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How To Amend Previous Tax Returns

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How To Amend Previous Tax Returns

How to amend previous tax returns Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). How to amend previous tax returns Low Income Taxpayer Clinics (LITCs). How to amend previous tax returns Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. How to amend previous tax returns All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. How to amend previous tax returns The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). How to amend previous tax returns After notice and hearing, the bankruptcy court may extend the period for another 30 days. How to amend previous tax returns Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. How to amend previous tax returns Note. How to amend previous tax returns Individual debtors should use their home address when filing Form 1040 with the IRS. How to amend previous tax returns Returns should not be filed “in care of” the trustee's address. How to amend previous tax returns Ordering tax transcripts and copies of returns. How to amend previous tax returns   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. How to amend previous tax returns The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. How to amend previous tax returns If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. How to amend previous tax returns Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. How to amend previous tax returns Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. How to amend previous tax returns A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. How to amend previous tax returns To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. How to amend previous tax returns It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. How to amend previous tax returns 00 per tax return for copies of the returns. How to amend previous tax returns Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. How to amend previous tax returns If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. How to amend previous tax returns Tax returns and payment of taxes in chapter 11 cases. How to amend previous tax returns   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. How to amend previous tax returns Disclosure of debtor's return information to trustee. How to amend previous tax returns   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. How to amend previous tax returns If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. How to amend previous tax returns    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. How to amend previous tax returns Material interest is generally defined as a financial or monetary interest. How to amend previous tax returns Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. How to amend previous tax returns   However, the U. How to amend previous tax returns S. How to amend previous tax returns Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. How to amend previous tax returns Disclosure of bankruptcy estate's return information to debtor. How to amend previous tax returns    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. How to amend previous tax returns Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. How to amend previous tax returns Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. How to amend previous tax returns Chapter 13 relief is not available to corporations or partnerships. How to amend previous tax returns The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. How to amend previous tax returns In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. How to amend previous tax returns S. How to amend previous tax returns Individual Income Tax Return. How to amend previous tax returns On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. How to amend previous tax returns Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. How to amend previous tax returns To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. How to amend previous tax returns See Debt Cancellation, later. How to amend previous tax returns Interest on trust accounts in chapter 13 cases. How to amend previous tax returns   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. How to amend previous tax returns This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. How to amend previous tax returns S. How to amend previous tax returns Trustee system. How to amend previous tax returns The interest is also not taxable to the trustee as income. How to amend previous tax returns Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. How to amend previous tax returns The bankruptcy estate in a chapter 7 case is represented by a trustee. How to amend previous tax returns The trustee is appointed to administer the estate and liquidate any nonexempt assets. How to amend previous tax returns In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. How to amend previous tax returns However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. How to amend previous tax returns During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. How to amend previous tax returns The bankruptcy trustee files a Form 1041 for the bankruptcy estate. How to amend previous tax returns However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). How to amend previous tax returns Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. How to amend previous tax returns Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). How to amend previous tax returns For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. How to amend previous tax returns Debtor's Election To End Tax Year – Form 1040 Short tax years. How to amend previous tax returns   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. How to amend previous tax returns If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. How to amend previous tax returns The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. How to amend previous tax returns   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. How to amend previous tax returns Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. How to amend previous tax returns    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. How to amend previous tax returns Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. How to amend previous tax returns Note. How to amend previous tax returns The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. How to amend previous tax returns Making the Election - Filing Requirements First short tax year. How to amend previous tax returns   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. How to amend previous tax returns The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. How to amend previous tax returns Second short tax year. How to amend previous tax returns   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. How to amend previous tax returns   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. How to amend previous tax returns To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. How to amend previous tax returns Example. How to amend previous tax returns Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. How to amend previous tax returns If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. How to amend previous tax returns Jane's second short year runs from May 8, 2012, through December 31, 2012. How to amend previous tax returns To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. How to amend previous tax returns To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. How to amend previous tax returns The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. How to amend previous tax returns S. How to amend previous tax returns Individual Tax Return. How to amend previous tax returns The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. How to amend previous tax returns The debtor must file Form 4868 by the due date of the return for the first short tax year. How to amend previous tax returns The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. How to amend previous tax returns Election by debtor's spouse. How to amend previous tax returns   If the debtor is married, the debtor's spouse may join in the election to end the tax year. How to amend previous tax returns If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. How to amend previous tax returns The debtor must elect by the due date for filing the return for the first short tax year. How to amend previous tax returns Once the election is made, it cannot be revoked for the first short tax year. How to amend previous tax returns However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. How to amend previous tax returns Later bankruptcy of spouse. How to amend previous tax returns    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. How to amend previous tax returns   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. How to amend previous tax returns If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. How to amend previous tax returns However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. How to amend previous tax returns The debtor and the spouse are precluded from this election because they have different tax years. How to amend previous tax returns This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. How to amend previous tax returns Example 1. How to amend previous tax returns Paul and Mary Harris are calendar-year taxpayers. How to amend previous tax returns Paul's voluntary chapter 7 bankruptcy case begins on March 4. How to amend previous tax returns If Paul does not make an election, his tax year does not end on March 3. How to amend previous tax returns If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. How to amend previous tax returns Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. How to amend previous tax returns They must make the election by July 15, the due date for filing the joint return. How to amend previous tax returns Example 2. How to amend previous tax returns Fred and Ethel Barnes are calendar-year taxpayers. How to amend previous tax returns Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. How to amend previous tax returns Ethel could elect to end her tax year on October 31. How to amend previous tax returns If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. How to amend previous tax returns Her first tax year is January 1–October 31, and her second year is November 1–December 31. How to amend previous tax returns If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. How to amend previous tax returns If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. How to amend previous tax returns Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. How to amend previous tax returns Example 3. How to amend previous tax returns Jack and Karen Thomas are calendar-year taxpayers. How to amend previous tax returns Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. How to amend previous tax returns Karen elected to close her tax year on April 9 and Jack joins in Karen's election. How to amend previous tax returns Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. How to amend previous tax returns The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. How to amend previous tax returns Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). How to amend previous tax returns If Karen does join in, she would have the same 3 short tax years as Jack. How to amend previous tax returns Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. How to amend previous tax returns Annualizing taxable income. How to amend previous tax returns   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. How to amend previous tax returns See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. How to amend previous tax returns Dismissal of bankruptcy case. How to amend previous tax returns   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. How to amend previous tax returns It is as if no bankruptcy estate was created for tax purposes. How to amend previous tax returns In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. How to amend previous tax returns Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. How to amend previous tax returns Attach a statement to the amended returns explaining why the debtor is filing an amended return. How to amend previous tax returns Taxes and the Bankruptcy Estate Property of the bankruptcy estate. How to amend previous tax returns   At the commencement of a bankruptcy case a bankruptcy estate is created. How to amend previous tax returns Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. How to amend previous tax returns This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. How to amend previous tax returns However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. How to amend previous tax returns Note. How to amend previous tax returns Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. How to amend previous tax returns Excluded property is never included in the estate. How to amend previous tax returns Transfer of assets between debtor and bankruptcy estate. How to amend previous tax returns   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. How to amend previous tax returns The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. How to amend previous tax returns For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. How to amend previous tax returns The estate assumes the same basis, holding period, and character of the transferred assets. How to amend previous tax returns Also, the estate generally accounts for the transferred assets in the same manner as debtor. How to amend previous tax returns   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. How to amend previous tax returns The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. How to amend previous tax returns Abandoned property. How to amend previous tax returns    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. How to amend previous tax returns If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. How to amend previous tax returns Separate taxable entity. How to amend previous tax returns   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. How to amend previous tax returns The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. How to amend previous tax returns S. How to amend previous tax returns Income Tax Return for Estates and Trusts, and paying its taxes. How to amend previous tax returns The debtor remains responsible for filing his or her own returns on Form 1040, U. How to amend previous tax returns S. How to amend previous tax returns Individual Income Tax Return, and paying taxes on income that does not belong to the estate. How to amend previous tax returns Employer identification number. How to amend previous tax returns   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. How to amend previous tax returns The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. How to amend previous tax returns See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. How to amend previous tax returns    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. How to amend previous tax returns Income, deductions, and credits – Form 1040. How to amend previous tax returns   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). How to amend previous tax returns Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. How to amend previous tax returns The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. How to amend previous tax returns See Debt Cancellation, below. How to amend previous tax returns Note. How to amend previous tax returns The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. How to amend previous tax returns Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. How to amend previous tax returns However, other exclusions, such as the insolvency exclusion, may apply. How to amend previous tax returns Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. How to amend previous tax returns    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. How to amend previous tax returns Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. How to amend previous tax returns   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. How to amend previous tax returns Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. How to amend previous tax returns Income of the estate in individual chapter 11 cases. How to amend previous tax returns    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. How to amend previous tax returns Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. How to amend previous tax returns S. How to amend previous tax returns C. How to amend previous tax returns section 1115). How to amend previous tax returns Note. How to amend previous tax returns A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. How to amend previous tax returns Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). How to amend previous tax returns Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. How to amend previous tax returns See Administrative expenses, below. How to amend previous tax returns Conversion or dismissal of chapter 11 cases. How to amend previous tax returns   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. How to amend previous tax returns If the chapter 11 case is converted to a chapter 7 case, 11 U. How to amend previous tax returns S. How to amend previous tax returns C. How to amend previous tax returns section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. How to amend previous tax returns Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. How to amend previous tax returns If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. How to amend previous tax returns Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. How to amend previous tax returns Note. How to amend previous tax returns Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). How to amend previous tax returns Administrative expenses. How to amend previous tax returns   Allowable expenses include administrative expenses. How to amend previous tax returns    Administrative expenses can only be deducted by the estate, never by the debtor. How to amend previous tax returns   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. How to amend previous tax returns These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. How to amend previous tax returns See IRC section 67(e). How to amend previous tax returns Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. How to amend previous tax returns Note. How to amend previous tax returns The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. How to amend previous tax returns See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. How to amend previous tax returns Administrative expense loss. How to amend previous tax returns   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. How to amend previous tax returns The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. How to amend previous tax returns The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. How to amend previous tax returns For a discussion of NOLs, see Publication 536. How to amend previous tax returns Attribute carryovers. How to amend previous tax returns   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. How to amend previous tax returns These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. How to amend previous tax returns The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. How to amend previous tax returns   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. How to amend previous tax returns See Debt Cancellation, later. How to amend previous tax returns   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. How to amend previous tax returns The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. How to amend previous tax returns Note. How to amend previous tax returns The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. How to amend previous tax returns See Administrative expense loss, above. How to amend previous tax returns Passive and at-risk activities. How to amend previous tax returns   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. How to amend previous tax returns Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. How to amend previous tax returns These transfers include the return of exempt property and abandonment of estate property to the debtor. How to amend previous tax returns Carrybacks from the debtor's activities. How to amend previous tax returns   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. How to amend previous tax returns Carrybacks from the bankruptcy estate. How to amend previous tax returns   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. How to amend previous tax returns The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. How to amend previous tax returns Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. How to amend previous tax returns    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. How to amend previous tax returns The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. How to amend previous tax returns These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. How to amend previous tax returns The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. How to amend previous tax returns The same method must be used to allocate the income and the withheld tax. How to amend previous tax returns Example. How to amend previous tax returns If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. How to amend previous tax returns Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. How to amend previous tax returns See IRC section 31(a). How to amend previous tax returns   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. How to amend previous tax returns In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. How to amend previous tax returns    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. How to amend previous tax returns The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. How to amend previous tax returns Note. How to amend previous tax returns The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). How to amend previous tax returns   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. How to amend previous tax returns Self-employment taxes in individual chapter 11 cases. How to amend previous tax returns   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. How to amend previous tax returns Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. How to amend previous tax returns   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. How to amend previous tax returns Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. How to amend previous tax returns This schedule includes self-employment income earned post-petition and the attributable deductions. How to amend previous tax returns The debtor must pay any self-employment tax imposed by IRC section 1401. How to amend previous tax returns Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. How to amend previous tax returns   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. How to amend previous tax returns However, section 1115 of the Bankruptcy Code (11 U. How to amend previous tax returns S. How to amend previous tax returns C. How to amend previous tax returns section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. How to amend previous tax returns See Notice 2006-83. How to amend previous tax returns   The reporting and withholding obligations of a debtor's employer also do not change. How to amend previous tax returns An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. How to amend previous tax returns Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. How to amend previous tax returns   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. How to amend previous tax returns See IRC section 6109(a)(2). How to amend previous tax returns As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). How to amend previous tax returns   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. How to amend previous tax returns See Notice 2006-83. How to amend previous tax returns An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. How to amend previous tax returns   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. How to amend previous tax returns However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. How to amend previous tax returns See Employment Tax Regulations section 31. How to amend previous tax returns 3402(f)(2)-1. How to amend previous tax returns Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. How to amend previous tax returns See IRC section 6654(a). How to amend previous tax returns Notice required in converted and dismissed cases. How to amend previous tax returns   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. How to amend previous tax returns The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. How to amend previous tax returns This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. How to amend previous tax returns   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. How to amend previous tax returns Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. How to amend previous tax returns However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. How to amend previous tax returns After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. How to amend previous tax returns Employment taxes. How to amend previous tax returns   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. How to amend previous tax returns See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. How to amend previous tax returns   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. How to amend previous tax returns For a further discussion of employment taxes, see Employment Taxes, later. How to amend previous tax returns Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . How to amend previous tax returns The bankruptcy court case number is . How to amend previous tax returns Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. How to amend previous tax returns   Year Taxpayer   Estate 1. How to amend previous tax returns Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. How to amend previous tax returns Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. How to amend previous tax returns Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. How to amend previous tax returns Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. How to amend previous tax returns   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. How to amend previous tax returns This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. How to amend previous tax returns   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). How to amend previous tax returns   These amounts are generally adjusted annually. How to amend previous tax returns See the present year Form 1041 Instructions at www. How to amend previous tax returns irs. How to amend previous tax returns gov/form1041 for the current dollar amounts. How to amend previous tax returns Accounting period. How to amend previous tax returns   A bankruptcy estate may have a fiscal year. How to amend previous tax returns However, this period cannot be longer than 12 months. How to amend previous tax returns Change of accounting period. How to amend previous tax returns   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. How to amend previous tax returns This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. How to amend previous tax returns The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. How to amend previous tax returns Employer identification number. How to amend previous tax returns   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. How to amend previous tax returns The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. How to amend previous tax returns    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. How to amend previous tax returns   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. How to amend previous tax returns irs. How to amend previous tax returns gov/businesses/small. How to amend previous tax returns The EIN is issued immediately once the application information is validated. How to amend previous tax returns By telephone at 1-800-829-4933 from 7:00 a. How to amend previous tax returns m. How to amend previous tax returns to 7:00 p. How to amend previous tax returns m. How to amend previous tax returns in the trustee's or debtor-in-possession's local time zone. How to amend previous tax returns Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. How to amend previous tax returns   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. How to amend previous tax returns For more details, see Pub. How to amend previous tax returns 583, Starting a Business and Keeping Records. How to amend previous tax returns   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. How to amend previous tax returns Figuring tax due. How to amend previous tax returns   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. How to amend previous tax returns However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. How to amend previous tax returns The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. How to amend previous tax returns The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. How to amend previous tax returns Tax rate schedule. How to amend previous tax returns The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. How to amend previous tax returns When to file. How to amend previous tax returns   Calendar year bankruptcy estates must file Form 1041 by April 15th. How to amend previous tax returns Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. How to amend previous tax returns For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. How to amend previous tax returns If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. How to amend previous tax returns Note. How to amend previous tax returns The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. How to amend previous tax returns Transmittal for Form 1040. How to amend previous tax returns   Form 1041 is used as a transmittal for Form 1040. How to amend previous tax returns If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. How to amend previous tax returns   Prepare the bankruptcy estate's return by completing Form 1040. How to amend previous tax returns In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. How to amend previous tax returns ” Then, attach Form 1040 to the Form 1041 transmittal. How to amend previous tax returns Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. How to amend previous tax returns An example of a bankruptcy estate's tax return is prepared below. How to amend previous tax returns Note. How to amend previous tax returns The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. How to amend previous tax returns Payment of Tax Due Payment methods. How to amend previous tax returns   Payment of tax due may be made by check or money order or by credit or debit card. How to amend previous tax returns For information on how to make payments electronically by credit or debit card, go to irs. How to amend previous tax returns gov/e-pay. How to amend previous tax returns      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. How to amend previous tax returns To enroll in EFTPS, go to eftps. How to amend previous tax returns gov or call 1-800-555-4477. How to amend previous tax returns For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. How to amend previous tax returns Payment voucher – Form 1041-V. How to amend previous tax returns   Form 1041-V accompanies payments made by check or money order for Form 1041. How to amend previous tax returns The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. How to amend previous tax returns Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. How to amend previous tax returns We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. How to amend previous tax returns Estimated tax – Form 1041-ES. How to amend previous tax returns   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. How to amend previous tax returns See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. How to amend previous tax returns Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. How to amend previous tax returns Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. How to amend previous tax returns If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. How to amend previous tax returns   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. How to amend previous tax returns Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. How to amend previous tax returns The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. How to amend previous tax returns If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How to amend previous tax returns , with their individual income tax returns. How to amend previous tax returns Tax Return Example – Form 1041 This publication is not revised annually. How to amend previous tax returns Future changes to the forms and their instructions may not be reflected in this example. How to amend previous tax returns Note. How to amend previous tax returns The following return was prepared for tax year 2011. How to amend previous tax returns In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). How to amend previous tax returns Facts and circumstances. How to amend previous tax returns   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. How to amend previous tax returns Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. How to amend previous tax returns   The estate received the following assets from Mr. How to amend previous tax returns Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. How to amend previous tax returns   Also, the estate received a $251,500 capital loss carryover. How to amend previous tax returns   Mr. How to amend previous tax returns Smith's bankruptcy case was closed on December 31, 2011. How to amend previous tax returns During 2011, Mr. How to amend previous tax returns Smith was relieved of $70,000 of debt by the bankruptcy court. How to amend previous tax returns The estate chose a calendar year as its tax year. How to amend previous tax returns Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. How to amend previous tax returns Schedule B (Form 1040). How to amend previous tax returns    The certificate of deposit earned $5,500 of interest during 2011. How to amend previous tax returns Joan reports this interest on Schedule B. How to amend previous tax returns She completes this schedule and enters the result on Form 1040. How to amend previous tax returns Form 4562. How to amend previous tax returns   Joan enters the depreciation allowed on Form 4562. How to amend previous tax returns She completes the form and enters the result on Schedule E. How to amend previous tax returns Schedule E (Form 1040). How to amend previous tax returns   The commercial real estate was rented through the date of sale. How to amend previous tax returns Joan reports the income and expenses on Schedule E. How to amend previous tax returns She enters the net income on Form 1040. How to amend previous tax returns Form 4797. How to amend previous tax returns   The commercial real estate was sold on July 1, 2011, for $280,000. How to amend previous tax returns The property was purchased in 2001 at a cost of $250,000. How to amend previous tax returns The total depreciation allowable as of the date of sale was $120,000. How to amend previous tax returns Additionally, $25,000 of selling expenses were incurred. How to amend previous tax returns Joan reports the gain or loss from the sale on Form 4797. How to amend previous tax returns She completes the form and enters the gain on Schedule D (Form 1040). How to amend previous tax returns   Mr. How to amend previous tax returns Smith's former residence was sold on September 30, 2011. How to amend previous tax returns The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. How to amend previous tax returns This sale is excluded from gross income under IRC section 121. How to amend previous tax returns Note. How to amend previous tax returns Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). How to amend previous tax returns Bankruptcy estates succeed to this exclusion at the commencement of the case. How to amend previous tax returns See Regulation section 1. How to amend previous tax returns 1398-3. How to amend previous tax returns Schedule D (Form 1040). How to amend previous tax returns   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). How to amend previous tax returns She enters the results on Form 1040. How to amend previous tax returns Form 1040, page 1. How to amend previous tax returns   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. How to amend previous tax returns Schedule A (Form 1040). How to amend previous tax returns   During 2011, the estate paid mortgage interest and real property tax on Mr. How to amend previous tax returns Smith's former residence. How to amend previous tax returns It also paid income tax to the state. How to amend previous tax returns Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. How to amend previous tax returns Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. How to amend previous tax returns She completes the Schedule A and enters the result on page 2 of Form 1040. How to amend previous tax returns Form 1040, page 2. How to amend previous tax returns   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. How to amend previous tax returns She then enters the estate's estimated tax payments and figures the amount the estate still owes. How to amend previous tax returns Form 982. How to amend previous tax returns   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. How to amend previous tax returns Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. How to amend previous tax returns See Debt Cancellation, later. How to amend previous tax returns After the bankruptcy case ends, Mr. How to amend previous tax returns Smith will assume the estate's tax attributes. How to amend previous tax returns Mr. How to amend previous tax returns Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). How to amend previous tax returns Note. How to amend previous tax returns If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. How to amend previous tax returns Form 1041. How to amend previous tax returns   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. How to amend previous tax returns She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. How to amend previous tax returns This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Schedule A This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Schedule B This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Schedule D This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Schedule E This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 2119 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 4562 This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. How to amend previous tax returns Please click the link to view the image. How to amend previous tax returns Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. How to amend previous tax returns Otherwise, you do not have any carryovers. How to amend previous tax returns 1. How to amend previous tax returns Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. How to amend previous tax returns If a loss, enclose the amount in parentheses 1. How to amend previous tax returns 19,880   2. How to amend previous tax returns Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. How to amend previous tax returns 1,500   3. How to amend previous tax returns Combine lines 1 and 2. How to amend previous tax returns If zero or less, enter -0- 3. How to amend previous tax returns 21,380   4. How to amend previous tax returns Enter the smaller of line 2 or line 3 4. How to amend previous tax returns 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. How to amend previous tax returns       5. How to amend previous tax returns Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. How to amend previous tax returns 0   6. How to amend previous tax returns Enter any gain from your 2010 Schedule D, line 15. How to amend previous tax returns If a loss, enter -0- 6. How to amend previous tax returns         7. How to amend previous tax returns Add lines 4 and 6 7. How to amend previous tax returns 1,500   8. How to amend previous tax returns Short-term capital loss carryover for 2011. How to amend previous tax returns Subtract line 7 from line 5. How to amend previous tax returns If zero or less, enter -0-. How to amend previous tax returns If more than zero, also enter this amount on Schedule D, line 6 8. How to amend previous tax returns 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. How to amend previous tax returns       9. How to amend previous tax returns Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. How to amend previous tax returns 251,500   10. How to amend previous tax returns Enter any gain from your 2010 Schedule D, line 7. How to amend previous tax returns If a loss, enter -0- 10. How to amend previous tax returns 0       11. How to amend previous tax returns Subtract line 5 from line 4. How to amend previous tax returns If zero or less, enter -0- 11. How to amend previous tax returns 1,500       12. How to amend previous tax returns Add lines 10 and 11 12. How to amend previous tax returns 1,500   13. How to amend previous tax returns Long-term capital loss carryover for 2011. How to amend previous tax returns Subtract line 12 from line 9. How to amend previous tax returns If zero or less, enter -0-. How to amend previous tax returns If more than zero, also enter this amount on Schedule D, line 14 13. How to amend previous tax returns 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. How to amend previous tax returns The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. How to amend previous tax returns In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. How to amend previous tax returns The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. How to amend previous tax returns Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. How to amend previous tax returns However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. How to amend previous tax returns A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. How to amend previous tax returns However, It may or may not be included in the individual partners' income. How to amend previous tax returns See Partnerships, below under Debt Cancellation. How to amend previous tax returns Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. How to amend previous tax returns A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. How to amend previous tax returns The following discussion only highlights bankruptcy tax rules applying to corporations. How to amend previous tax returns The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. How to amend previous tax returns Therefore, you may wish to seek the help of a professional tax advisor. How to amend previous tax returns See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. How to amend previous tax returns Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. How to amend previous tax returns However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. How to amend previous tax returns A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. How to amend previous tax returns In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. How to amend previous tax returns In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. How to amend previous tax returns Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. How to amend previous tax returns In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. How to amend previous tax returns IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. How to amend previous tax returns IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. How to amend previous tax returns In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. How to amend previous tax returns No loss is recognized in this situation. How to amend previous tax returns Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. How to amend previous tax returns To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. How to amend previous tax returns The exemption request must be submitted to the local IRS Insolvency Office handling the case. How to amend previous tax returns The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. How to amend previous tax returns The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. How to amend previous tax returns ” The statement must be signed by the trustee, receiver or assignee. How to amend previous tax returns The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). How to amend previous tax returns The IRS will act on your request within 90 days. How to amend previous tax returns Disclosure of return information to trustee. How to amend previous tax returns   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. How to amend previous tax returns However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. How to amend previous tax returns Material interest is generally defined as a financial or monetary interest. How to amend previous tax returns Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. How to amend previous tax returns Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. How to amend previous tax returns Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. How to amend previous tax returns QSFs are required to file an annual income tax return, Form 1120-SF, U. How to amend previous tax returns S. How to amend previous tax returns Income Tax Return for Settlement Funds. How to amend previous tax returns More information about QSFs may be found in Treasury Regulation sections 1. How to amend previous tax returns 468B-1 through -5. How to amend previous tax returns Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. How to amend previous tax returns After a return is filed, the IRS will either accept the return as filed or select the return for examination. How to amend previous tax returns Under examination the IRS may redetermine the tax liability shown on the return. How to amend previous tax returns If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. How to amend previous tax returns See Court Jurisdiction over Tax Matters, later. How to amend previous tax returns Prompt Determination Requests Pursuant to Rev. How to amend previous tax returns Proc. How to amend previous tax returns 2006-24, 2006-22 I. How to amend previous tax returns R. How to amend previous tax returns B. How to amend previous tax returns 943, www. How to amend previous tax returns irs. How to amend previous tax returns gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. How to amend previous tax returns irs. How to amend previous tax returns gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. How to amend previous tax returns Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). How to amend previous tax returns Making the request for determination. How to amend previous tax returns   As detailed in Rev. How to amend previous tax returns Proc. How to amend previous tax returns 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. How to amend previous tax returns O. How to amend previous tax returns Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). How to amend previous tax returns   The request must be submitted in duplicate and must be executed under penalties of perjury. How to amend previous tax returns In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. How to amend previous tax returns The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. How to amend previous tax returns The name and location of the office where the return was filed. How to amend previous tax returns The name of the debtor. How to amend previous tax returns Debtor's social security number, TIN, or EIN. How to amend previous tax returns Type of bankruptcy estate. How to amend previous tax returns Bankruptcy case number. How to amend previous tax returns Court where the bankruptcy case is pending. How to amend previous tax returns   The copy of the return(s) submitted with the request must be an exact copy of a valid return. How to amend previous tax returns A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. How to amend previous tax returns    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. How to amend previous tax returns A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. How to amend previous tax returns Examination of return. How to amend previous tax returns   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. How to amend previous tax returns If the return is selected for examination, it will be examined as soon as possible. How to amend previous tax returns The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. How to amend previous tax returns   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. How to amend previous tax returns   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. How to amend previous tax returns   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. How to amend previous tax returns Note. How to amend previous tax returns An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. How to amend previous tax returns   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei
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The How To Amend Previous Tax Returns

How to amend previous tax returns 1. How to amend previous tax returns   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. How to amend previous tax returns When repayment contributions can be made. How to amend previous tax returns No deduction. How to amend previous tax returns Reserve component. How to amend previous tax returns Figuring your IRA deduction. How to amend previous tax returns Reporting the repayment. How to amend previous tax returns Example. How to amend previous tax returns General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. How to amend previous tax returns Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. How to amend previous tax returns Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. How to amend previous tax returns Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. How to amend previous tax returns 2013 Reporting. How to amend previous tax returns Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. How to amend previous tax returns One-time transfer. How to amend previous tax returns Testing period rules apply. How to amend previous tax returns More information. How to amend previous tax returns Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. How to amend previous tax returns  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. How to amend previous tax returns If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. How to amend previous tax returns For more information, see How Much Can Be Contributed? in this chapter. How to amend previous tax returns Modified AGI limit for traditional IRA contributions increased. How to amend previous tax returns  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. How to amend previous tax returns If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. How to amend previous tax returns If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. How to amend previous tax returns See How Much Can You Deduct? in this chapter. How to amend previous tax returns Net Investment Income Tax. How to amend previous tax returns  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). How to amend previous tax returns However, these distributions are taken into account when determining the modified adjusted gross income threshold. How to amend previous tax returns Distributions from a nonqualified retirement plan are included in net investment income. How to amend previous tax returns See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. How to amend previous tax returns What's New for 2014 Modified AGI limit for traditional IRA contributions increased. How to amend previous tax returns  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. How to amend previous tax returns If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. How to amend previous tax returns If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. How to amend previous tax returns Introduction This chapter discusses the original IRA. How to amend previous tax returns In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. How to amend previous tax returns ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. How to amend previous tax returns The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. How to amend previous tax returns Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. How to amend previous tax returns Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. How to amend previous tax returns You can have a traditional IRA whether or not you are covered by any other retirement plan. How to amend previous tax returns However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. How to amend previous tax returns See How Much Can You Deduct , later. How to amend previous tax returns Both spouses have compensation. How to amend previous tax returns   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. How to amend previous tax returns You cannot both participate in the same IRA. How to amend previous tax returns If you file a joint return, only one of you needs to have compensation. How to amend previous tax returns What Is Compensation? Generally, compensation is what you earn from working. How to amend previous tax returns For a summary of what compensation does and does not include, see Table 1-1. How to amend previous tax returns Compensation includes all of the items discussed next (even if you have more than one type). How to amend previous tax returns Wages, salaries, etc. How to amend previous tax returns   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. How to amend previous tax returns The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). How to amend previous tax returns Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. How to amend previous tax returns Commissions. How to amend previous tax returns   An amount you receive that is a percentage of profits or sales price is compensation. How to amend previous tax returns Self-employment income. How to amend previous tax returns   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. How to amend previous tax returns   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. How to amend previous tax returns Self-employment loss. How to amend previous tax returns   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. How to amend previous tax returns Alimony and separate maintenance. How to amend previous tax returns   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. How to amend previous tax returns Nontaxable combat pay. How to amend previous tax returns   If you were a member of the U. How to amend previous tax returns S. How to amend previous tax returns Armed Forces, compensation includes any nontaxable combat pay you received. How to amend previous tax returns This amount should be reported in box 12 of your 2013 Form W-2 with code Q. How to amend previous tax returns Table 1-1. How to amend previous tax returns Compensation for Purposes of an IRA Includes . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns Does not include . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns   earnings and profits from property. How to amend previous tax returns wages, salaries, etc. How to amend previous tax returns     interest and dividend income. How to amend previous tax returns commissions. How to amend previous tax returns     pension or annuity income. How to amend previous tax returns self-employment income. How to amend previous tax returns     deferred compensation. How to amend previous tax returns alimony and separate maintenance. How to amend previous tax returns     income from certain  partnerships. How to amend previous tax returns nontaxable combat pay. How to amend previous tax returns     any amounts you exclude from income. How to amend previous tax returns     What Is Not Compensation? Compensation does not include any of the following items. How to amend previous tax returns Earnings and profits from property, such as rental income, interest income, and dividend income. How to amend previous tax returns Pension or annuity income. How to amend previous tax returns Deferred compensation received (compensation payments postponed from a past year). How to amend previous tax returns Income from a partnership for which you do not provide services that are a material income-producing factor. How to amend previous tax returns Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. How to amend previous tax returns Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. How to amend previous tax returns When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. How to amend previous tax returns However, the time for making contributions for any year is limited. How to amend previous tax returns See When Can Contributions Be Made , later. How to amend previous tax returns How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. How to amend previous tax returns You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. How to amend previous tax returns You can also open an IRA through your stockbroker. How to amend previous tax returns Any IRA must meet Internal Revenue Code requirements. How to amend previous tax returns The requirements for the various arrangements are discussed below. How to amend previous tax returns Kinds of traditional IRAs. How to amend previous tax returns   Your traditional IRA can be an individual retirement account or annuity. How to amend previous tax returns It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. How to amend previous tax returns Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. How to amend previous tax returns The account is created by a written document. How to amend previous tax returns The document must show that the account meets all of the following requirements. How to amend previous tax returns The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. How to amend previous tax returns The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. How to amend previous tax returns However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. How to amend previous tax returns Contributions, except for rollover contributions, must be in cash. How to amend previous tax returns See Rollovers , later. How to amend previous tax returns You must have a nonforfeitable right to the amount at all times. How to amend previous tax returns Money in your account cannot be used to buy a life insurance policy. How to amend previous tax returns Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. How to amend previous tax returns You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. How to amend previous tax returns See When Must You Withdraw Assets? (Required Minimum Distributions) , later. How to amend previous tax returns Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. How to amend previous tax returns An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. How to amend previous tax returns An individual retirement annuity must meet all the following requirements. How to amend previous tax returns Your entire interest in the contract must be nonforfeitable. How to amend previous tax returns The contract must provide that you cannot transfer any portion of it to any person other than the issuer. How to amend previous tax returns There must be flexible premiums so that if your compensation changes, your payment can also change. How to amend previous tax returns This provision applies to contracts issued after November 6, 1978. How to amend previous tax returns The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. How to amend previous tax returns Distributions must begin by April 1 of the year following the year in which you reach age 70½. How to amend previous tax returns See When Must You Withdraw Assets? (Required Minimum Distributions) , later. How to amend previous tax returns Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. How to amend previous tax returns The bonds have the following features. How to amend previous tax returns They stop earning interest when you reach age 70½. How to amend previous tax returns If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. How to amend previous tax returns You cannot transfer the bonds. How to amend previous tax returns If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. How to amend previous tax returns See Age 59½ Rule under Early Distributions, later. How to amend previous tax returns You can roll over redemption proceeds into IRAs. How to amend previous tax returns Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. How to amend previous tax returns Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. How to amend previous tax returns See Publication 560 for more information about SEPs. How to amend previous tax returns Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. How to amend previous tax returns The requirements for individual retirement accounts apply to these traditional IRAs. How to amend previous tax returns Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. How to amend previous tax returns However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. How to amend previous tax returns The disclosure statement must explain certain items in plain language. How to amend previous tax returns For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. How to amend previous tax returns This explanation must appear at the beginning of the disclosure statement. How to amend previous tax returns If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. How to amend previous tax returns The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. How to amend previous tax returns These requirements apply to all sponsors. How to amend previous tax returns How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. How to amend previous tax returns These limits and rules are explained below. How to amend previous tax returns Community property laws. How to amend previous tax returns   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. How to amend previous tax returns This is the rule even in states with community property laws. How to amend previous tax returns Brokers' commissions. How to amend previous tax returns   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. How to amend previous tax returns For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. How to amend previous tax returns Trustees' fees. How to amend previous tax returns   Trustees' administrative fees are not subject to the contribution limit. How to amend previous tax returns For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. How to amend previous tax returns Qualified reservist repayments. How to amend previous tax returns   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. How to amend previous tax returns You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. How to amend previous tax returns To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. How to amend previous tax returns Limit. How to amend previous tax returns   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. How to amend previous tax returns When repayment contributions can be made. How to amend previous tax returns   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. How to amend previous tax returns No deduction. How to amend previous tax returns   You cannot deduct qualified reservist repayments. How to amend previous tax returns Reserve component. How to amend previous tax returns   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. How to amend previous tax returns Figuring your IRA deduction. How to amend previous tax returns   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. How to amend previous tax returns Reporting the repayment. How to amend previous tax returns   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. How to amend previous tax returns Example. How to amend previous tax returns   In 2013, your IRA contribution limit is $5,500. How to amend previous tax returns However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. How to amend previous tax returns You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). How to amend previous tax returns In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. How to amend previous tax returns   For 2013, you can contribute a total of $8,500 to your IRA. How to amend previous tax returns This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. How to amend previous tax returns You contribute the maximum allowable for the year. How to amend previous tax returns Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. How to amend previous tax returns The qualified reservist repayment is not deductible. How to amend previous tax returns Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. How to amend previous tax returns See chapter 2 for information about Roth IRAs. How to amend previous tax returns General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. How to amend previous tax returns Note. How to amend previous tax returns This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). How to amend previous tax returns This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. How to amend previous tax returns (See Nondeductible Contributions , later. How to amend previous tax returns ) Qualified reservist repayments do not affect this limit. How to amend previous tax returns Examples. How to amend previous tax returns George, who is 34 years old and single, earns $24,000 in 2013. How to amend previous tax returns His IRA contributions for 2013 are limited to $5,500. How to amend previous tax returns Danny, an unmarried college student working part time, earns $3,500 in 2013. How to amend previous tax returns His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. How to amend previous tax returns More than one IRA. How to amend previous tax returns   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. How to amend previous tax returns Annuity or endowment contracts. How to amend previous tax returns   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. How to amend previous tax returns If more than this amount is contributed, the annuity or endowment contract is disqualified. How to amend previous tax returns Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. How to amend previous tax returns Your spouse's IRA contribution for the year to a traditional IRA. How to amend previous tax returns Any contributions for the year to a Roth IRA on behalf of your spouse. How to amend previous tax returns This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). How to amend previous tax returns Note. How to amend previous tax returns This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). How to amend previous tax returns Example. How to amend previous tax returns Kristin, a full-time student with no taxable compensation, marries Carl during the year. How to amend previous tax returns Neither of them was age 50 by the end of 2013. How to amend previous tax returns For the year, Carl has taxable compensation of $30,000. How to amend previous tax returns He plans to contribute (and deduct) $5,500 to a traditional IRA. How to amend previous tax returns If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. How to amend previous tax returns This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. How to amend previous tax returns In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). How to amend previous tax returns Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. How to amend previous tax returns However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. How to amend previous tax returns See How Much Can You Deduct , later. How to amend previous tax returns Example. How to amend previous tax returns Tom and Darcy are married and both are 53. How to amend previous tax returns They both work and each has a traditional IRA. How to amend previous tax returns Tom earned $3,800 and Darcy earned $48,000 in 2013. How to amend previous tax returns Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. How to amend previous tax returns They can contribute up to $6,500 to Darcy's IRA. How to amend previous tax returns If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. How to amend previous tax returns Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. How to amend previous tax returns Example. How to amend previous tax returns Rafael, who is 40, earns $30,000 in 2013. How to amend previous tax returns Although he can contribute up to $5,500 for 2013, he contributes only $3,000. How to amend previous tax returns After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). How to amend previous tax returns He cannot contribute $2,500 more than the limit for any later year. How to amend previous tax returns More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. How to amend previous tax returns However, a penalty or additional tax may apply. How to amend previous tax returns See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. How to amend previous tax returns When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). How to amend previous tax returns Contributions must be in the form of money (cash, check, or money order). How to amend previous tax returns Property cannot be contributed. How to amend previous tax returns Although property cannot be contributed, your IRA may invest in certain property. How to amend previous tax returns For example, your IRA may purchase shares of stock. How to amend previous tax returns For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. How to amend previous tax returns You may be able to transfer or roll over certain property from one retirement plan to another. How to amend previous tax returns See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . How to amend previous tax returns You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. How to amend previous tax returns For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). How to amend previous tax returns Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. How to amend previous tax returns For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. How to amend previous tax returns See Who Can Open a Traditional IRA , earlier. How to amend previous tax returns Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. How to amend previous tax returns Contributions can resume for any years that you qualify. How to amend previous tax returns Contributions must be made by due date. How to amend previous tax returns   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. How to amend previous tax returns For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. How to amend previous tax returns Age 70½ rule. How to amend previous tax returns   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. How to amend previous tax returns   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. How to amend previous tax returns If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. How to amend previous tax returns Designating year for which contribution is made. How to amend previous tax returns   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. How to amend previous tax returns If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). How to amend previous tax returns Filing before a contribution is made. How to amend previous tax returns    You can file your return claiming a traditional IRA contribution before the contribution is actually made. How to amend previous tax returns Generally, the contribution must be made by the due date of your return, not including extensions. How to amend previous tax returns Contributions not required. How to amend previous tax returns   You do not have to contribute to your traditional IRA for every tax year, even if you can. How to amend previous tax returns How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . How to amend previous tax returns However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. How to amend previous tax returns See Limit if Covered by Employer Plan , later. How to amend previous tax returns You may be able to claim a credit for contributions to your traditional IRA. How to amend previous tax returns For more information, see chapter 4. How to amend previous tax returns Trustees' fees. How to amend previous tax returns   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. How to amend previous tax returns However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). How to amend previous tax returns For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. How to amend previous tax returns Brokers' commissions. How to amend previous tax returns   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. How to amend previous tax returns Full deduction. How to amend previous tax returns   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. How to amend previous tax returns   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. How to amend previous tax returns Kay Bailey Hutchison Spousal IRA. How to amend previous tax returns   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. How to amend previous tax returns The IRA deduction for the year of the spouse with the greater compensation. How to amend previous tax returns Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. How to amend previous tax returns Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. How to amend previous tax returns   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. How to amend previous tax returns Note. How to amend previous tax returns If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. How to amend previous tax returns After a divorce or legal separation, you can deduct only the contributions to your own IRA. How to amend previous tax returns Your deductions are subject to the rules for single individuals. How to amend previous tax returns Covered by an employer retirement plan. How to amend previous tax returns   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. How to amend previous tax returns This is discussed later under Limit if Covered by Employer Plan . How to amend previous tax returns Limits on the amount you can deduct do not affect the amount that can be contributed. How to amend previous tax returns Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. How to amend previous tax returns The “Retirement Plan” box should be checked if you were covered. How to amend previous tax returns Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. How to amend previous tax returns If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. How to amend previous tax returns Federal judges. How to amend previous tax returns   For purposes of the IRA deduction, federal judges are covered by an employer plan. How to amend previous tax returns For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. How to amend previous tax returns These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. How to amend previous tax returns Tax year. How to amend previous tax returns   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. How to amend previous tax returns For almost all people, the tax year is the calendar year. How to amend previous tax returns Defined contribution plan. How to amend previous tax returns   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. How to amend previous tax returns However, also see Situations in Which You Are Not Covered , later. How to amend previous tax returns   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. How to amend previous tax returns In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. How to amend previous tax returns The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. How to amend previous tax returns Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. How to amend previous tax returns Example. How to amend previous tax returns Company A has a money purchase pension plan. How to amend previous tax returns Its plan year is from July 1 to June 30. How to amend previous tax returns The plan provides that contributions must be allocated as of June 30. How to amend previous tax returns Bob, an employee, leaves Company A on December 31, 2012. How to amend previous tax returns The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. How to amend previous tax returns Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. How to amend previous tax returns   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. How to amend previous tax returns If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. How to amend previous tax returns If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. How to amend previous tax returns Example. How to amend previous tax returns Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. How to amend previous tax returns The plan year runs from July 1 to June 30. How to amend previous tax returns Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. How to amend previous tax returns Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. How to amend previous tax returns As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. How to amend previous tax returns In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. How to amend previous tax returns On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. How to amend previous tax returns That contribution was made on February 15, 2014. How to amend previous tax returns Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. How to amend previous tax returns No vested interest. How to amend previous tax returns   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. How to amend previous tax returns Defined benefit plan. How to amend previous tax returns   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. How to amend previous tax returns This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. How to amend previous tax returns   A defined benefit plan is any plan that is not a defined contribution plan. How to amend previous tax returns In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. How to amend previous tax returns The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. How to amend previous tax returns Defined benefit plans include pension plans and annuity plans. How to amend previous tax returns Example. How to amend previous tax returns Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. How to amend previous tax returns Nick leaves Company B on December 31, 2012. How to amend previous tax returns Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. How to amend previous tax returns No vested interest. How to amend previous tax returns   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. How to amend previous tax returns Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. How to amend previous tax returns Social security or railroad retirement. How to amend previous tax returns   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. How to amend previous tax returns Benefits from previous employer's plan. How to amend previous tax returns   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. How to amend previous tax returns Reservists. How to amend previous tax returns   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. How to amend previous tax returns You are not covered by the plan if both of the following conditions are met. How to amend previous tax returns The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. How to amend previous tax returns You did not serve more than 90 days on active duty during the year (not counting duty for training). How to amend previous tax returns Volunteer firefighters. How to amend previous tax returns   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. How to amend previous tax returns You are not covered by the plan if both of the following conditions are met. How to amend previous tax returns The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. How to amend previous tax returns Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. How to amend previous tax returns Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. How to amend previous tax returns Your deduction is also affected by how much income you had and by your filing status. How to amend previous tax returns Your deduction may also be affected by social security benefits you received. How to amend previous tax returns Reduced or no deduction. How to amend previous tax returns   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. How to amend previous tax returns   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. How to amend previous tax returns These amounts vary depending on your filing status. How to amend previous tax returns   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . How to amend previous tax returns Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. How to amend previous tax returns Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. How to amend previous tax returns You received social security benefits. How to amend previous tax returns You received taxable compensation. How to amend previous tax returns Contributions were made to your traditional IRA. How to amend previous tax returns You or your spouse was covered by an employer retirement plan. How to amend previous tax returns Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. How to amend previous tax returns Appendix B includes an example with filled-in worksheets to assist you. How to amend previous tax returns Table 1-2. How to amend previous tax returns Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. How to amend previous tax returns IF your filing status is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your modified adjusted gross income (modified AGI) is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns THEN you can take . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns single or head of household $59,000 or less a full deduction. How to amend previous tax returns more than $59,000 but less than $69,000 a partial deduction. How to amend previous tax returns $69,000 or more no deduction. How to amend previous tax returns married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. How to amend previous tax returns more than $95,000 but less than $115,000 a partial deduction. How to amend previous tax returns $115,000 or more no deduction. How to amend previous tax returns married filing separately2 less than $10,000 a partial deduction. How to amend previous tax returns $10,000 or more no deduction. How to amend previous tax returns 1 Modified AGI (adjusted gross income). How to amend previous tax returns See Modified adjusted gross income (AGI) , later. How to amend previous tax returns  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). How to amend previous tax returns Table 1-3. How to amend previous tax returns Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. How to amend previous tax returns IF your filing status is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your modified adjusted gross income (modified AGI) is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns THEN you can take . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns single, head of household, or qualifying widow(er) any amount a full deduction. How to amend previous tax returns married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. How to amend previous tax returns married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. How to amend previous tax returns more than $178,000 but less than $188,000 a partial deduction. How to amend previous tax returns $188,000 or more no deduction. How to amend previous tax returns married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. How to amend previous tax returns $10,000 or more no deduction. How to amend previous tax returns 1 Modified AGI (adjusted gross income). How to amend previous tax returns See Modified adjusted gross income (AGI) , later. How to amend previous tax returns  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. How to amend previous tax returns For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. How to amend previous tax returns If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. How to amend previous tax returns Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. How to amend previous tax returns Covered by a retirement plan. How to amend previous tax returns   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. How to amend previous tax returns For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. How to amend previous tax returns If your spouse is covered. How to amend previous tax returns   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. How to amend previous tax returns Filing status. How to amend previous tax returns   Your filing status depends primarily on your marital status. How to amend previous tax returns For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. How to amend previous tax returns If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. How to amend previous tax returns Lived apart from spouse. How to amend previous tax returns   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. How to amend previous tax returns Modified adjusted gross income (AGI). How to amend previous tax returns   You can use Worksheet 1-1 to figure your modified AGI. How to amend previous tax returns If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. How to amend previous tax returns    Do not assume that your modified AGI is the same as your compensation. How to amend previous tax returns Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. How to amend previous tax returns Form 1040. How to amend previous tax returns   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. How to amend previous tax returns IRA deduction. How to amend previous tax returns Student loan interest deduction. How to amend previous tax returns Tuition and fees deduction. How to amend previous tax returns Domestic production activities deduction. How to amend previous tax returns Foreign earned income exclusion. How to amend previous tax returns Foreign housing exclusion or deduction. How to amend previous tax returns Exclusion of qualified savings bond interest shown on Form 8815. How to amend previous tax returns Exclusion of employer-provided adoption benefits shown on Form 8839. How to amend previous tax returns This is your modified AGI. How to amend previous tax returns Form 1040A. How to amend previous tax returns   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. How to amend previous tax returns IRA deduction. How to amend previous tax returns Student loan interest deduction. How to amend previous tax returns Tuition and fees deduction. How to amend previous tax returns Exclusion of qualified savings bond interest shown on Form 8815. How to amend previous tax returns This is your modified AGI. How to amend previous tax returns Form 1040NR. How to amend previous tax returns   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. How to amend previous tax returns IRA deduction. How to amend previous tax returns Student loan interest deduction. How to amend previous tax returns Domestic production activities deduction. How to amend previous tax returns Exclusion of qualified savings bond interest shown on Form 8815. How to amend previous tax returns Exclusion of employer-provided adoption benefits shown on Form 8839. How to amend previous tax returns This is your modified AGI. How to amend previous tax returns Income from IRA distributions. How to amend previous tax returns   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. How to amend previous tax returns Both contributions for 2013 and distributions in 2013. How to amend previous tax returns   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. How to amend previous tax returns You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. How to amend previous tax returns (See Nondeductible Contributions and Worksheet 1-2, later. How to amend previous tax returns ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. How to amend previous tax returns To do this, you can use Worksheet 1-5, later. How to amend previous tax returns   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. How to amend previous tax returns How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013. How to amend previous tax returns The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. How to amend previous tax returns If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. How to amend previous tax returns Note. How to amend previous tax returns If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. How to amend previous tax returns Worksheet 1-1. How to amend previous tax returns Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. How to amend previous tax returns 1. How to amend previous tax returns Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. How to amend previous tax returns   2. How to amend previous tax returns Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. How to amend previous tax returns   3. How to amend previous tax returns Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. How to amend previous tax returns   4. How to amend previous tax returns Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. How to amend previous tax returns   5. How to amend previous tax returns Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. How to amend previous tax returns   6. How to amend previous tax returns Enter any foreign housing deduction from Form 2555, line 50 6. How to amend previous tax returns   7. How to amend previous tax returns Enter any excludable savings bond interest from Form 8815, line 14 7. How to amend previous tax returns   8. How to amend previous tax returns Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. How to amend previous tax returns   9. How to amend previous tax returns Add lines 1 through 8. How to amend previous tax returns This is your Modified AGI for traditional IRA purposes 9. How to amend previous tax returns   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. How to amend previous tax returns If you file Form 1040A, enter your IRA deduction on line 17 of that form. How to amend previous tax returns If you file Form 1040NR, enter your IRA deduction on line 32 of that form. How to amend previous tax returns You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. How to amend previous tax returns Self-employed. How to amend previous tax returns   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. How to amend previous tax returns If you file Form 1040NR, enter your deduction on line 28 of that form. How to amend previous tax returns Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. How to amend previous tax returns The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. How to amend previous tax returns Example. How to amend previous tax returns Tony is 29 years old and single. How to amend previous tax returns In 2013, he was covered by a retirement plan at work. How to amend previous tax returns His salary is $62,000. How to amend previous tax returns His modified AGI is $70,000. How to amend previous tax returns Tony makes a $5,500 IRA contribution for 2013. How to amend previous tax returns Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. How to amend previous tax returns He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. How to amend previous tax returns Repayment of reservist distributions. How to amend previous tax returns   Nondeductible contributions may include repayments of qualified reservist distributions. How to amend previous tax returns For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. How to amend previous tax returns Form 8606. How to amend previous tax returns   To designate contributions as nondeductible, you must file Form 8606. How to amend previous tax returns (See the filled-in Forms 8606 in this chapter. How to amend previous tax returns )   You do not have to designate a contribution as nondeductible until you file your tax return. How to amend previous tax returns When you file, you can even designate otherwise deductible contributions as nondeductible contributions. How to amend previous tax returns   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. How to amend previous tax returns    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. How to amend previous tax returns In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. How to amend previous tax returns See Form 8606 under Distributions Fully or Partly Taxable, later. How to amend previous tax returns Failure to report nondeductible contributions. How to amend previous tax returns   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. How to amend previous tax returns All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. How to amend previous tax returns Penalty for overstatement. How to amend previous tax returns   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. How to amend previous tax returns Penalty for failure to file Form 8606. How to amend previous tax returns   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. How to amend previous tax returns Tax on earnings on nondeductible contributions. How to amend previous tax returns   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. How to amend previous tax returns Cost basis. How to amend previous tax returns   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. How to amend previous tax returns Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. How to amend previous tax returns    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. How to amend previous tax returns See Are Distributions Taxable, later, for more information. How to amend previous tax returns Recordkeeping. How to amend previous tax returns There is a recordkeeping worksheet, Appendix A. How to amend previous tax returns Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. How to amend previous tax returns Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. How to amend previous tax returns Example 1. How to amend previous tax returns For 2013, Tom and Betty file a joint return on Form 1040. How to amend previous tax returns They are both 39 years old. How to amend previous tax returns They are both employed and Tom is covered by his employer's retirement plan. How to amend previous tax returns Tom's salary is $59,000 and Betty's is $32,555. How to amend previous tax returns They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. How to amend previous tax returns Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . How to amend previous tax returns For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. How to amend previous tax returns Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. How to amend previous tax returns Tom can take a deduction of only $5,080. How to amend previous tax returns He can choose to treat the $5,080 as either deductible or nondeductible contributions. How to amend previous tax returns He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. How to amend previous tax returns He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. How to amend previous tax returns Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. How to amend previous tax returns Betty figures her IRA deduction as follows. How to amend previous tax returns Betty can treat all or part of her contributions as either deductible or nondeductible. How to amend previous tax returns This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . How to amend previous tax returns She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. How to amend previous tax returns Betty decides to treat her $5,500 IRA contributions as deductible. How to amend previous tax returns The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. How to amend previous tax returns Example 2. How to amend previous tax returns For 2013, Ed and Sue file a joint return on Form 1040. How to amend previous tax returns They are both 39 years old. How to amend previous tax returns Ed is covered by his employer's retirement plan. How to amend previous tax returns Ed's salary is $45,000. How to amend previous tax returns Sue had no compensation for the year and did not contribute to an IRA. How to amend previous tax returns Sue is not covered by an employer plan. How to amend previous tax returns Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). How to amend previous tax returns Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. How to amend previous tax returns Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. How to amend previous tax returns He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. How to amend previous tax returns Sue figures her IRA deduction as shown on Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. How to amend previous tax returns Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. How to amend previous tax returns ) Note. How to amend previous tax returns If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. How to amend previous tax returns IF you . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your  filing status is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your modified AGI is over . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns THEN enter on  line 1 below . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. How to amend previous tax returns Enter applicable amount from table above 1. How to amend previous tax returns   2. How to amend previous tax returns Enter your modified AGI (that of both spouses, if married filing jointly) 2. How to amend previous tax returns     Note. How to amend previous tax returns If line 2 is equal to or more than the amount on line 1, stop here. How to amend previous tax returns  Your IRA contributions are not deductible. How to amend previous tax returns See Nondeductible Contributions , earlier. How to amend previous tax returns     3. How to amend previous tax returns Subtract line 2 from line 1. How to amend previous tax returns If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. How to amend previous tax returns You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. How to amend previous tax returns   4. How to amend previous tax returns Multiply line 3 by the percentage below that applies to you. How to amend previous tax returns If the result is not a multiple of $10, round it to the next highest multiple of $10. How to amend previous tax returns (For example, $611. How to amend previous tax returns 40 is rounded to $620. How to amend previous tax returns ) However, if the result is less than $200, enter $200. How to amend previous tax returns         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. How to amend previous tax returns 5% (. How to amend previous tax returns 275) (by 32. How to amend previous tax returns 5% (. How to amend previous tax returns 325) if you are age 50 or older). How to amend previous tax returns All others, multiply line 3 by 55% (. How to amend previous tax returns 55) (by 65% (. How to amend previous tax returns 65) if you are age 50 or older). How to amend previous tax returns 4. How to amend previous tax returns   5. How to amend previous tax returns Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). How to amend previous tax returns If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. How to amend previous tax returns If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. How to amend previous tax returns   6. How to amend previous tax returns Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). How to amend previous tax returns If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. How to amend previous tax returns 6. How to amend previous tax returns   7. How to amend previous tax returns IRA deduction. How to amend previous tax returns Compare lines 4, 5, and 6. How to amend previous tax returns Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. How to amend previous tax returns If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. How to amend previous tax returns   8. How to amend previous tax returns Nondeductible contribution. How to amend previous tax returns Subtract line 7 from line 5 or 6, whichever is smaller. How to amend previous tax returns  Enter the result here and on line 1 of your Form 8606 8. How to amend previous tax returns   Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. How to amend previous tax returns ) Note. How to amend previous tax returns If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. How to amend previous tax returns IF you . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your  filing status is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your modified AGI is over . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns THEN enter on  line 1 below . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. How to amend previous tax returns Enter applicable amount from table above 1. How to amend previous tax returns 115,000 2. How to amend previous tax returns Enter your modified AGI (that of both spouses, if married filing jointly) 2. How to amend previous tax returns 96,555   Note. How to amend previous tax returns If line 2 is equal to or more than the amount on line 1, stop here. How to amend previous tax returns  Your IRA contributions are not deductible. How to amend previous tax returns See Nondeductible Contributions , earlier. How to amend previous tax returns     3. How to amend previous tax returns Subtract line 2 from line 1. How to amend previous tax returns If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. How to amend previous tax returns You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. How to amend previous tax returns 18,445 4. How to amend previous tax returns Multiply line 3 by the percentage below that applies to you. How to amend previous tax returns If the result is not a multiple of $10, round it to the next highest multiple of $10. How to amend previous tax returns (For example, $611. How to amend previous tax returns 40 is rounded to $620. How to amend previous tax returns ) However, if the result is less than $200, enter $200. How to amend previous tax returns         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. How to amend previous tax returns 5% (. How to amend previous tax returns 275) (by 32. How to amend previous tax returns 5% (. How to amend previous tax returns 325) if you are age 50 or older). How to amend previous tax returns All others, multiply line 3 by 55% (. How to amend previous tax returns 55) (by 65% (. How to amend previous tax returns 65) if you are age 50 or older). How to amend previous tax returns 4. How to amend previous tax returns 5,080 5. How to amend previous tax returns Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). How to amend previous tax returns If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. How to amend previous tax returns If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. How to amend previous tax returns 59,000 6. How to amend previous tax returns Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). How to amend previous tax returns If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. How to amend previous tax returns 6. How to amend previous tax returns 5,500 7. How to amend previous tax returns IRA deduction. How to amend previous tax returns Compare lines 4, 5, and 6. How to amend previous tax returns Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. How to amend previous tax returns If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. How to amend previous tax returns 5,080 8. How to amend previous tax returns Nondeductible contribution. How to amend previous tax returns Subtract line 7 from line 5 or 6, whichever is smaller. How to amend previous tax returns  Enter the result here and on line 1 of your Form 8606 8. How to amend previous tax returns 420 Worksheet 1-2. How to amend previous tax returns Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. How to amend previous tax returns ) Note. How to amend previous tax returns If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. How to amend previous tax returns IF you . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your  filing status is . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns AND your modified AGI is over . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns THEN enter on  line 1 below . How to amend previous tax returns . How to amend previous tax returns . How to amend previous tax returns       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. How to amend previous tax returns Enter applicable amount from table above 1. How to amend previous tax returns 188,000 2. How to amend previous tax returns Enter your modified AGI (that of both spouses, if married filing jointly) 2. How to amend previous tax returns 180,555   Note. How to amend previous tax returns If line 2 is equal to or more than the amount on line 1, stop here. How to amend previous tax returns  Your IRA contributions are not deductible. How to amend previous tax returns See Nondeductible Contributions , earlier. How to amend previous tax returns     3. How to amend previous tax returns Subtract line 2 from line 1. How to amend previous tax returns If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. How to amend previous tax returns You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. How to amend previous tax returns 7,445 4. How to amend previous tax returns Multiply line 3 by the percentage below that applies to you. How to amend previous tax returns If the result is not a multiple of $10, round it to the next highest multiple of $10. How to amend previous tax returns (For example, $611. How to amend previous tax returns 40 is rounded to $620. How to amend previous tax returns ) However, if the result is less than $200, enter $200. How to amend previous tax returns         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. How to amend previous tax returns 5% (. How to amend previous tax returns 275) (by 32. How to amend previous tax returns 5% (. How to amend previous tax returns 325) if you are age 50 or older). How to amend previous tax returns All others, multiply line 3 by 55% (. How to amend previous tax returns 55) (by 65% (. How to amend previous tax returns 65) if you are age 50 or older). How to amend previous tax returns 4. How to amend previous tax returns 4,100 5. How to amend previous tax returns Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). How to amend previous tax returns If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. How to amend previous tax returns If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. How to amend previous tax returns 39,500 6. How to amend previous tax returns Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). How to amend previous tax returns If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. How to amend previous tax returns 6. How to amend previous tax returns 5,500 7. How to amend previous tax returns IRA deduction. How to amend previous tax returns Compare lines 4, 5, and 6. How to amend previous tax returns Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. How to amend previous tax returns If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. How to amend previous tax returns 4,100 8. How to amend previous tax returns Nondeductible contribution. How to amend previous tax returns Subtract line 7 from line 5 or 6, whichever is smaller. How to amend previous tax returns  Enter the result here and on line 1 of your Form 8606 8. How to amend previous tax returns 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. How to amend previous tax returns A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. How to amend previous tax returns Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. How to amend previous tax returns Inherited from spouse. How to amend previous tax returns   If you inherit a traditional IRA from your spouse, you generally have the following three choices. How to amend previous tax returns You can: Treat it as your own IRA by designating yourself as the account owner. How to amend previous tax returns Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s