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Free federal tax return 8. Free federal tax return   Distributions and Rollovers Table of Contents DistributionsMinimum Required Distributions No Special 10-Year Tax Option Transfer of Interest in 403(b) ContractAfter-tax contributions. Free federal tax return Permissive service credit. Free federal tax return Tax-Free RolloversHardship exception to rollover rules. Free federal tax return Eligible retirement plans. Free federal tax return Nonqualifying distributions. Free federal tax return Second rollover. Free federal tax return Gift Tax Distributions Permissible distributions. Free federal tax return   Generally, a distribution cannot be made from a 403(b) account until the employee: Reaches age 59½, Has a severance from employment, Dies, Becomes disabled, In the case of elective deferrals, encounters financial hardship, or Has a qualified reservist distribution. Free federal tax return In most cases, the payments you receive or that are made available to you under your 403(b) account are taxable in full as ordinary income. Free federal tax return In general, the same tax rules apply to distributions from 403(b) plans that apply to distributions from other retirement plans. Free federal tax return These rules are explained in Publication 575. Free federal tax return Publication 575 also discusses the additional tax on early distributions from retirement plans. Free federal tax return Retired public safety officers. Free federal tax return   If you are an eligible retired public safety officer, distributions of up to $3,000, made directly from your 403(b) plan to pay accident, health, or long-term care insurance, are not included in your taxable income. Free federal tax return The premiums can be for you, your spouse, or your dependents. Free federal tax return   A public safety officer is a law enforcement officer, fire fighter, chaplain, or member of a rescue squad or ambulance crew. Free federal tax return   For additional information, see Publication 575. Free federal tax return Distribution for active reservist. Free federal tax return   The 10% penalty for early withdrawals will not apply to a qualified reservist distribution attributable to elective deferrals from a 403(b) plan. Free federal tax return A qualified reservist distribution is a distribution that is made: To an individual who is a reservist or national guardsman and who was ordered or called to active duty for a period in excess of 179 days or for an indefinite period; and During the period beginning on the date of the order or call to duty and ending at the close of the active duty period. Free federal tax return Minimum Required Distributions You must receive all, or at least a certain minimum, of your interest accruing after 1986 in the 403(b) plan by April 1 of the calendar year following the later of the calendar year in which you become age 70½, or the calendar year in which you retire. Free federal tax return Check with your employer, plan administrator, or provider to find out whether this rule also applies to pre-1987 accruals. Free federal tax return If not, a minimum amount of these accruals must begin to be distributed by the later of the end of the calendar year in which you reach age 75 or April 1 of the calendar year following retirement. Free federal tax return For each year thereafter, the minimum distribution must be made by the last day of the year. Free federal tax return If you do not receive the required minimum distribution, you are subject to a nondeductible 50% excise tax on the difference between the required minimum distribution and the amount actually distributed. Free federal tax return No Special 10-Year Tax Option A distribution from a 403(b) plan does not qualify as a lump-sum distribution. Free federal tax return This means you cannot use the special 10-year tax option to calculate the taxable portion of a 403(b) distribution. Free federal tax return For more information, see Publication 575. Free federal tax return Transfer of Interest in 403(b) Contract Contract exchanges. Free federal tax return   If you transfer all or part of your interest from a 403(b) contract to another 403(b) contract (held in the same plan), the transfer is tax free, and is referred to as a contract exchange. Free federal tax return This was previously known as a 90-24 transfer. Free federal tax return A contract exchange is similar to a 90-24 transfer with one major difference. Free federal tax return Previously, you were able to accomplish the transfer without your employer’s involvement. Free federal tax return After September 24, 2007, all such transfers are accomplished through a contract exchange requiring your employer’s involvement. Free federal tax return In addition, the plan must provide for the exchange and the transferred interest must be subject to the same or stricter distribution restrictions. Free federal tax return Finally, your accumulated benefit after the exchange must be equal to what it was before the exchange. Free federal tax return   Transfers that do not satisfy this rule are plan distributions and are generally taxable as ordinary income. Free federal tax return Plan-to-plan transfers. Free federal tax return   You may also transfer part or all of your interest from a 403(b) plan to another 403(b) plan if you are an employee of (or were formerly employed by) the employer of the plan to which you would like to transfer. Free federal tax return Both the initial plan and the receiving plan must provide for transfers. Free federal tax return Your accumulated benefit after the transfer must be at least equal to what it was before the transfer. Free federal tax return The new plan’s restrictions on distributions must be the same or stricter than those of the original plan. Free federal tax return Tax-free transfers for certain cash distributions. Free federal tax return   A tax-free transfer may also apply to a cash distribution of your 403(b) account from an insurance company that is subject to a rehabilitation, conservatorship, insolvency, or similar state proceeding. Free federal tax return To receive tax-free treatment, you must do all of the following: Withdraw all the cash to which you are entitled in full settlement of your contract rights or, if less, the maximum permitted by the state. Free federal tax return Reinvest the cash distribution in a single policy or contract issued by another insurance company or in a single custodial account subject to the same or stricter distribution restrictions as the original contract not later than 60 days after you receive the cash distribution. Free federal tax return Assign all future distribution rights to the new contract or account for investment in that contract or account if you received an amount that is less than what you are entitled to because of state restrictions. Free federal tax return   In addition to the preceding requirements, you must provide the new insurer with a written statement containing all of the following information: The gross amount of cash distributed under the old contract. Free federal tax return The amount of cash reinvested in the new contract. Free federal tax return Your investment in the old contract on the date you receive your first cash distribution. Free federal tax return   Also, you must attach the following items to your timely filed income tax return in the year you receive the first distribution of cash. Free federal tax return A copy of the statement you gave the new insurer. Free federal tax return A statement that includes: The words ELECTION UNDER REV. Free federal tax return PROC. Free federal tax return 92-44, The name of the company that issued the new contract, and The new policy number. Free federal tax return Direct trustee-to-trustee transfer. Free federal tax return   If you make a direct trustee-to-trustee transfer, from your governmental 403(b) account to a defined benefit governmental plan, it may not be includible in gross income. Free federal tax return   The transfer amount is not includible in gross income if it is made to: Purchase permissive service credits, or Repay contributions and earnings that were previously refunded under a forfeiture of service credit under the plan, or under another plan maintained by a state or local government employer within the same state. Free federal tax return After-tax contributions. Free federal tax return   For distributions beginning after December 31, 2006, after-tax contributions can be rolled over between a 403(b) plan and a defined benefit plan, IRA, or a defined contribution plan. Free federal tax return If the rollover is to or from a 403(b) plan, it must occur through a direct trustee-to-trustee transfer. Free federal tax return Permissive service credit. Free federal tax return   A permissive service credit is credit for a period of service recognized by a defined benefit governmental plan only if you voluntarily contribute to the plan an amount that does not exceed the amount necessary to fund the benefit attributable to the period of service and the amount contributed is in addition to the regular employee contribution, if any, under the plan. Free federal tax return   A permissive service credit may also include service credit for up to 5 years where there is no performance of service, or service credited to provide an increased benefit for service credit which a participant is receiving under the plan. Free federal tax return   Check with your plan administrator as to the type and extent of service that may be purchased by this transfer. Free federal tax return Tax-Free Rollovers You can generally roll over tax free all or any part of a distribution from a 403(b) plan to a traditional IRA or a non-Roth eligible retirement plan, except for any nonqualifying distributions, described later. Free federal tax return You may also roll over any part of a distribution from a 403(b) plan by converting it through a direct rollover, described below, to a Roth IRA. Free federal tax return Conversion amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Free federal tax return See Publication 590 for more information about conversion into a Roth IRA. Free federal tax return Note. Free federal tax return A participant is required to roll over distribution amounts received within 60 days in order for the amount to be treated as nontaxable. Free federal tax return Distribution amounts that are rolled over within the 60 days are not subject to the 10% early distribution penalty. Free federal tax return Rollovers to and from 403(b) plans. Free federal tax return   You can generally roll over tax free all or any part of a distribution from an eligible retirement plan to a 403(b) plan. Free federal tax return Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA. Free federal tax return Converted amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Free federal tax return See Publication 590 for more information on conversion into a Roth IRA. Free federal tax return   If a distribution includes both pre-tax contributions and after-tax contributions, the portion of the distribution that is rolled over is treated as consisting first of pre-tax amounts (contributions and earnings that would be includible in income if no rollover occurred). Free federal tax return This means that if you roll over an amount that is at least as much as the pre-tax portion of the distribution, you do not have to include any of the distribution in income. Free federal tax return   For more information on rollovers and eligible retirement plans, see Publication 575. Free federal tax return If you roll over money or other property from a 403(b) plan to an eligible retirement plan, see Publication 575 for information about possible effects on later distributions from the eligible retirement plan. Free federal tax return Hardship exception to rollover rules. Free federal tax return   The IRS may waive the 60-day rollover period if the failure to waive such requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the reasonable control of an individual. Free federal tax return   To obtain a hardship exception, you must apply to the IRS for a waiver of the 60-day rollover requirement. Free federal tax return You apply for the waiver by following the general instructions used in requesting a letter ruling. Free federal tax return These instructions are stated in Revenue Procedure 2013-4, 2013-1 I. Free federal tax return R. Free federal tax return B. Free federal tax return 126 available at www. Free federal tax return irs. Free federal tax return gov/irb/2013-01_IRB/ar09. Free federal tax return html, or see the latest annual update. Free federal tax return You must also pay a user fee with the application. Free federal tax return The user fee for a rollover that is less than $50,000 is $500. Free federal tax return For rollovers that are $50,000 or more, see Revenue Procedure 2013-8, 2013-1 I. Free federal tax return R. Free federal tax return B. Free federal tax return 237 available at www. Free federal tax return irs. Free federal tax return gov/irb/2013-01_IRB/ar13. Free federal tax return html, or see the latest annual update. Free federal tax return   In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including: Whether errors were made by the financial institution; Whether you were unable to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error; Whether you used the amount distributed (for example, in the case of payment by check, whether you cashed the check); and How much time has passed since the date of distribution. Free federal tax return   For additional information on rollovers, see Publication 590. Free federal tax return Eligible retirement plans. Free federal tax return   The following are considered eligible retirement plans. Free federal tax return Individual retirement arrangements. Free federal tax return Roth IRA. Free federal tax return 403(b) plans. Free federal tax return Government eligible 457 plans. Free federal tax return Qualified retirement plans. Free federal tax return  If the distribution is from a designated Roth account, then the only eligible retirement plan is another designated Roth account or a Roth IRA. Free federal tax return Nonqualifying distributions. Free federal tax return   You cannot roll over tax free: Minimum required distributions (generally required to begin at age 70½), Substantially equal payments over your life or life expectancy, Substantially equal payments over the joint lives or life expectancies of your beneficiary and you, Substantially equal payments for a period of 10 years or more, Hardship distributions, or Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or excess annual additions and any allocable gains. Free federal tax return Rollover of nontaxable amounts. Free federal tax return    You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another eligible retirement plan, traditional IRA, or Roth IRA. Free federal tax return The transfer must be made either through a direct rollover to an eligible plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional IRA or Roth IRA. Free federal tax return   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. Free federal tax return Direct rollovers of 403(b) plan distributions. Free federal tax return   You have the option of having your 403(b) plan make the rollover directly to a traditional IRA, Roth IRA, or new plan. Free federal tax return Before you receive a distribution, your plan will give you information on this. Free federal tax return It is generally to your advantage to choose this option because your plan will not withhold tax on the distribution if you choose it. Free federal tax return Distribution received by you. Free federal tax return   If you receive a distribution that qualifies to be rolled over, you can roll over all or any part of the distribution. Free federal tax return Generally, you will receive only 80% of the distribution because 20% must be withheld. Free federal tax return If you roll over only the 80% you receive, you must pay tax on the 20% you did not roll over. Free federal tax return You can replace the 20% that was withheld with other money within the 60-day period to make a 100% rollover. Free federal tax return Voluntary deductible contributions. Free federal tax return   For tax years 1982 through 1986, employees could make deductible contributions to a 403(b) plan under the individual retirement arrangement (IRA) rules instead of deducting contributions to a traditional IRA. Free federal tax return   If you made voluntary deductible contributions to a 403(b) plan under these traditional IRA rules, the distribution of all or part of the accumulated deductible contributions may be rolled over if it otherwise qualifies as a distribution you can roll over. Free federal tax return Accumulated deductible contributions are the deductible contributions: Plus Income allocable to the contributions, Gain allocable to the contributions, and Minus Expenses and losses allocable to the contributions, and Distributions from the contributions, income, or gain. Free federal tax return Excess employer contributions. Free federal tax return   The portion of a distribution from a 403(b) plan transferred to a traditional IRA that was previously included in income as excess employer contributions (discussed earlier) is not an eligible rollover distribution. Free federal tax return   Its transfer does not affect the rollover treatment of the eligible portion of the transferred amounts. Free federal tax return However, the ineligible portion is subject to the traditional IRA contribution limits and may create an excess IRA contribution subject to a 6% excise tax (see chapter 1 of Publication 590). Free federal tax return Qualified domestic relations order. Free federal tax return   You may be able to roll over tax free all or any part of an eligible rollover distribution from a 403(b) plan that you receive under a qualified domestic relations order (QDRO). Free federal tax return If you receive the interest in the 403(b) plan as an employee's spouse or former spouse under a QDRO, all of the rollover rules apply to you as if you were the employee. Free federal tax return You can roll over your interest in the plan to a traditional IRA or another 403(b) plan. Free federal tax return For more information on the treatment of an interest received under a QDRO, see Publication 575. Free federal tax return Spouses of deceased employees. Free federal tax return   If you are the spouse of a deceased employee, you can roll over the qualifying distribution attributable to the employee. Free federal tax return You can make the rollover to any eligible retirement plan. Free federal tax return   After you roll money and other property over from a 403(b) plan to an eligible retirement plan, and you take a distribution from that plan, you will not be eligible to receive the capital gain treatment or the special averaging treatment for the distribution. Free federal tax return Second rollover. Free federal tax return   If you roll over a qualifying distribution to a traditional IRA, you can, if certain conditions are satisfied, later roll the distribution into another 403(b) plan. Free federal tax return For more information, see IRA as a holding account (conduit IRA) for rollovers to other eligible plans in chapter 1 of Publication 590. Free federal tax return Nonspouse beneficiary. Free federal tax return   A nonspouse beneficiary may make a direct rollover of a distribution from a 403(b) plan of a deceased participant if the rollover is a direct transfer to an inherited IRA established to receive the distribution. Free federal tax return If the rollover is a direct trustee-to-trustee transfer to an IRA established to receive the distribution: The transfer will be treated as an eligible rollover distribution. Free federal tax return The IRA will be considered an inherited account. Free federal tax return The required minimum distribution rules that apply in instances where the participant dies before the entire interest is distributed will apply to the transferred IRA. Free federal tax return    For more information on IRAs, see Publication 590. Free federal tax return Frozen deposits. Free federal tax return   The 60-day period usually allowed for completing a rollover is extended for any time that the amount distributed is a frozen deposit in a financial institution. Free federal tax return The 60-day period cannot end earlier than 10 days after the deposit ceases to be a frozen deposit. Free federal tax return   A frozen deposit is any deposit that on any day during the 60-day period cannot be withdrawn because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because one or more banks in the state are (or are about to be) bankrupt or insolvent. Free federal tax return Gift Tax If, by choosing or not choosing an election, or option, you provide an annuity for your beneficiary at or after your death, you may have made a taxable gift equal to the value of the annuity. Free federal tax return Joint and survivor annuity. Free federal tax return   If the gift is an interest in a joint and survivor annuity where only you and your spouse have the right to receive payments, the gift will generally be treated as qualifying for the unlimited marital deduction. Free federal tax return More information. Free federal tax return   For information on the gift tax, see Publication 559, Survivors, Executors, and Administrators. Free federal tax return Prev  Up  Next   Home   More Online Publications

Topic 305 - Recordkeeping

Well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination, or to prepare a response if you receive an IRS notice.

Records such as receipts, canceled checks, and other documents that support an item of income or a deduction, or a credit appearing on a return must be kept so long as they may become material in the administration of any internal revenue law, which generally will be until the period of limitation expires for that return. For assessment of tax you owe, this generally is 3 years from the date you filed the return. Returns filed before the due date are treated as filed on the due date.

There is no period of limitations to assess tax when a return is fraudulent or when no return is filed. If income that you should have reported is not reported, and it is more than 25% of the gross income shown on the return, the time to assess is 6 years from when the return is filed. For filing a claim for credit or refund, the period to make the claim generally is 3 years from the date the original return was filed (or the due date for filing the return if the return was filed before that date), or 2 years from the date the tax was paid, whichever is later. For filing a claim for an overpayment resulting from a bad debt deduction or a loss from worthless securities the time to make the claim is 7 years from when the return was due.

If you have employees, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later. For more information, see Publication 15, (Circular E), Employer's Tax Guide.

If you are in business, there is no particular method of bookkeeping you must use. However, you must use a method that clearly and accurately reflects your gross income and expenses. The records should substantiate both your income and expenses. Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses. Publication 17, Your Federal Income Tax for Individuals, provides more information on recordkeeping requirements for individuals.

Page Last Reviewed or Updated: January 22, 2014

The Free Federal Tax Return

Free federal tax return Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. Free federal tax return Gross monthly rate. Free federal tax return Your cost. Free federal tax return Choosing a survivor annuity after retirement. Free federal tax return Canceling a survivor annuity after retirement. Free federal tax return Annuity starting date after 1986. Free federal tax return Annuity starting date before 1987. Free federal tax return Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. Free federal tax return Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. Free federal tax return The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. Free federal tax return If the refund includes only your contributions, none of the refund is taxable. Free federal tax return If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). Free federal tax return If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Free federal tax return See Rollover Rules in Part II for information on how to make a rollover. Free federal tax return Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. Free federal tax return Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. Free federal tax return If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free federal tax return If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. Free federal tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free federal tax return A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. Free federal tax return Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. Free federal tax return OPM will tell you how to make the choice. Free federal tax return The choice for no withholding remains in effect until you change it. Free federal tax return These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. Free federal tax return If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments. Free federal tax return You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. Free federal tax return Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. Free federal tax return For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. Free federal tax return Form CSA 1099R. Free federal tax return   Form CSA 1099R is mailed to you by OPM each year. Free federal tax return It will show any tax you had withheld. Free federal tax return File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. Free federal tax return    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. Free federal tax return servicesonline. Free federal tax return opm. Free federal tax return gov. Free federal tax return To log in, you will need your retirement CSA claim number and your personal identification number. Free federal tax return Choosing no withholding on payments outside the United States. Free federal tax return   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. Free federal tax return   To choose no withholding if you are a U. Free federal tax return S. Free federal tax return citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. Free federal tax return Otherwise, OPM has to withhold tax. Free federal tax return For example, OPM must withhold if you provide a U. Free federal tax return S. Free federal tax return address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. Free federal tax return S. Free federal tax return home address. Free federal tax return   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. Free federal tax return S. Free federal tax return citizen, a U. Free federal tax return S. Free federal tax return resident alien, or someone who left the United States to avoid tax. Free federal tax return But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Free federal tax return For details, see Publication 519, U. Free federal tax return S. Free federal tax return Tax Guide for Aliens. Free federal tax return Withholding certificate. Free federal tax return   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. Free federal tax return The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. Free federal tax return If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. Free federal tax return To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free federal tax return C. Free federal tax return calling area must call 202-606-0500). Free federal tax return No special form is needed. Free federal tax return You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. Free federal tax return If you have TTY/TDD equipment, call 1-855–887–4957. Free federal tax return If you need a PIN, call OPM's Retirement Information Office. Free federal tax return You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. Free federal tax return servicesonline. Free federal tax return opm. Free federal tax return gov. Free federal tax return You will need your retirement CSA or CSF claim number and your PIN. Free federal tax return Withholding from certain lump-sum payments. Free federal tax return   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. Free federal tax return Tax will be withheld at a 20% rate on the interest distributed. Free federal tax return However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. Free federal tax return If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. Free federal tax return Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. Free federal tax return See Rollover Rules in Part II. Free federal tax return If you receive only your contributions, no tax will be withheld. Free federal tax return Withholding from Thrift Savings Plan payments. Free federal tax return   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. Free federal tax return The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. Free federal tax return  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. Free federal tax return By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. Free federal tax return   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. Free federal tax return The above document is also available in the “Forms & Publications” section of the TSP website at www. Free federal tax return tsp. Free federal tax return gov. Free federal tax return Estimated tax. Free federal tax return   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). Free federal tax return The return must cover all 12 months. Free federal tax return   You do not have to pay estimated tax for 2014 if you were a U. Free federal tax return S. Free federal tax return citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. Free federal tax return   Publication 505 contains information that you can use to help you figure your estimated tax payments. Free federal tax return Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. Free federal tax return The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. Free federal tax return Children. Free federal tax return   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. Free federal tax return   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. Free federal tax return Form CSF 1099R. Free federal tax return   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. Free federal tax return It will show the total amount of the annuity you received in the past year. Free federal tax return It also should show, separately, the survivor annuity for a child or children. Free federal tax return Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. Free federal tax return   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. Free federal tax return    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. Free federal tax return servicesonline. Free federal tax return opm. Free federal tax return gov. Free federal tax return To log in you will need your retirement CSF claim number and personal identification number. Free federal tax return    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free federal tax return C. Free federal tax return calling area must call 202-606-0500). Free federal tax return You will need your CSF claim number and your social security number when you call. Free federal tax return Taxable part of annuity. Free federal tax return   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. Free federal tax return To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. Free federal tax return Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. Free federal tax return If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. Free federal tax return However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. Free federal tax return Annuity statement. Free federal tax return   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). Free federal tax return You will use this information to figure the tax-free recovery of your cost. Free federal tax return Annuity starting date. Free federal tax return   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. Free federal tax return If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. Free federal tax return Gross monthly rate. Free federal tax return   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. Free federal tax return Your cost. Free federal tax return   Your monthly annuity payment contains an amount on which you have previously paid income tax. Free federal tax return This amount represents part of your contributions to the retirement plan. Free federal tax return Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. Free federal tax return   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. Free federal tax return If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. Free federal tax return (See Lump-sum credit under Alternative Annuity Option, later. Free federal tax return )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. Free federal tax return You cannot claim an interest deduction for any interest payments. Free federal tax return You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. Free federal tax return Recovering your cost tax free. Free federal tax return   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. Free federal tax return If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. Free federal tax return If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). Free federal tax return If your annuity starting date is after November 18, 1996, you must use the Simplified Method. Free federal tax return   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). Free federal tax return The tax-free part is a fixed dollar amount. Free federal tax return It remains the same, even if your annuity is increased. Free federal tax return Generally, this rule applies as long as you receive your annuity. Free federal tax return However, see Exclusion limit , later. Free federal tax return Choosing a survivor annuity after retirement. Free federal tax return    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. Free federal tax return   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. Free federal tax return To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. Free federal tax return Figure the expected return as of the date the reduced annuity begins. Free federal tax return For details on the General Rule, see Publication 939. Free federal tax return Canceling a survivor annuity after retirement. Free federal tax return   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. Free federal tax return The increased annuity does not change the cost recovery you figured at the annuity starting date. Free federal tax return The tax-free part of each annuity payment remains the same. Free federal tax return    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free federal tax return C. Free federal tax return calling area must call 202-606-0500). Free federal tax return Exclusion limit. Free federal tax return   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Free federal tax return Annuity starting date after 1986. Free federal tax return   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. Free federal tax return Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. Free federal tax return Example. Free federal tax return Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. Free federal tax return If your cost is $12,000, the exclusion ends after 10 years (120 months). Free federal tax return Thereafter, your entire annuity is generally fully taxable. Free federal tax return Annuity starting date before 1987. Free federal tax return   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. Free federal tax return If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. Free federal tax return The total exclusion may be more than your cost. Free federal tax return Deduction of unrecovered cost. Free federal tax return   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. Free federal tax return The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). Free federal tax return If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. Free federal tax return Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. Free federal tax return (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. Free federal tax return ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. Free federal tax return The Simplified Method does not apply if your annuity starting date is before July 2, 1986. Free federal tax return Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. Free federal tax return This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Free federal tax return If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. Free federal tax return Worksheet A. Free federal tax return   Use Worksheet A. Free federal tax return Simplified Method (near the end of this publication), to figure your taxable annuity. Free federal tax return Be sure to keep the completed worksheet. Free federal tax return It will help you figure your taxable amounts for later years. Free federal tax return Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. Free federal tax return However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. Free federal tax return Line 2. Free federal tax return   See Your cost , earlier, for an explanation of your cost in the plan. Free federal tax return If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. Free federal tax return Line 3. Free federal tax return   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. Free federal tax return If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. Free federal tax return If your annuity starting date is before 1998, use Table 1. Free federal tax return Line 6. Free federal tax return   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. Free federal tax return If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. Free federal tax return Example. Free federal tax return Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. Free federal tax return His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. Free federal tax return He must use the Simplified Method to figure the tax-free part of his annuity benefits. Free federal tax return Bill's monthly annuity benefit is $1,000. Free federal tax return He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. Free federal tax return At his annuity starting date, he was 65 and Kathy was 57. Free federal tax return Bill's completed Worksheet A is shown later. Free federal tax return To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). Free federal tax return Bill keeps a copy of the completed worksheet for his records. Free federal tax return It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. Free federal tax return Bill's tax-free monthly amount is $100. Free federal tax return (See line 4 of the worksheet. Free federal tax return ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. Free federal tax return If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. Free federal tax return If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. Free federal tax return General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. Free federal tax return If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. Free federal tax return If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. Free federal tax return Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. Free federal tax return Figuring this percentage is complex and requires the use of actuarial tables. Free federal tax return For these tables and other information about using the General Rule, see Publication 939. Free federal tax return Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. Free federal tax return Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. Free federal tax return After your cost was recovered, all payments became fully taxable. Free federal tax return You cannot use another rule to again exclude amounts from income. Free federal tax return The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. Free federal tax return Worksheet A. Free federal tax return Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. Free federal tax return 1. Free federal tax return Enter the total pension or annuity payments received this year. Free federal tax return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Free federal tax return $ 8,000 2. Free federal tax return Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Free federal tax return See Your cost in Part II, Rules for Retirees, earlier 2. Free federal tax return 31,000 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Free federal tax return Otherwise, go to line 3. Free federal tax return   3. Free federal tax return Enter the appropriate number from Table 1 below. Free federal tax return But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Free federal tax return 3. Free federal tax return 310 4. Free federal tax return Divide line 2 by the number on line 3 4. Free federal tax return 100 5. Free federal tax return Multiply line 4 by the number of months for which this year's payments were made. Free federal tax return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Free federal tax return Otherwise, go to line 6 5. Free federal tax return 800 6. Free federal tax return Enter any amounts previously recovered tax free in years after 1986. Free federal tax return This is the amount shown on line 10 of your worksheet for last year 6. Free federal tax return 0 7. Free federal tax return Subtract line 6 from line 2 7. Free federal tax return 31,000 8. Free federal tax return Enter the smaller of line 5 or line 7 8. Free federal tax return 800 9. Free federal tax return Taxable amount for year. Free federal tax return Subtract line 8 from line 1. Free federal tax return Enter the result, but not less than zero. Free federal tax return Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Free federal tax return If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Free federal tax return If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Free federal tax return If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Free federal tax return $7,200 10. Free federal tax return Was your annuity starting date before 1987?   Yes. Free federal tax return Do not complete the rest of this worksheet. Free federal tax return    No. Free federal tax return Add lines 6 and 8. Free federal tax return This is the amount you have recovered tax free through 2013. Free federal tax return You will need this number if you need to fill out this worksheet next year 10. Free federal tax return 800 11. Free federal tax return Balance of cost to be recovered. Free federal tax return Subtract line 10 from line 2. Free federal tax return If zero, you will not have to complete this worksheet next year. Free federal tax return The payments you receive next year will generally be fully taxable 11. Free federal tax return $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Free federal tax return Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. Free federal tax return If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. Free federal tax return You are eligible to make this choice if you meet all of the following requirements. Free federal tax return You are retiring, but not on disability. Free federal tax return You have a life-threatening illness or other critical medical condition. Free federal tax return You do not have a former spouse entitled to court ordered benefits based on your service. Free federal tax return If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. Free federal tax return Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. Free federal tax return The tax-free part represents part of your cost. Free federal tax return The taxable part represents part of the earnings on your annuity contract. Free federal tax return Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. Free federal tax return Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. Free federal tax return Your taxable amount may therefore be more than the lump-sum payment you receive. Free federal tax return You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. Free federal tax return If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Free federal tax return See Rollover Rules , later, for information on how to make a rollover. Free federal tax return OPM can make a direct rollover only up to the amount of the lump-sum payment. Free federal tax return Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. Free federal tax return The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free federal tax return It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. Free federal tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free federal tax return Worksheet B. Free federal tax return   Use Worksheet B. Free federal tax return Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. Free federal tax return Be sure to keep the completed worksheet for your records. Free federal tax return   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. Free federal tax return Lump-sum credit. Free federal tax return   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). Free federal tax return However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. Free federal tax return Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. Free federal tax return Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. Free federal tax return You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. Free federal tax return Present value of your annuity contract. Free federal tax return   The present value of your annuity contract is figured using actuarial tables provided by the IRS. Free federal tax return If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. Free federal tax return Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. Free federal tax return , NW Washington, DC 20224-0002 Example. Free federal tax return David Brown retired from the federal government in 2013, one month after his 55th birthday. Free federal tax return He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. Free federal tax return The present value of his annuity contract was $155,000. Free federal tax return The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. Free federal tax return The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. Free federal tax return See Reduced Annuity , later. Free federal tax return Worksheet B. Free federal tax return Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . Free federal tax return  1. Free federal tax return Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. Free federal tax return $ 31,000 2. Free federal tax return Enter the present value of your annuity contract 2. Free federal tax return 155,000 3. Free federal tax return Divide line 1 by line 2 3. Free federal tax return . Free federal tax return 20 4. Free federal tax return Tax-free amount. Free federal tax return Multiply line 1 by line 3. Free federal tax return (Caution: Do not include this amount on line 6 of Worksheet A in this publication. Free federal tax return ) 4. Free federal tax return $6,200 5. Free federal tax return Taxable amount (net cost in the plan). Free federal tax return Subtract line 4 from line 1. Free federal tax return Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Free federal tax return Also, enter this amount on line 2 of Worksheet A in this publication. Free federal tax return 5. Free federal tax return $24,800   Lump-sum payment in installments. Free federal tax return   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. Free federal tax return You will receive the first installment after you make the choice upon retirement. Free federal tax return The second installment will be paid to you, with interest, in the next calendar year. Free federal tax return (Exceptions to the installment rule are provided for cases of critical medical need. Free federal tax return )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. Free federal tax return If the payment has a tax-free part, you must treat the taxable part as received first. Free federal tax return How to report. Free federal tax return   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Free federal tax return Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. Free federal tax return    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. Free federal tax return Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. Free federal tax return These annuity payments each will have a tax-free and a taxable part. Free federal tax return To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). Free federal tax return For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. Free federal tax return To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. Free federal tax return Enter as your net cost on line 2 the amount from Worksheet B, line 5. Free federal tax return Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Free federal tax return Example. Free federal tax return The facts are the same as in the example for David Brown in the preceding discussion. Free federal tax return In addition, David received 10 annuity payments in 2013 of $1,200 each. Free federal tax return Using Worksheet A, he figures the taxable part of his annuity payments. Free federal tax return He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. Free federal tax return His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). Free federal tax return He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. Free federal tax return David's filled-in Worksheet A is shown on the next page. Free federal tax return Worksheet A. Free federal tax return Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . Free federal tax return 1. Free federal tax return Enter the total pension or annuity payments received this year. Free federal tax return Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Free federal tax return $ 12,000 2. Free federal tax return Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Free federal tax return See Your cost in Part II, Rules for Retirees, earlier 2. Free federal tax return 24,800 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Free federal tax return Otherwise, go to line 3. Free federal tax return   3. Free federal tax return Enter the appropriate number from Table 1 below. Free federal tax return But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Free federal tax return 3. Free federal tax return 360 4. Free federal tax return Divide line 2 by the number on line 3 4. Free federal tax return 68. Free federal tax return 89 5. Free federal tax return Multiply line 4 by the number of months for which this year's payments were made. Free federal tax return If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Free federal tax return Otherwise, go to line 6 5. Free federal tax return 688. Free federal tax return 90 6. Free federal tax return Enter any amounts previously recovered tax free in years after 1986. Free federal tax return This is the amount shown on line 10 of your worksheet for last year 6. Free federal tax return 0 7. Free federal tax return Subtract line 6 from line 2 7. Free federal tax return 24,800 8. Free federal tax return Enter the smaller of line 5 or line 7 8. Free federal tax return 688. Free federal tax return 90 9. Free federal tax return Taxable amount for year. Free federal tax return Subtract line 8 from line 1. Free federal tax return Enter the result, but not less than zero. Free federal tax return Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Free federal tax return If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Free federal tax return If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Free federal tax return If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Free federal tax return $11,311. Free federal tax return 10 10. Free federal tax return Was your annuity starting date before 1987?   Yes. Free federal tax return Do not complete the rest of this worksheet. Free federal tax return    No. Free federal tax return Add lines 6 and 8. Free federal tax return This is the amount you have recovered tax free through 2013. Free federal tax return You will need this number if you need to fill out this worksheet next year 10. Free federal tax return 688. Free federal tax return 90 11. Free federal tax return Balance of cost to be recovered. Free federal tax return Subtract line 10 from line 2. Free federal tax return If zero, you will not have to complete this worksheet next year. Free federal tax return The payments you receive next year will generally be fully taxable 11. Free federal tax return $24,111. Free federal tax return 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Free federal tax return Reemployment after choosing the alternative annuity option. Free federal tax return If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. Free federal tax return If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. Free federal tax return Annuity starting date before November 19, 1996. Free federal tax return   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. Free federal tax return Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. Free federal tax return However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Free federal tax return Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. Free federal tax return The gift may be taxable for gift tax purposes. Free federal tax return The value of the gift is equal to the value of the annuity. Free federal tax return Joint and survivor annuity. Free federal tax return   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. Free federal tax return This will eliminate any gift tax liability with regard to that gift. Free federal tax return   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. Free federal tax return This may result in a taxable gift. Free federal tax return More information. Free federal tax return   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. Free federal tax return Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. Free federal tax return Annual leave. Free federal tax return   A payment for accrued annual leave received on retirement is a salary payment. Free federal tax return It is taxable as wages in the tax year you receive it. Free federal tax return Voluntary contributions. Free federal tax return   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. Free federal tax return They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. Free federal tax return Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. Free federal tax return See Thrift Savings Plan , later. Free federal tax return Additional annuity benefit. Free federal tax return   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. Free federal tax return This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. Free federal tax return It does not matter that you receive only one monthly check covering both benefits. Free federal tax return Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. Free federal tax return   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. Free federal tax return Refund of voluntary contributions. Free federal tax return   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. Free federal tax return If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. Free federal tax return See Rollover Rules , later. Free federal tax return The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free federal tax return It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. Free federal tax return For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free federal tax return Community property laws. Free federal tax return   State community property laws apply to your annuity. Free federal tax return These laws will affect your income tax only if you file a return separately from your spouse. Free federal tax return   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. Free federal tax return Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. Free federal tax return   At any time, you have only one domicile even though you may have more than one home. Free federal tax return Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Free federal tax return The question of your domicile is mainly a matter of your intentions as indicated by your actions. Free federal tax return   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. Free federal tax return The division is based on your periods of service and domicile in community and noncommunity property states while you were married. Free federal tax return   For more information, see Publication 555, Community Property. Free federal tax return Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. Free federal tax return The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. Free federal tax return This amount is taxable as wages. Free federal tax return Your annuity will continue to be taxed just as it was before. Free federal tax return If you are still recovering your cost, you continue to do so. Free federal tax return If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. Free federal tax return Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. Free federal tax return A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Free federal tax return Special rule for figuring your total contributions. Free federal tax return   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. Free federal tax return You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. Free federal tax return For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. Free federal tax return Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. Free federal tax return   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. Free federal tax return Limit on taxable amount. Free federal tax return   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. Free federal tax return Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. Free federal tax return The numerator of the fraction is the retiree's total U. Free federal tax return S. Free federal tax return Government basic pay, other than tax-exempt pay for services performed outside the United States. Free federal tax return The denominator is the retiree's total U. Free federal tax return S. Free federal tax return Government basic pay for all services. Free federal tax return    Basic pay includes regular pay plus any standby differential. Free federal tax return It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. Free federal tax return   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. Free federal tax return (For an annuity, first complete Worksheet A in this publication. Free federal tax return ) Worksheet C. Free federal tax return Limited Taxable Amount for Nonresident Alien 1. Free federal tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free federal tax return   2. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free federal tax return   3. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay for all services 3. Free federal tax return   4. Free federal tax return Divide line 2 by line 3 4. Free federal tax return   5. Free federal tax return Limited taxable amount. Free federal tax return Multiply line 1 by line 4. Free federal tax return Enter this amount on Form 1040NR, line 17b 5. Free federal tax return   Example 1. Free federal tax return You are a nonresident alien who performed all services for the U. Free federal tax return S. Free federal tax return Government abroad as a nonresident alien. Free federal tax return You retired and began to receive a monthly annuity of $200. Free federal tax return Your total basic pay for all services for the U. Free federal tax return S. Free federal tax return Government was $100,000. Free federal tax return All of your basic pay was tax exempt because it was not U. Free federal tax return S. Free federal tax return source income. Free federal tax return The taxable amount of your annuity using Worksheet A in this publication is $720. Free federal tax return You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Free federal tax return Worksheet C. Free federal tax return Limited Taxable Amount for Nonresident Alien — Example 1 1. Free federal tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free federal tax return $ 720 2. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free federal tax return 0 3. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay for all services 3. Free federal tax return 100,000 4. Free federal tax return Divide line 2 by line 3 4. Free federal tax return 0 5. Free federal tax return Limited taxable amount. Free federal tax return Multiply line 1 by line 4. Free federal tax return Enter this amount on Form 1040NR, line 17b 5. Free federal tax return 0 Example 2. Free federal tax return You are a nonresident alien who performed services for the U. Free federal tax return S. Free federal tax return Government as a nonresident alien both within the United States and abroad. Free federal tax return You retired and began to receive a monthly annuity of $240. Free federal tax return Your total basic pay for your services for the U. Free federal tax return S. Free federal tax return Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. Free federal tax return The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. Free federal tax return S. Free federal tax return source income. Free federal tax return The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. Free federal tax return You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Free federal tax return Worksheet C. Free federal tax return Limited Taxable Amount for Nonresident Alien — Example 2 1. Free federal tax return Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free federal tax return $ 1,980 2. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free federal tax return 40,000 3. Free federal tax return Enter the total U. Free federal tax return S. Free federal tax return Government basic pay for all services 3. Free federal tax return 120,000 4. Free federal tax return Divide line 2 by line 3 4. Free federal tax return . Free federal tax return 333 5. Free federal tax return Limited taxable amount. Free federal tax return Multiply line 1 by line 4. Free federal tax return Enter this amount on Form 1040NR, line 17b 5. Free federal tax return 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. Free federal tax return (However, see Roth TSP balance and Uniformed services TSP accounts, next. Free federal tax return ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. Free federal tax return The way that you withdraw your account balance determines when you must pay the tax. Free federal tax return Roth TSP balance. Free federal tax return   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. Free federal tax return This means Roth TSP contributions are included in your income. Free federal tax return The contribution limits are the same as the traditional TSP. Free federal tax return You can elect to have part or all of your TSP contributions designated as a Roth TSP. Free federal tax return Agency contributions will be part of your traditional TSP balance. Free federal tax return Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. Free federal tax return   Qualified distributions from your Roth TSP are not included in income. Free federal tax return This applies to both your cost in the account and income earned on that account. Free federal tax return A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Free federal tax return   For more information, go to the TSP website, www. Free federal tax return tsp. Free federal tax return gov, or the TSP Service Office. Free federal tax return See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. Free federal tax return Uniformed services TSP accounts. Free federal tax return   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. Free federal tax return However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. Free federal tax return See Roth TSP balance discussed previously to get more information about Roth contributions. Free federal tax return The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Free federal tax return You can get more information from the TSP website, www. Free federal tax return tsp. Free federal tax return gov, or the TSP Service Office. Free federal tax return Direct rollover by the TSP. Free federal tax return   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. Free federal tax return However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Free federal tax return Also, see Rollover Rules , later. Free federal tax return Direct rollover by the TSP to a Roth IRA. Free federal tax return   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. Free federal tax return However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Free federal tax return Also, see Rollovers to Roth IRAs for more information, later. Free federal tax return Note. Free federal tax return A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. Free federal tax return This is because you already paid tax on those contributions. Free federal tax return You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. Free federal tax return TSP annuity. Free federal tax return   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. Free federal tax return The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. Free federal tax return However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. Free federal tax return See Roth TSP balance , earlier. Free federal tax return This is because you already paid tax on those contributions. Free federal tax return Cash withdrawals. Free federal tax return   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. Free federal tax return (See Rollover Rules , later. Free federal tax return ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. Free federal tax return See Lump-Sum Distributions in Publication 575 for details. Free federal tax return However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. Free federal tax return See Roth TSP balance , earlier. Free federal tax return    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. Free federal tax return   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. Free federal tax return If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. Free federal tax return See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. Free federal tax return However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. Free federal tax return See Roth TSP balance , earlier, for a discussion of those conditions. Free federal tax return Tax on early distributions. Free federal tax return   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. Free federal tax return However, this additional tax does not apply in certain situations, including any of the following. Free federal tax return You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. Free federal tax return You choose to receive your account balance in monthly payments based on your life expectancy. Free federal tax return You are totally and permanently disabled. Free federal tax return You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). Free federal tax return The earnings may be subject to the 10% tax depending on whether you met certain conditions. Free federal tax return See Roth TSP balance , earlier. Free federal tax return   For more information, see Tax on Early Distributions in Publication 575. Free federal tax return Outstanding loan. Free federal tax return   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. Free federal tax return The distribution also may be subject to the additional 10% tax on early distributions. Free federal tax return However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. Free federal tax return See Rollover Rules , later. Free federal tax return   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. Free federal tax return However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. Free federal tax return See Roth TSP balance , earlier. Free federal tax return More information. Free federal tax return   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. Free federal tax return Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). Free federal tax return    The above documents are also available on the TSP website at www. Free federal tax return tsp. Free federal tax return gov. Free federal tax return Select “Forms & Publications. Free federal tax return ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. Free federal tax return You do not include the amount rolled over in your income, and you cannot take a deduction for it. Free federal tax return The amount rolled over is taxed later as the new program pays that amount to you. Free federal tax return If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. Free federal tax return However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. Free federal tax return To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. Free federal tax return You can also roll over a distribution from a qualified retirement plan into a Roth IRA. Free federal tax return Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. Free federal tax return See Rollovers to Roth IRAs , later, for more information. Free federal tax return Qualified retirement plan. Free federal tax return   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. Free federal tax return The CSRS, FERS, and TSP are considered qualified retirement plans. Free federal tax return Distributions eligible for rollover treatment. Free federal tax return   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. Free federal tax return You cannot roll over any part of your CSRS or FERS annuity payments. Free federal tax return   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. Free federal tax return   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. Free federal tax return However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. Free federal tax return Direct rollover option. Free federal tax return   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. Free federal tax return   There is an automatic rollover requirement for mandatory distributions. Free federal tax return A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. Free federal tax return The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. Free federal tax return You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. Free federal tax return If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. Free federal tax return No tax withheld. Free federal tax return   If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. Free federal tax return However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. Free federal tax return Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. Free federal tax return Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. Free federal tax return Payment to you option. Free federal tax return   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. Free federal tax return However, the full amount is treated as distributed to you even though you actually receive only 80%. Free federal tax return You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. Free federal tax return Rollovers to Roth IRAs are generally included in income. Free federal tax return Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. Free federal tax return If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. Free federal tax return However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). Free federal tax return Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. Free federal tax return See Roth TSP balance , earlier. Free federal tax return Also, see Tax on Early Distributions in Publication 575. Free federal tax return Exception to withholding. Free federal tax return   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. Free federal tax return Partial rollovers. Free federal tax return   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. Free federal tax return See Lump-Sum Distributions in Publication 575. Free federal tax return However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. Free federal tax return Rolling over more than amount received. Free federal tax return   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). Free federal tax return Example. Free federal tax return You left government service at age 53. Free federal tax return On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you