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Individual Income Tax Return Resident 2012 N11

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Individual Income Tax Return Resident 2012 N11

Individual income tax return resident 2012 n11 Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. Individual income tax return resident 2012 n11 However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Individual income tax return resident 2012 n11 If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Individual income tax return resident 2012 n11 Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Individual income tax return resident 2012 n11 Also include any state and local general sales taxes paid for a leased motor vehicle. Individual income tax return resident 2012 n11 Do not include sales taxes paid on items used in your trade or business. Individual income tax return resident 2012 n11 To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. Individual income tax return resident 2012 n11 You must keep your actual receipts showing general sales taxes paid to use this method. Individual income tax return resident 2012 n11 Refund of general sales taxes. Individual income tax return resident 2012 n11   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. Individual income tax return resident 2012 n11 If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. Individual income tax return resident 2012 n11 But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. Individual income tax return resident 2012 n11 See Recoveries in Pub. Individual income tax return resident 2012 n11 525 for details. Individual income tax return resident 2012 n11 Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. Individual income tax return resident 2012 n11 You may also be able to add the state and local general sales taxes paid on certain specified items. Individual income tax return resident 2012 n11 To figure your state and local general sales tax deduction using the tables, complete the worksheet below. Individual income tax return resident 2012 n11 If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. Individual income tax return resident 2012 n11 State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. Individual income tax return resident 2012 n11 ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. Individual income tax return resident 2012 n11   1. Individual income tax return resident 2012 n11 Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. Individual income tax return resident 2012 n11 $     Next. Individual income tax return resident 2012 n11 If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. Individual income tax return resident 2012 n11 Otherwise, go to line 2       2. Individual income tax return resident 2012 n11 Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. Individual income tax return resident 2012 n11 Enter -0-                   Yes. Individual income tax return resident 2012 n11 Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. Individual income tax return resident 2012 n11 $       3. Individual income tax return resident 2012 n11 Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. Individual income tax return resident 2012 n11 Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. Individual income tax return resident 2012 n11 Enter your local general sales tax rate, but omit the percentage sign. Individual income tax return resident 2012 n11 For example, if your local general sales tax rate was 2. Individual income tax return resident 2012 n11 5%, enter 2. Individual income tax return resident 2012 n11 5. Individual income tax return resident 2012 n11 If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. Individual income tax return resident 2012 n11 (If you do not know your local general sales tax rate, contact your local government. Individual income tax return resident 2012 n11 ) 3. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11       4. Individual income tax return resident 2012 n11 Did you enter -0- on line 2 above?             No. Individual income tax return resident 2012 n11 Skip lines 4 and 5 and go to line 6             Yes. Individual income tax return resident 2012 n11 Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. Individual income tax return resident 2012 n11 For example, if your state general sales tax rate is 6%, enter 6. Individual income tax return resident 2012 n11 0 4. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11       5. Individual income tax return resident 2012 n11 Divide line 3 by line 4. Individual income tax return resident 2012 n11 Enter the result as a decimal (rounded to at least three places) 5. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11       6. Individual income tax return resident 2012 n11 Did you enter -0- on line 2 above?             No. Individual income tax return resident 2012 n11 Multiply line 2 by line 3   6. Individual income tax return resident 2012 n11 $     Yes. Individual income tax return resident 2012 n11 Multiply line 1 by line 5. Individual income tax return resident 2012 n11 If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. Individual income tax return resident 2012 n11 Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. Individual income tax return resident 2012 n11 $   8. Individual income tax return resident 2012 n11 Deduction for general sales taxes. Individual income tax return resident 2012 n11 Add lines 1, 6, and 7. Individual income tax return resident 2012 n11 Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. Individual income tax return resident 2012 n11 Be sure to enter “ST” on the dotted line to the left of the entry space 8. Individual income tax return resident 2012 n11 $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. Individual income tax return resident 2012 n11    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. Individual income tax return resident 2012 n11 Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. Individual income tax return resident 2012 n11 If married filing separately, do not include your spouse's income. Individual income tax return resident 2012 n11 Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. Individual income tax return resident 2012 n11 Tax-exempt interest. Individual income tax return resident 2012 n11 Veterans' benefits. Individual income tax return resident 2012 n11 Nontaxable combat pay. Individual income tax return resident 2012 n11 Workers' compensation. Individual income tax return resident 2012 n11 Nontaxable part of social security and railroad retirement benefits. Individual income tax return resident 2012 n11 Nontaxable part of IRA, pension, or annuity distributions. Individual income tax return resident 2012 n11 Do not include rollovers. Individual income tax return resident 2012 n11 Public assistance payments. Individual income tax return resident 2012 n11 The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Individual income tax return resident 2012 n11 Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Individual income tax return resident 2012 n11 What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. Individual income tax return resident 2012 n11 If there is no table for your state, the table amount is considered to be zero. Individual income tax return resident 2012 n11 Multiply the table amount for each state you lived in by a fraction. Individual income tax return resident 2012 n11 The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). Individual income tax return resident 2012 n11 Enter the total of the prorated table amounts for each state on line 1. Individual income tax return resident 2012 n11 However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. Individual income tax return resident 2012 n11 Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). Individual income tax return resident 2012 n11 The table amount for State A is $500. Individual income tax return resident 2012 n11 The table amount for State B is $400. Individual income tax return resident 2012 n11 You would figure your state general sales tax as follows. Individual income tax return resident 2012 n11 State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. Individual income tax return resident 2012 n11 Otherwise, complete a separate worksheet for State A and State B. Individual income tax return resident 2012 n11 Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. Individual income tax return resident 2012 n11 Line 2. Individual income tax return resident 2012 n11   If you checked the “No” box, enter -0- on line 2, and go to line 3. Individual income tax return resident 2012 n11 If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. Individual income tax return resident 2012 n11 Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. Individual income tax return resident 2012 n11 See the line 1 instructions on this page to figure your 2006 income. Individual income tax return resident 2012 n11 The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Individual income tax return resident 2012 n11 Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Individual income tax return resident 2012 n11 What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. Individual income tax return resident 2012 n11 If there is no table for your locality, the table amount is considered to be zero. Individual income tax return resident 2012 n11 Multiply the table amount for each locality you lived in by a fraction. Individual income tax return resident 2012 n11 The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Individual income tax return resident 2012 n11 If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. Individual income tax return resident 2012 n11 Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Individual income tax return resident 2012 n11 The table amount for Locality 1 is $100. Individual income tax return resident 2012 n11 The table amount for Locality 2 is $150. Individual income tax return resident 2012 n11 You would figure the amount to enter on line 2 as follows. Individual income tax return resident 2012 n11 Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. Individual income tax return resident 2012 n11 Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. Individual income tax return resident 2012 n11   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. Individual income tax return resident 2012 n11 25%. Individual income tax return resident 2012 n11 Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. Individual income tax return resident 2012 n11 25%. Individual income tax return resident 2012 n11   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. Individual income tax return resident 2012 n11 5%. Individual income tax return resident 2012 n11 Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. Individual income tax return resident 2012 n11 5%. Individual income tax return resident 2012 n11   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. Individual income tax return resident 2012 n11 0” on line 3. Individual income tax return resident 2012 n11 Your local general sales tax rate of 4. Individual income tax return resident 2012 n11 0% includes the additional 1. Individual income tax return resident 2012 n11 0% Arkansas state sales tax rate for Texarkana and the 1. Individual income tax return resident 2012 n11 5% sales tax rate for Miller County. Individual income tax return resident 2012 n11 What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. Individual income tax return resident 2012 n11 Multiply each tax rate for the period it was in effect by a fraction. Individual income tax return resident 2012 n11 The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). Individual income tax return resident 2012 n11 Enter the total of the prorated tax rates on line 3. Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). Individual income tax return resident 2012 n11 The rate increased to 1. Individual income tax return resident 2012 n11 75% for the period from October 1 through December 31, 2006 (92 days). Individual income tax return resident 2012 n11 You would enter “1. Individual income tax return resident 2012 n11 189” on line 3, figured as follows. Individual income tax return resident 2012 n11 January 1 - September 30: 1. Individual income tax return resident 2012 n11 00 x 273/365 = 0. Individual income tax return resident 2012 n11 748   October 1 - December 31: 1. Individual income tax return resident 2012 n11 75 x 92/365 = 0. Individual income tax return resident 2012 n11 441   Total = 1. Individual income tax return resident 2012 n11 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. Individual income tax return resident 2012 n11 Each locality did not have the same local general sales tax rate. Individual income tax return resident 2012 n11 You lived in Texarkana, AR, or Los Angeles County, CA. Individual income tax return resident 2012 n11   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. Individual income tax return resident 2012 n11 The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Individual income tax return resident 2012 n11 The local general sales tax rate for Locality 1 is 1%. Individual income tax return resident 2012 n11 The rate for Locality 2 is 1. Individual income tax return resident 2012 n11 75%. Individual income tax return resident 2012 n11 You would enter “0. Individual income tax return resident 2012 n11 666” on line 3 for the Locality 1 worksheet and “0. Individual income tax return resident 2012 n11 585” for the Locality 2 worksheet, figured as follows. Individual income tax return resident 2012 n11 Locality 1: 1. Individual income tax return resident 2012 n11 00 x 243/365 = 0. Individual income tax return resident 2012 n11 666   Locality 2: 1. Individual income tax return resident 2012 n11 75 x 122/365 = 0. Individual income tax return resident 2012 n11 585   Line 6. Individual income tax return resident 2012 n11   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. Individual income tax return resident 2012 n11 If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. Individual income tax return resident 2012 n11 Line 7. Individual income tax return resident 2012 n11    Enter on line 7 any state and local general sales taxes paid on the following specified items. Individual income tax return resident 2012 n11 If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. Individual income tax return resident 2012 n11 A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Individual income tax return resident 2012 n11 Also include any state and local general sales taxes paid for a leased motor vehicle. Individual income tax return resident 2012 n11 If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. Individual income tax return resident 2012 n11 An aircraft or boat, if the tax rate was the same as the general sales tax rate. Individual income tax return resident 2012 n11 A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. Individual income tax return resident 2012 n11 Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. Individual income tax return resident 2012 n11 You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. Individual income tax return resident 2012 n11 Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. Individual income tax return resident 2012 n11 The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. Individual income tax return resident 2012 n11 In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. Individual income tax return resident 2012 n11   Do not include sales taxes paid on items used in your trade or business. Individual income tax return resident 2012 n11 If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. Individual income tax return resident 2012 n11 Prev  Up  Next   Home   More Online Publications
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IRS Offers Health Care Tax Tips to Help Individuals Understand Tax Provisions in the Affordable Care Act

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IR-2014-19, Feb. 25, 2014

The Internal Revenue Service is offering educational Health Care Tax Tips to help individuals understand how the Affordable Care Act may affect their taxes. 

The IRS has designed the Health Care Tax Tips to help people understand what they need to know for the federal individual income tax returns they are filing this year, as well as for future tax returns. This includes information on the Premium Tax Credit and making health care coverage choices.

Although many of the tax provisions included in the law went into effect on Jan. 1, 2014, most do not affect the 2013 tax returns. 

The Health Care Tax Tips, which are now available at IRS.gov/aca, include:

    • IRS Reminds Individuals of Health Care Choices for 2014 — Find out what you need to know about how health care choices you make for 2014 may affect your taxes.
    • The Health Insurance Marketplace – Learn about Your Health Insurance Coverage Options Find out about getting health care coverage through the Health Insurance Marketplace.
    • The Premium Tax Credit — Learn the basics of the Premium Tax Credit, including who might be eligible and how to get the credit.
    • The Individual Shared Responsibility Payment – An Overview — Provides information about types of qualifying coverage, exemptions from having coverage, and making a payment if you do not have qualifying coverage or an exemption.
    • Three Timely Tips about Taxes and the Health Care Law —  Provides tips that help with filing the 2013 tax return, including information about employment status, tax favored health plans and itemized deductions.
    • Four Tax Facts about the Health Care Law for Individuals — Offers basic tips to help people determine if the Affordable Care Act affects them and their families, and where to find more information.
    • Changes in Circumstances can Affect your Premium Tax Credit — Learn the importance of reporting any changes in circumstances that involve family size or income when advance payments of the Premium Tax Credit are involved.

In addition to Health Care Tax Tips, the IRS.gov/aca website offers informative flyers and brochures, Frequently Asked Questions and in-depth legal guidance regarding the tax provisions of the Affordable Care Act.   

Individuals interested in receiving copies of IRS tax tips via email on a variety of topics, including the Affordable Care Act, can subscribe at www.irs.gov/uac/Subscribe-to-IRS-Tax-Tips.

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Page Last Reviewed or Updated: 12-Mar-2014

The Individual Income Tax Return Resident 2012 N11

Individual income tax return resident 2012 n11 17. Individual income tax return resident 2012 n11   Individual Retirement Arrangements (IRAs) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Traditional IRAsWho Can Open a Traditional IRA? When and How Can a Traditional IRA Be Opened? How Much Can Be Contributed? When Can Contributions Be Made? How Much Can You Deduct? Nondeductible Contributions Inherited IRAs Can You Move Retirement Plan Assets? When Can You Withdraw or Use IRA Assets? When Must You Withdraw IRA Assets? (Required Minimum Distributions) Are Distributions Taxable? What Acts Result in Penalties or Additional Taxes? Roth IRAsWhat Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA? Can You Move Amounts Into a Roth IRA? Are Distributions Taxable? What's New Traditional IRA contribution and deduction limit. Individual income tax return resident 2012 n11  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. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 For more information, see How Much Can Be Contributed? later. Individual income tax return resident 2012 n11 Roth IRA contribution limit. Individual income tax return resident 2012 n11  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Individual income tax return resident 2012 n11 If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Individual income tax return resident 2012 n11 However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Individual income tax return resident 2012 n11 For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? later. Individual income tax return resident 2012 n11 Modified AGI limit for traditional IRA contributions increased. Individual income tax return resident 2012 n11  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. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Individual income tax return resident 2012 n11 See How Much Can You Deduct , later. Individual income tax return resident 2012 n11 Modified AGI limit for Roth IRA contributions increased. Individual income tax return resident 2012 n11  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Individual income tax return resident 2012 n11 Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Individual income tax return resident 2012 n11 You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Individual income tax return resident 2012 n11 Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Individual income tax return resident 2012 n11 You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Individual income tax return resident 2012 n11 Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Individual income tax return resident 2012 n11 You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Individual income tax return resident 2012 n11 See Can You Contribute to a Roth IRA , later. Individual income tax return resident 2012 n11 Net Investment Income Tax. Individual income tax return resident 2012 n11   For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan including IRAs (for example; 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Individual income tax return resident 2012 n11 However, these distributions are taken into account when determining the modified adjusted gross income threshold. Individual income tax return resident 2012 n11 Distributions from a nonqualified retirement plan are included in net investment income. Individual income tax return resident 2012 n11 See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Individual income tax return resident 2012 n11 Name change. Individual income tax return resident 2012 n11  All spousal IRAs have been renamed Kay Bailey Hutchison Spousal IRAs. Individual income tax return resident 2012 n11 There are no changes to the rules regarding these IRAs. Individual income tax return resident 2012 n11 See Kay Bailey Hutchison Spousal IRA Limit , later, for more information. Individual income tax return resident 2012 n11 Reminders 2014 limits. Individual income tax return resident 2012 n11   You can find information about the 2014 contribution and AGI limits in Publication 590. Individual income tax return resident 2012 n11 Contributions to both traditional and Roth IRAs. Individual income tax return resident 2012 n11   For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in Roth IRAs, later. Individual income tax return resident 2012 n11 Statement of required minimum distribution. Individual income tax return resident 2012 n11  If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. Individual income tax return resident 2012 n11 The report or offer must include the date by which the amount must be distributed. Individual income tax return resident 2012 n11 The report is due January 31 of the year in which the minimum distribution is required. Individual income tax return resident 2012 n11 It can be provided with the year-end fair market value statement that you normally get each year. Individual income tax return resident 2012 n11 No report is required for IRAs of owners who have died. Individual income tax return resident 2012 n11 IRA interest. Individual income tax return resident 2012 n11  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Individual income tax return resident 2012 n11 Tax on your traditional IRA is generally deferred until you take a distribution. Individual income tax return resident 2012 n11 Do not report this interest on your tax return as tax-exempt interest. Individual income tax return resident 2012 n11 Form 8606. Individual income tax return resident 2012 n11   To designate contributions as nondeductible, you must file Form 8606, Nondeductible IRAs. Individual income tax return resident 2012 n11 The term “50 or older” is used several times in this chapter. Individual income tax return resident 2012 n11 It refers to an IRA owner who is age 50 or older by the end of the tax year. Individual income tax return resident 2012 n11 Introduction An individual retirement arrangement (IRA) is a personal savings plan that gives you tax advantages for setting aside money for your retirement. Individual income tax return resident 2012 n11 This chapter discusses the following topics. Individual income tax return resident 2012 n11 The rules for a traditional IRA (any IRA that is not a Roth or SIMPLE IRA). Individual income tax return resident 2012 n11 The Roth IRA, which features nondeductible contributions and tax-free distributions. Individual income tax return resident 2012 n11 Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs) are not discussed in this chapter. Individual income tax return resident 2012 n11 For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Publications 560 and 590. Individual income tax return resident 2012 n11 For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Publication 590. Individual income tax return resident 2012 n11 Useful Items - You may want to see: Publication 560 Retirement Plans for Small Business 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts 8606 Nondeductible IRAs Traditional IRAs In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Individual income tax return resident 2012 n11 ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Individual income tax return resident 2012 n11 Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 What is compensation?   Generally, compensation is what you earn from working. Individual income tax return resident 2012 n11 Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. Individual income tax return resident 2012 n11 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). Individual income tax return resident 2012 n11   Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. Individual income tax return resident 2012 n11   Compensation also includes commissions and taxable alimony and separate maintenance payments. Individual income tax return resident 2012 n11 Self-employment income. Individual income tax return resident 2012 n11   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 deductible part of your self-employment tax. Individual income tax return resident 2012 n11   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Individual income tax return resident 2012 n11 Nontaxable combat pay. Individual income tax return resident 2012 n11   For IRA purposes, if you were a member of the U. Individual income tax return resident 2012 n11 S. Individual income tax return resident 2012 n11 Armed Forces, your compensation includes any nontaxable combat pay you receive. Individual income tax return resident 2012 n11 What is not compensation?   Compensation does not include any of the following items. Individual income tax return resident 2012 n11 Earnings and profits from property, such as rental income, interest income, and dividend income. Individual income tax return resident 2012 n11 Pension or annuity income. Individual income tax return resident 2012 n11 Deferred compensation received (compensation payments postponed from a past year). Individual income tax return resident 2012 n11 Income from a partnership for which you do not provide services that are a material income-producing factor. Individual income tax return resident 2012 n11 Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Individual income tax return resident 2012 n11 Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Individual income tax return resident 2012 n11 When and How Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Individual income tax return resident 2012 n11 However, the time for making contributions for any year is limited. Individual income tax return resident 2012 n11 See When Can Contributions Be Made , later. Individual income tax return resident 2012 n11 You can open different kinds of IRAs with a variety of organizations. Individual income tax return resident 2012 n11 You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Individual income tax return resident 2012 n11 You can also open an IRA through your stockbroker. Individual income tax return resident 2012 n11 Any IRA must meet Internal Revenue Code requirements. Individual income tax return resident 2012 n11 Kinds of traditional IRAs. Individual income tax return resident 2012 n11   Your traditional IRA can be an individual retirement account or annuity. Individual income tax return resident 2012 n11 It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Individual income tax return resident 2012 n11 How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Individual income tax return resident 2012 n11 These limits and other rules are explained below. Individual income tax return resident 2012 n11 Community property laws. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 This is the rule even in states with community property laws. Individual income tax return resident 2012 n11 Brokers' commissions. Individual income tax return resident 2012 n11   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Individual income tax return resident 2012 n11 Trustees' fees. Individual income tax return resident 2012 n11   Trustees' administrative fees are not subject to the contribution limit. Individual income tax return resident 2012 n11 Qualified reservist repayments. Individual income tax return resident 2012 n11   If you are (or 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 you received. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 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 similar arrangement. Individual income tax return resident 2012 n11   For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Individual income tax return resident 2012 n11 (See Roth IRAs, later. Individual income tax return resident 2012 n11 ) General limit. Individual income tax return resident 2012 n11   For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts. Individual income tax return resident 2012 n11 $5,500 ($6,500 if you are 50 or older). Individual income tax return resident 2012 n11 Your taxable compensation (defined earlier) for the year. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 (See Nondeductible Contributions , later. Individual income tax return resident 2012 n11 ) Qualified reservist repayments do not affect this limit. Individual income tax return resident 2012 n11 Example 1. Individual income tax return resident 2012 n11 Betty, who is 34 years old and single, earned $24,000 in 2013. Individual income tax return resident 2012 n11 Her IRA contributions for 2013 are limited to $5,500. Individual income tax return resident 2012 n11 Example 2. Individual income tax return resident 2012 n11 John, an unmarried college student working part time, earned $3,500 in 2013. Individual income tax return resident 2012 n11 His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Individual income tax return resident 2012 n11 Kay Bailey Hutchison Spousal IRA limit. Individual income tax return resident 2012 n11   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 amounts. Individual income tax return resident 2012 n11 $5,500 ($6,500 if you are 50 or older). Individual income tax return resident 2012 n11 The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Individual income tax return resident 2012 n11 Your spouse's IRA contribution for the year to a traditional IRA. Individual income tax return resident 2012 n11 Any contribution for the year to a Roth IRA on behalf of your spouse. Individual income tax return resident 2012 n11 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 50 or older, or $13,000 if both of you are 50 or older). Individual income tax return resident 2012 n11 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). Individual income tax return resident 2012 n11 Contributions must be in the form of money (cash, check, or money order). Individual income tax return resident 2012 n11 Property cannot be contributed. Individual income tax return resident 2012 n11 Contributions must be made by due date. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 Age 70½ rule. Individual income tax return resident 2012 n11   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Individual income tax return resident 2012 n11   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Individual income tax return resident 2012 n11 If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Individual income tax return resident 2012 n11 Designating year for which contribution is made. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 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). Individual income tax return resident 2012 n11 Filing before a contribution is made. Individual income tax return resident 2012 n11   You can file your return claiming a traditional IRA contribution before the contribution is actually made. Individual income tax return resident 2012 n11 Generally, the contribution must be made by the due date of your return, not including extensions. Individual income tax return resident 2012 n11 Contributions not required. Individual income tax return resident 2012 n11   You do not have to contribute to your traditional IRA for every tax year, even if you can. Individual income tax return resident 2012 n11 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 it applies). Individual income tax return resident 2012 n11 However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Individual income tax return resident 2012 n11 See Limit If Covered by Employer Plan , later. Individual income tax return resident 2012 n11 You may be able to claim a credit for contributions to your traditional IRA. Individual income tax return resident 2012 n11 For more information, see chapter 37. Individual income tax return resident 2012 n11 Trustees' fees. Individual income tax return resident 2012 n11   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Individual income tax return resident 2012 n11 However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Individual income tax return resident 2012 n11 See chapter 28. Individual income tax return resident 2012 n11 Brokers' commissions. Individual income tax return resident 2012 n11   Brokers' commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Individual income tax return resident 2012 n11 Full deduction. Individual income tax return resident 2012 n11   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 traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older in 2013). Individual income tax return resident 2012 n11 100% of your compensation. Individual income tax return resident 2012 n11 This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Individual income tax return resident 2012 n11 Kay Bailey Hutchison Spousal IRA. Individual income tax return resident 2012 n11   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 the following amounts. Individual income tax return resident 2012 n11 $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older in 2013). Individual income tax return resident 2012 n11 The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Individual income tax return resident 2012 n11 The IRA deduction for the year of the spouse with the greater compensation. Individual income tax return resident 2012 n11 Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Individual income tax return resident 2012 n11 Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Individual income tax return resident 2012 n11 This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation. Individual income tax return resident 2012 n11 Note. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 After a divorce or legal separation, you can deduct only contributions to your own IRA. Individual income tax return resident 2012 n11 Your deductions are subject to the rules for single individuals. Individual income tax return resident 2012 n11 Covered by an employer retirement plan. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 This is discussed later under Limit If Covered by Employer Plan . Individual income tax return resident 2012 n11 Limits on the amount you can deduct do not affect the amount that can be contributed. Individual income tax return resident 2012 n11 See Nondeductible Contributions , later. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 The “Retirement plan” box should be checked if you were covered. Individual income tax return resident 2012 n11 Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered by an Employer Plan , later. Individual income tax return resident 2012 n11 If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Individual income tax return resident 2012 n11 Federal judges. Individual income tax return resident 2012 n11   For purposes of the IRA deduction, federal judges are covered by an employer retirement plan. Individual income tax return resident 2012 n11 For Which Year(s) Are You Covered by an Employer Plan? Special rules apply to determine the tax years for which you are covered by an employer plan. Individual income tax return resident 2012 n11 These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Individual income tax return resident 2012 n11 Tax year. Individual income tax return resident 2012 n11   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Individual income tax return resident 2012 n11 For almost all people, the tax year is the calendar year. Individual income tax return resident 2012 n11 Defined contribution plan. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Individual income tax return resident 2012 n11 Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Individual income tax return resident 2012 n11 Defined benefit plan. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11   A defined benefit plan is any plan that is not a defined contribution plan. Individual income tax return resident 2012 n11 Defined benefit plans include pension plans and annuity plans. Individual income tax return resident 2012 n11 No vested interest. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 Situations in Which You Are Not Covered by an Employer Plan Unless you are covered under another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Individual income tax return resident 2012 n11 Social security or railroad retirement. Individual income tax return resident 2012 n11   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Individual income tax return resident 2012 n11 Benefits from a previous employer's plan. Individual income tax return resident 2012 n11   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Individual income tax return resident 2012 n11 Reservists. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 You are not covered by the plan if both of the following conditions are met. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 You did not serve more than 90 days on active duty during the year (not counting duty for training). Individual income tax return resident 2012 n11 Volunteer firefighters. Individual income tax return resident 2012 n11   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Individual income tax return resident 2012 n11 You are not covered by the plan if both of the following conditions are met. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Individual income tax return resident 2012 n11 Limit If Covered by Employer Plan 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. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 These amounts vary depending on your filing status. Individual income tax return resident 2012 n11 To determine if your deduction is subject to phaseout, you must determine your modified adjusted gross income (AGI) and your filing status. Individual income tax return resident 2012 n11 See Filing status and Modified adjusted gross income (AGI) , later. Individual income tax return resident 2012 n11 Then use Table 17-1 or 17-2 to determine if the phaseout applies. Individual income tax return resident 2012 n11 Social security recipients. Individual income tax return resident 2012 n11   Instead of using Table 17-1 or Table 17-2, use the worksheets in Appendix B of Publication 590 if, for the year, all of the following apply. Individual income tax return resident 2012 n11 You received social security benefits. Individual income tax return resident 2012 n11 You received taxable compensation. Individual income tax return resident 2012 n11 Contributions were made to your traditional IRA. Individual income tax return resident 2012 n11 You or your spouse was covered by an employer retirement plan. Individual income tax return resident 2012 n11 Use those worksheets to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Individual income tax return resident 2012 n11 Deduction phaseout. Individual income tax return resident 2012 n11   If you were 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 17-1. Individual income tax return resident 2012 n11 Table 17-1. Individual income tax return resident 2012 n11 Effect of Modified AGI1 on Deduction if You Are Covered by 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. Individual income tax return resident 2012 n11 IF your filing status is. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11   AND your modified AGI is. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11   THEN you can take. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 single   or  head of household   $59,000 or less   a full deduction. Individual income tax return resident 2012 n11   more than $59,000 but less than $69,000   a partial deduction. Individual income tax return resident 2012 n11   $69,000 or more   no deduction. Individual income tax return resident 2012 n11 married filing jointly   or  qualifying widow(er)   $95,000 or less   a full deduction. Individual income tax return resident 2012 n11   more than $95,000 but less than $115,000   a partial deduction. Individual income tax return resident 2012 n11   $115,000 or more   no deduction. Individual income tax return resident 2012 n11 married filing separately2   less than $10,000   a partial deduction. Individual income tax return resident 2012 n11   $10,000 or more   no deduction. Individual income tax return resident 2012 n11 1Modified AGI (adjusted gross income). Individual income tax return resident 2012 n11 See Modified adjusted gross income (AGI) . Individual income tax return resident 2012 n11 2If 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” column). Individual income tax return resident 2012 n11 If your spouse is covered. Individual income tax return resident 2012 n11   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 17-2. Individual income tax return resident 2012 n11 Filing status. Individual income tax return resident 2012 n11   Your filing status depends primarily on your marital status. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 If you need more information on filing status, see chapter 2. Individual income tax return resident 2012 n11 Lived apart from spouse. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 Table 17-2. Individual income tax return resident 2012 n11 Effect of Modified AGI1 on Deduction if You Are NOT Covered by 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. Individual income tax return resident 2012 n11 IF your filing status is. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11   AND your modified AGI is. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11   THEN you can take. Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 . Individual income tax return resident 2012 n11 single, head of household, or qualifying widow(er)   any amount   a full deduction. Individual income tax return resident 2012 n11 married filing jointly or separately with a spouse who is not covered by a plan at work   any amount   a full deduction. Individual income tax return resident 2012 n11 married filing jointly with a spouse who is covered by a plan at work   $178,000 or less   a full deduction. Individual income tax return resident 2012 n11   more than $178,000 but less than $188,000   a partial deduction. Individual income tax return resident 2012 n11   $188,000 or more   no deduction. Individual income tax return resident 2012 n11 married filing separately with a spouse who is covered by a plan at work2   less than $10,000   a partial deduction. Individual income tax return resident 2012 n11   $10,000 or more   no deduction. Individual income tax return resident 2012 n11 1Modified AGI (adjusted gross income). Individual income tax return resident 2012 n11 See Modified adjusted gross income (AGI) . Individual income tax return resident 2012 n11 2You are entitled to the full deduction if you did not live with your spouse at any time during the year. Individual income tax return resident 2012 n11 Modified adjusted gross income (AGI). Individual income tax return resident 2012 n11   How you figure your modified AGI depends on whether you are filing Form 1040 or Form 1040A. Individual income tax return resident 2012 n11 If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Publication 590. Individual income tax return resident 2012 n11 You may be able to use Worksheet 17-1 to figure your modified AGI. Individual income tax return resident 2012 n11    Do not assume that your modified AGI is the same as your compensation. Individual income tax return resident 2012 n11 Your modified AGI may include income in addition to your compensation (discussed earlier), such as interest, dividends, and income from IRA distributions. Individual income tax return resident 2012 n11 Form 1040. Individual income tax return resident 2012 n11   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following eight amounts. Individual income tax return resident 2012 n11 IRA deduction. Individual income tax return resident 2012 n11 Student loan interest deduction. Individual income tax return resident 2012 n11 Tuition and fees deduction. Individual income tax return resident 2012 n11 Domestic production activities deduction. Individual income tax return resident 2012 n11 Foreign earned income exclusion. Individual income tax return resident 2012 n11 Foreign housing exclusion or deduction. Individual income tax return resident 2012 n11 Exclusion of qualified savings bond interest shown on Form 8815, Exclusion of Interest From Series EE and I U. Individual income tax return resident 2012 n11 S. Individual income tax return resident 2012 n11 Savings Bonds Issued After 1989. Individual income tax return resident 2012 n11 Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses. Individual income tax return resident 2012 n11 This is your modified AGI. Individual income tax return resident 2012 n11 Form 1040A. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 IRA deduction. Individual income tax return resident 2012 n11 Student loan interest deduction. Individual income tax return resident 2012 n11 Tuition and fees deduction. Individual income tax return resident 2012 n11 Exclusion of qualified savings bond interest shown on Form 8815. Individual income tax return resident 2012 n11 This is your modified AGI. Individual income tax return resident 2012 n11 Both contributions for 2013 and distributions in 2013. Individual income tax return resident 2012 n11   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Individual income tax return resident 2012 n11 You received distributions in 2013 from one or more traditional IRAs. Individual income tax return resident 2012 n11 You made contributions to a traditional IRA for 2013. Individual income tax return resident 2012 n11 Some of those contributions may be nondeductible contributions. Individual income tax return resident 2012 n11 If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Individual income tax return resident 2012 n11 To do this, you can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, in Publication 590. Individual income tax return resident 2012 n11   If at least one of the above does not apply, figure your modified AGI using Worksheet 17-1, later. Individual income tax return resident 2012 n11    How to figure your reduced IRA deduction. Individual income tax return resident 2012 n11   You can figure your reduced IRA deduction for either Form 1040 or Form 1040A by using the worksheets in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Also, the instructions for Form 1040 and Form 1040A include similar worksheets that you may be able to use instead. Individual income tax return resident 2012 n11 Worksheet 17-1. Individual income tax return resident 2012 n11 Figuring Your Modified AGI Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes. Individual income tax return resident 2012 n11 1. Individual income tax return resident 2012 n11 Enter your adjusted gross income (AGI) from Form 1040, line 38, or Form 1040A, line 22, figured without taking into account the amount from Form 1040, line 32, or Form 1040A, line 17 1. Individual income tax return resident 2012 n11   2. Individual income tax return resident 2012 n11 Enter any student loan interest deduction from Form 1040, line 33, or Form 1040A, line 18 2. Individual income tax return resident 2012 n11   3. Individual income tax return resident 2012 n11 Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Individual income tax return resident 2012 n11   4. Individual income tax return resident 2012 n11 Enter any domestic production activities deduction from Form 1040, line 35 4. Individual income tax return resident 2012 n11   5. Individual income tax return resident 2012 n11 Enter any foreign earned income and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Individual income tax return resident 2012 n11   6. Individual income tax return resident 2012 n11 Enter any foreign housing deduction from Form 2555, line 50 6. Individual income tax return resident 2012 n11   7. Individual income tax return resident 2012 n11 Enter any excludable savings bond interest from Form 8815, line 14 7. Individual income tax return resident 2012 n11   8. Individual income tax return resident 2012 n11 Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Individual income tax return resident 2012 n11   9. Individual income tax return resident 2012 n11 Add lines 1 through 8. Individual income tax return resident 2012 n11 This is your Modified AGI for traditional IRA purposes 9. Individual income tax return resident 2012 n11   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Individual income tax return resident 2012 n11 If you file Form 1040A, enter your IRA deduction on line 17. Individual income tax return resident 2012 n11 You cannot deduct IRA contributions on Form 1040EZ. Individual income tax return resident 2012 n11 Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Individual income tax return resident 2012 n11 The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 Mike is 28 years old and single. Individual income tax return resident 2012 n11 In 2013, he was covered by a retirement plan at work. Individual income tax return resident 2012 n11 His salary was $57,312. Individual income tax return resident 2012 n11 His modified AGI was $70,000. Individual income tax return resident 2012 n11 Mike made a $5,500 IRA contribution for 2013. Individual income tax return resident 2012 n11 Because he was covered by a retirement plan and his modified AGI was over $69,000, he cannot deduct his $5,500 IRA contribution. Individual income tax return resident 2012 n11 He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. Individual income tax return resident 2012 n11 Form 8606. Individual income tax return resident 2012 n11   To designate contributions as nondeductible, you must file Form 8606. Individual income tax return resident 2012 n11   You do not have to designate a contribution as nondeductible until you file your tax return. Individual income tax return resident 2012 n11 When you file, you can even designate otherwise deductible contributions as nondeductible. Individual income tax return resident 2012 n11   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Individual income tax return resident 2012 n11 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. Individual income tax return resident 2012 n11 In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Individual income tax return resident 2012 n11 See Form 8606 under Distributions Fully or Partly Taxable, later. Individual income tax return resident 2012 n11 Failure to report nondeductible contributions. Individual income tax return resident 2012 n11   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated as deductible contributions when withdrawn. Individual income tax return resident 2012 n11 All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Individual income tax return resident 2012 n11 Penalty for overstatement. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 Penalty for failure to file Form 8606. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11    Tax on earnings on nondeductible contributions. Individual income tax return resident 2012 n11   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. Individual income tax return resident 2012 n11 See When Can You Withdraw or Use IRA Assets , later. Individual income tax return resident 2012 n11 Cost basis. Individual income tax return resident 2012 n11   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Individual income tax return resident 2012 n11 Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Individual income tax return resident 2012 n11 Inherited IRAs If you inherit a traditional IRA, you are called a beneficiary. Individual income tax return resident 2012 n11 A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Individual income tax return resident 2012 n11 Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Individual income tax return resident 2012 n11 Inherited from spouse. Individual income tax return resident 2012 n11   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Individual income tax return resident 2012 n11 You can: Treat it as your own IRA by designating yourself as the account owner. Individual income tax return resident 2012 n11 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 (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). Individual income tax return resident 2012 n11 Treat yourself as the beneficiary rather than treating the IRA as your own. Individual income tax return resident 2012 n11 Treating it as your own. Individual income tax return resident 2012 n11   You will be considered to have chosen to treat the IRA as your own if: Contributions (including rollover contributions) are made to the inherited IRA, or You do not take the required minimum distribution for a year as a beneficiary of the IRA. Individual income tax return resident 2012 n11 You will only be considered to have chosen to treat the IRA as your own if: You are the sole beneficiary of the IRA, and You have an unlimited right to withdraw amounts from it. Individual income tax return resident 2012 n11   However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. Individual income tax return resident 2012 n11 Inherited from someone other than spouse. Individual income tax return resident 2012 n11   If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. Individual income tax return resident 2012 n11 This means that you cannot make any contributions to the IRA. Individual income tax return resident 2012 n11 It also means you cannot roll over any amounts into or out of the inherited IRA. Individual income tax return resident 2012 n11 However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. Individual income tax return resident 2012 n11 For more information, see the discussion of inherited IRAs under Rollover From One IRA Into Another, later. Individual income tax return resident 2012 n11 Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. Individual income tax return resident 2012 n11 You can make the following kinds of transfers. Individual income tax return resident 2012 n11 Transfers from one trustee to another. Individual income tax return resident 2012 n11 Rollovers. Individual income tax return resident 2012 n11 Transfers incident to a divorce. Individual income tax return resident 2012 n11 Transfers to Roth IRAs. Individual income tax return resident 2012 n11   Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. Individual income tax return resident 2012 n11 You can also move assets from a qualified retirement plan to a Roth IRA. Individual income tax return resident 2012 n11 See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later. Individual income tax return resident 2012 n11 Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Individual income tax return resident 2012 n11 Because there is no distribution to you, the transfer is tax free. Individual income tax return resident 2012 n11 Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another . Individual income tax return resident 2012 n11 For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Publication 590. Individual income tax return resident 2012 n11 Rollovers Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. Individual income tax return resident 2012 n11 The contribution to the second retirement plan is called a “rollover contribution. Individual income tax return resident 2012 n11 ” Note. Individual income tax return resident 2012 n11 An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. Individual income tax return resident 2012 n11 Kinds of rollovers to a traditional IRA. Individual income tax return resident 2012 n11   You can roll over amounts from the following plans into a traditional IRA: A traditional IRA, An employer's qualified retirement plan for its employees, A deferred compensation plan of a state or local government (section 457 plan), or A tax-sheltered annuity plan (section 403(b) plan). Individual income tax return resident 2012 n11 Treatment of rollovers. Individual income tax return resident 2012 n11   You cannot deduct a rollover contribution, but you must report the rollover distribution on your tax return as discussed later under Reporting rollovers from IRAs and under Reporting rollovers from employer plans . Individual income tax return resident 2012 n11 Kinds of rollovers from a traditional IRA. Individual income tax return resident 2012 n11   You may be able to roll over, tax free, a distribution from your traditional IRA into a qualified plan. Individual income tax return resident 2012 n11 These plans include the federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). Individual income tax return resident 2012 n11 The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Individual income tax return resident 2012 n11 Qualified plans may, but are not required to, accept such rollovers. Individual income tax return resident 2012 n11 Time limit for making a rollover contribution. Individual income tax return resident 2012 n11   You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan. Individual income tax return resident 2012 n11 The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Individual income tax return resident 2012 n11 For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Extension of rollover period. Individual income tax return resident 2012 n11   If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, special rules extend the rollover period. Individual income tax return resident 2012 n11 For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 More information. Individual income tax return resident 2012 n11   For more information on rollovers, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Individual income tax return resident 2012 n11 Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. Individual income tax return resident 2012 n11 Waiting period between rollovers. Individual income tax return resident 2012 n11   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. Individual income tax return resident 2012 n11 You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. Individual income tax return resident 2012 n11   The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. Individual income tax return resident 2012 n11 Example. Individual income tax return resident 2012 n11 You have two traditional IRAs, IRA-1 and IRA-2. Individual income tax return resident 2012 n11 You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). Individual income tax return resident 2012 n11 You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. Individual income tax return resident 2012 n11 However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. Individual income tax return resident 2012 n11 This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. Individual income tax return resident 2012 n11 Exception. Individual income tax return resident 2012 n11   For an exception for distributions from failed financial institutions, see Rollover From One IRA Into Another under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Partial rollovers. Individual income tax return resident 2012 n11   If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. Individual income tax return resident 2012 n11 The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). Individual income tax return resident 2012 n11 The amount you keep may be subject to the 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Additional Taxes? . Individual income tax return resident 2012 n11 Required distributions. Individual income tax return resident 2012 n11   Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. Individual income tax return resident 2012 n11 Inherited IRAs. Individual income tax return resident 2012 n11   If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own. Individual income tax return resident 2012 n11 See Treating it as your own , earlier. Individual income tax return resident 2012 n11 Not inherited from spouse. Individual income tax return resident 2012 n11   If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. Individual income tax return resident 2012 n11 You must withdraw the IRA assets within a certain period. Individual income tax return resident 2012 n11 For more information, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Reporting rollovers from IRAs. Individual income tax return resident 2012 n11   Report any rollover from one traditional IRA to the same or another traditional IRA on lines 15a and 15b, Form 1040, or lines 11a and 11b, Form 1040A, as follows. Individual income tax return resident 2012 n11   Enter the total amount of the distribution on Form 1040, line 15a, or Form 1040A, line 11a. Individual income tax return resident 2012 n11 If the total amount on Form 1040, line 15a, or Form 1040A, line 11a, was rolled over, enter zero on Form 1040, line 15b, or Form 1040A, line 11b. Individual income tax return resident 2012 n11 If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b, or Form 1040A, line 11b. Individual income tax return resident 2012 n11 Put “Rollover” next to Form 1040, line 15b, or Form 1040A, line 11b. Individual income tax return resident 2012 n11 See your tax return instructions. Individual income tax return resident 2012 n11   If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2014, attach a statement explaining what you did. Individual income tax return resident 2012 n11 Rollover From Employer's Plan Into an IRA You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan; Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Individual income tax return resident 2012 n11 A qualified plan is one that meets the requirements of the Internal Revenue Code. Individual income tax return resident 2012 n11 Eligible rollover distribution. Individual income tax return resident 2012 n11   Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. Individual income tax return resident 2012 n11 A required minimum distribution (explained later under When Must You Withdraw IRA Assets? (Required Minimum Distributions) ). Individual income tax return resident 2012 n11 A hardship distribution. Individual income tax return resident 2012 n11 Any of a series of substantially equal periodic distributions paid at least once a year over: Your lifetime or life expectancy, The lifetimes or life expectancies of you and your beneficiary, or A period of 10 years or more. Individual income tax return resident 2012 n11 Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. Individual income tax return resident 2012 n11 A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. Individual income tax return resident 2012 n11 Dividends on employer securities. Individual income tax return resident 2012 n11 The cost of life insurance coverage. Individual income tax return resident 2012 n11 Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Individual income tax return resident 2012 n11 To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Individual income tax return resident 2012 n11 See Form 8606 under Distributions Fully or Partly Taxable, later. Individual income tax return resident 2012 n11 Rollover by nonspouse beneficiary. Individual income tax return resident 2012 n11   A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. Individual income tax return resident 2012 n11 The IRA is treated as an inherited IRA. Individual income tax return resident 2012 n11 For more information about inherited IRAs, see Inherited IRAs , earlier. Individual income tax return resident 2012 n11 Reporting rollovers from employer plans. Individual income tax return resident 2012 n11    Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a, or Form 1040A, line 12a. Individual income tax return resident 2012 n11 This amount should be shown in box 1 of Form 1099-R. Individual income tax return resident 2012 n11 From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. Individual income tax return resident 2012 n11 From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. Individual income tax return resident 2012 n11 Enter the remaining amount, even if zero, on Form 1040, line 16b, or Form 1040A, line 12b. Individual income tax return resident 2012 n11 Also, enter "Rollover" next to Form 1040, line 16b, or Form 1040A, line 12b. Individual income tax return resident 2012 n11 Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. Individual income tax return resident 2012 n11 The transfer is tax free. Individual income tax return resident 2012 n11 For detailed information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Converting From Any Traditional IRA to a Roth IRA Allowable conversions. Individual income tax return resident 2012 n11   You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. Individual income tax return resident 2012 n11 The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. Individual income tax return resident 2012 n11 If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. Individual income tax return resident 2012 n11 However, a part or all of the conversion contribution from your traditional IRA is included in your gross income. Individual income tax return resident 2012 n11 Required distributions. Individual income tax return resident 2012 n11   You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70½) under the required distribution rules (discussed later). Individual income tax return resident 2012 n11 Income. Individual income tax return resident 2012 n11   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Individual income tax return resident 2012 n11 These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Individual income tax return resident 2012 n11   You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later. Individual income tax return resident 2012 n11   You must file Form 8606 to report 2013 conversions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2013 (unless you recharacterized the entire amount) and to figure the amount to include in income. Individual income tax return resident 2012 n11   If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Individual income tax return resident 2012 n11 See chapter 4. Individual income tax return resident 2012 n11 Recharacterizations You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. Individual income tax return resident 2012 n11 This is called recharacterizing the contribution. Individual income tax return resident 2012 n11 See Can You Move Retirement Plan Assets? in chapter 1 of Publication 590 for more detailed information. Individual income tax return resident 2012 n11 How to recharacterize a contribution. Individual income tax return resident 2012 n11   To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. Individual income tax return resident 2012 n11 If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. Individual income tax return resident 2012 n11 If you recharacterize your contribution, you must do all three of the following. Individual income tax return resident 2012 n11 Include in the transfer any net income allocable to the contribution. Individual income tax return resident 2012 n11 If there was a loss, the net income you must transfer may be a negative amount. Individual income tax return resident 2012 n11 Report the recharacterization on your tax return for the year during which the contribution was made. Individual income tax return resident 2012 n11 Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. Individual income tax return resident 2012 n11 No deduction allowed. Individual income tax return resident 2012 n11   You cannot deduct the contribution to the first IRA. Individual income tax return resident 2012 n11 Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA. Individual income tax return resident 2012 n11 Required notifications. Individual income tax return resident 2012 n11   To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. Individual income tax return resident 2012 n11 You must make the notifications by the date of the transfer. Individual income tax return resident 2012 n11 Only one notification is required if both IRAs are maintained by the same trustee. Individual income tax return resident 2012 n11 The notification(s) must include all of the following information. Individual income tax return resident 2012 n11 The type and amount of the contribution to the first IRA that is to be recharacterized. Individual income tax return resident 2012 n11 The date on which the contribution was made to the first IRA and the year for which it was made. Individual income tax return resident 2012 n11 A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. Individual income tax return resident 2012 n11 The name of the trustee of the first IRA and the name of the trustee of the second IRA. Individual income tax return resident 2012 n11 Any additional information needed to make the transfer. Individual income tax return resident 2012 n11 Reporting a recharacterization. Individual income tax return resident 2012 n11   If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. Individual income tax return resident 2012 n11 You must treat the contribution as having been made to the second IRA. Individual income tax return resident 2012 n11 When Can You Withdraw or Use IRA Assets? There are rules limiting use of your IRA assets and distributions from it. Individual income tax return resident 2012 n11 Violation of the rules generally results in additional taxes in the year of violation. Individual income tax return resident 2012 n11 See What Acts Result in Penalties or Additional Taxes , later. Individual income tax return resident 2012 n11 Contributions returned before the due date of return. Individual income tax return resident 2012 n11   If you made IRA contributions in 2013, you can withdraw them tax free by the due date of your return. Individual income tax return resident 2012 n11 If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. Individual income tax return resident 2012 n11 You can do this if, for each contribution you withdraw, both of the following conditions apply. Individual income tax return resident 2012 n11 You did not take a deduction for the contribution. Individual income tax return resident 2012 n11 You withdraw any interest or other income earned on the contribution. Individual income tax return resident 2012 n11 You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Individual income tax return resident 2012 n11 If there was a loss, the net income earned on the contribution may be a negative amount. Individual income tax return resident 2012 n11 Note. Individual income tax return resident 2012 n11 To calculate the amount you must withdraw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Earnings includible in income. Individual income tax return resident 2012 n11   You must include in income any earnings on the contributions you withdraw. Individual income tax return resident 2012 n11 Include the earnings in income for the year in which you made the contributions, not in the year in which you withdraw them. Individual income tax return resident 2012 n11 Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. Individual income tax return resident 2012 n11 Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes?, later. Individual income tax return resident 2012 n11    Early distributions tax. Individual income tax return resident 2012 n11   The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. Individual income tax return resident 2012 n11 However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. Individual income tax return resident 2012 n11 When Must You Withdraw IRA Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. Individual income tax return resident 2012 n11 Eventually they must be distributed. Individual income tax return resident 2012 n11 If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. Individual income tax return resident 2012 n11 See Excess Accumulations (Insufficient Distributions) , later. Individual income tax return resident 2012 n11 The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the beneficiary of a decedent's IRA. Individual income tax return resident 2012 n11 Required minimum distribution. Individual income tax return resident 2012 n11   The amount that must be distributed each year is referred to as the required minimum distribution. Individual income tax return resident 2012 n11 Required distributions not eligible for rollover. Individual income tax return resident 2012 n11   Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. Individual income tax return resident 2012 n11 IRA owners. Individual income tax return resident 2012 n11   If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Individual income tax return resident 2012 n11 April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. Individual income tax return resident 2012 n11 Distributions by the required beginning date. Individual income tax return resident 2012 n11   You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). Individual income tax return resident 2012 n11 If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year. Individual income tax return resident 2012 n11   If an IRA owner dies after reaching age 70½, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. Individual income tax return resident 2012 n11 Even if you begin receiving distributions before you attain age 70½, you must begin calculating and receiving required minimum distributions by your required beginning date. Individual income tax return resident 2012 n11 Distributions after the required beginning date. Individual income tax return resident 2012 n11   The required minimum distribution for any year after the year you turn 70½ must be made by December 31 of that later year. Individual income tax return resident 2012 n11    Beneficiaries. Individual income tax return resident 2012 n11   If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions. Individual income tax return resident 2012 n11 More information. Individual income tax return resident 2012 n11   For more information, including how to figure your minimum required distribution each year and how to figure your required distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. Individual income tax return resident 2012 n11 Exceptions. Individual income tax return resident 2012 n11   Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: Rollovers, Qualified charitable distributions (QCD), discussed later, Tax-free withdrawals of contributions, discussed earlier, and The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable . Individual income tax return resident 2012 n11    Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Individual income tax return resident 2012 n11 Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Qualified charitable distributions (QCD). Individual income tax return resident 2012 n11   A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax-deductible contributions. Individual income tax return resident 2012 n11 Special rules apply if you made a qualified charitable distribution in January 2013 that you elected to treat as made in 2012. Individual income tax return resident 2012 n11 See Qualified Charitable Distributions in Publication 590 for more information. Individual income tax return resident 2012 n11 Ordinary income. Individual income tax return resident 2012 n11   Distributions from traditional IRAs that you include in income are taxed as ordinary income. Individual income tax return resident 2012 n11 No special treatment. Individual income tax return resident 2012 n11   In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. Individual income tax return resident 2012 n11 Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. Individual income tax return resident 2012 n11 Fully taxable. Individual income tax return resident 2012 n11   If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Individual income tax return resident 2012 n11 Because you have no basis in your IRA, any distributions are fully taxable when received. Individual income tax return resident 2012 n11 See Reporting taxable distributions on your return , later. Individual income tax return resident 2012 n11 Partly taxable. Individual income tax return resident 2012 n11    If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. Individual income tax return resident 2012 n11 These nondeductible contributions are not taxed when they are distributed to you. Individual income tax return resident 2012 n11 They are a return of your investment in your IRA. Individual income tax return resident 2012 n11   Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. Individual income tax return resident 2012 n11 If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Individual income tax return resident 2012 n11 Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. Individual income tax return resident 2012 n11 Form 8606. Individual income tax return resident 2012 n11   You must complete Form 8606 and attach it to your return if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Individual income tax return resident 2012 n11 Using the form, you will figure the nontaxable distributions for 2013 and your total IRA basis for 2013 and earlier years. Individual income tax return resident 2012 n11 Note. Individual income tax return resident 2012 n11 If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 8606. Individual income tax return resident 2012 n11 Send it to the IRS at the time and place you would otherwise file an income tax return. Individual income tax return resident 2012 n11 Distributions reported on Form 1099-R. Individual income tax return resident 2012 n11   If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Individual income tax return resident 2012 n11 , or a similar statement. Individual income tax return resident 2012 n11 IRA distributions are shown in boxes 1 and 2a of Form 1099-R. Individual income tax return resident 2012 n11 A number or letter code in box 7 tells you what type of distribution you received from your IRA. Individual income tax return resident 2012 n11 Withholding. Individual income tax return resident 2012 n11   Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. Individual income tax return resident 2012 n11 See chapter 4. Individual income tax return resident 2012 n11 IRA distributions delivered outside the United States. Individual income tax return resident 2012 n11   In general, if you are a U. Individual income tax return resident 2012 n11 S. Individual income tax return resident 2012 n11 citizen or resident alien and your home address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. Individual income tax return resident 2012 n11 Reporting taxable distributions on your return. Individual income tax return resident 2012 n11    Report fully taxable distributions, including early distributions on Form 1040, line 15b, or Form 1040A, line 11b (no entry is required on Form 1040, line 15a, or Form 1040A, line 11a). Individual income tax return resident 2012 n11 If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a, or Form 1040A, line 11a, and the taxable part on Form 1040, line 15b, or Form 1040A, line 11b. Individual income tax return resident 2012 n11 You cannot report distributions on Form 1040EZ. Individual income tax return resident 2012 n11 What Acts Result in Penalties or Additional Taxes? The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. Individual income tax return resident 2012 n11 There are additions to the regular tax for using your IRA funds in prohibited transactions. Individual income tax return resident 2012 n11 There are also additional taxes for the following activities. Individual income tax return resident 2012 n11 Investing in collectibles. Individual income tax return resident 2012 n11 Making excess contributions. Individual income tax return resident 2012 n11 Taking early distributions. Individual income tax return resident 2012 n11 Allowing excess amounts to accumulate (failing to take required distributions). Individual income tax return resident 2012 n11 There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required. Individual income tax return resident 2012 n11 Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. Individual income tax return resident 2012 n11 Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). Individual income tax return resident 2012 n11 The following are examples of prohibited transactions with a traditional IRA. Individual income tax return resident 2012 n11 Borrowing money from it. Individual income tax return resident 2012 n11 Selling property to it. Individual income tax return resident 2012 n11 Receiving unreasonable compensation for managing it. Individual income tax return resident 2012 n11 Using it as security for a loan. Individual income tax return resident 2012 n11 Buying property for personal use (present or future) with IRA funds. Individual income tax return resident 2012 n11 Effect on an IRA account. Individual income tax return resident 2012 n11   Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. Individual income tax return resident 2012 n11 Effect on you or your beneficiary. Individual income tax return resident 2012 n11   If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. Individual income tax return resident 2012 n11 If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. Individual income tax return resident 2012 n11 For information on figuring your gain and reporting it in income, see Are Distributions Taxable , earlier. Individual income tax return resident 2012 n11 The distribution may be subject to additional taxes or penalties. Individual income tax return resident 2012 n11 Taxes on prohibited transactions. Individual income tax return resident 2012 n11   If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. Individual income tax return resident 2012 n11 In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction is not corrected. Individual income tax return resident 2012 n11 More information. Individual income tax return resident 2012 n11   For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Publication 590. Individual income tax return resident 2012 n11 Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. Individual income tax return resident 2012 n11 You may have to pay the 10% additional tax on early distributions, discussed later. Individual income tax return resident 2012 n11 Collectibles. Individual income tax return resident 2012 n11   These include: Artworks, Rugs, Antiques, Metals, Gems, Stamps, Coins, Alcoholic beverages, and Certain other tangible personal property. Individual income tax return resident 2012 n11 Exception. Individual income tax return resident 2012 n11    Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U. Individual income tax return resident 2012 n11 S. Individual income tax return resident 2012 n11 gold coins, or one-ounce silver coins minted by the Treasury Department. Individual income tax return resident 2012 n11 It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. Individual income tax return resident 2012 n11 Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of: The maximum deductible amount for the year. Individual income tax return resident 2012 n11 For 2013, this is $5,500 ($6,500 if you are 50 or older), or Your taxable compensation for the year. Individual income tax return resident 2012 n11 Tax on excess contributions. Individual income tax return resident 2012 n11   In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. Individual income tax return resident 2012 n11 You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. Individual income tax return resident 2012 n11 The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. Individual income tax return resident 2012 n11 Excess contributions withdrawn by due date of return. Individual income tax return resident 2012 n11   You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribution. Individual income tax return resident 2012 n11 You must complete your withdrawal by the date your tax return for that year is due, including extensions. Individual income tax return resident 2012 n11 How to treat withdrawn contributions. Individual income tax return resident 2012 n11   Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both the following conditions are met. Individual income tax return resident 2012 n11 No deduction was allowed for the excess contribution. Individual income tax return resident 2012 n11 You withdraw the interest or other income earned on the excess contribution. Individual income tax return resident 2012 n11 You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Individual income tax return resident 2012 n11 If there was a loss, the net income you must withdraw may be a negative amount. Individual income tax return resident 2012 n11 How to treat withdrawn interest or other income. Individual income tax return resident 2012 n11   You must include in your gross income the interest or other income that was earned on the excess contribution. Individual income tax return resident 2012 n11 Report it on your return for the year in which the excess contribution was made. Individual income tax return resident 2012 n11 Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discus