 being completed. Free federal and state tax filing 2012 online (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. Free federal and state tax filing 2012 online ) Example. Free federal and state tax filing 2012 online Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Free federal and state tax filing 2012 online The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. Free federal and state tax filing 2012 online Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Free federal and state tax filing 2012 online Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Free federal and state tax filing 2012 online Other children's information not available. Free federal and state tax filing 2012 online   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. Free federal and state tax filing 2012 online Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Free federal and state tax filing 2012 online Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Free federal and state tax filing 2012 online You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Free federal and state tax filing 2012 online Net capital gain. Free federal and state tax filing 2012 online   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. Free federal and state tax filing 2012 online If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Free federal and state tax filing 2012 online Qualified dividends. Free federal and state tax filing 2012 online   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Free federal and state tax filing 2012 online Net capital gain and qualified dividends on line 8. Free federal and state tax filing 2012 online   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Free federal and state tax filing 2012 online   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Free federal and state tax filing 2012 online   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. Free federal and state tax filing 2012 online   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. Free federal and state tax filing 2012 online   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Free federal and state tax filing 2012 online See the instructions for Form 8615 for more details. Free federal and state tax filing 2012 online Note. Free federal and state tax filing 2012 online The amount of any net capital gain or qualified dividends is not separately reported on line 8. Free federal and state tax filing 2012 online It is  needed, however, when figuring the tax on line 9. Free federal and state tax filing 2012 online Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. Free federal and state tax filing 2012 online If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. Free federal and state tax filing 2012 online But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. Free federal and state tax filing 2012 online If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Free federal and state tax filing 2012 online For details, see the instructions for Form 8615, line 9. Free federal and state tax filing 2012 online However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Free federal and state tax filing 2012 online But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Free federal and state tax filing 2012 online Child files Form 2555 or 2555-EZ. Free federal and state tax filing 2012 online   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. Free federal and state tax filing 2012 online Using the Schedule D Tax Worksheet for line 9 tax. Free federal and state tax filing 2012 online    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. Free federal and state tax filing 2012 online If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. Free federal and state tax filing 2012 online Then figure the line 9 tax using another Schedule D Tax Worksheet. Free federal and state tax filing 2012 online (Do not attach this Schedule D Tax Worksheet to the child's return. Free federal and state tax filing 2012 online )   Complete this Schedule D Tax Worksheet as follows. Free federal and state tax filing 2012 online On line 1, enter the amount from Form 8615, line 8. Free federal and state tax filing 2012 online On line 2, enter the qualified dividends included on Form 8615, line 8. Free federal and state tax filing 2012 online (See the earlier discussion for line 8. Free federal and state tax filing 2012 online ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. Free federal and state tax filing 2012 online On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. Free federal and state tax filing 2012 online If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Free federal and state tax filing 2012 online On lines 5 and 6, follow the worksheet instructions. Free federal and state tax filing 2012 online On line 7, enter the net capital gain included on Form 8615, line 8. Free federal and state tax filing 2012 online (See the earlier discussion for line 8. Free federal and state tax filing 2012 online ) On lines 8 through 10, follow the worksheet instructions. Free federal and state tax filing 2012 online On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Free federal and state tax filing 2012 online Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Free federal and state tax filing 2012 online Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Free federal and state tax filing 2012 online If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Free federal and state tax filing 2012 online Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Free federal and state tax filing 2012 online Determine whether there is a line 8 capital gain excess as follows. Free federal and state tax filing 2012 online Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. Free federal and state tax filing 2012 online (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free federal and state tax filing 2012 online ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Free federal and state tax filing 2012 online Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Free federal and state tax filing 2012 online If the result is more than zero, that amount is the line 8 capital gain excess. Free federal and state tax filing 2012 online If the result is zero or less, there is no line 8 capital gain excess. Free federal and state tax filing 2012 online If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Free federal and state tax filing 2012 online If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. Free federal and state tax filing 2012 online (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Free federal and state tax filing 2012 online ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Free federal and state tax filing 2012 online Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. Free federal and state tax filing 2012 online If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free federal and state tax filing 2012 online If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free federal and state tax filing 2012 online Complete lines 12 through 45 following the worksheet instructions. Free federal and state tax filing 2012 online Use the parent's filing status to complete lines 15, 42, and 44. Free federal and state tax filing 2012 online Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line