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Irs 2012 Tax Forms 1040 Ez

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Irs 2012 Tax Forms 1040 Ez

Irs 2012 tax forms 1040 ez Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. Irs 2012 tax forms 1040 ez You must be an eligible individual to qualify for an HSA. Irs 2012 tax forms 1040 ez No permission or authorization from the IRS is necessary to establish an HSA. Irs 2012 tax forms 1040 ez You set up an HSA with a trustee. Irs 2012 tax forms 1040 ez A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. Irs 2012 tax forms 1040 ez The HSA can be established through a trustee that is different from your health plan provider. Irs 2012 tax forms 1040 ez Your employer may already have some information on HSA trustees in your area. Irs 2012 tax forms 1040 ez If you have an Archer MSA, you can generally roll it over into an HSA tax free. Irs 2012 tax forms 1040 ez See Rollovers, later. Irs 2012 tax forms 1040 ez What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. Irs 2012 tax forms 1040 ez You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. Irs 2012 tax forms 1040 ez Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. Irs 2012 tax forms 1040 ez The contributions remain in your account until you use them. Irs 2012 tax forms 1040 ez The interest or other earnings on the assets in the account are tax free. Irs 2012 tax forms 1040 ez Distributions may be tax free if you pay qualified medical expenses. Irs 2012 tax forms 1040 ez See Qualified medical expenses , later. Irs 2012 tax forms 1040 ez An HSA is “portable. Irs 2012 tax forms 1040 ez ” It stays with you if you change employers or leave the work force. Irs 2012 tax forms 1040 ez Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. Irs 2012 tax forms 1040 ez You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. Irs 2012 tax forms 1040 ez You have no other health coverage except what is permitted under Other health coverage , later. Irs 2012 tax forms 1040 ez You are not enrolled in Medicare. Irs 2012 tax forms 1040 ez You cannot be claimed as a dependent on someone else's 2013 tax return. Irs 2012 tax forms 1040 ez Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). Irs 2012 tax forms 1040 ez If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. Irs 2012 tax forms 1040 ez If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. Irs 2012 tax forms 1040 ez This is true even if the other person does not actually claim your exemption. Irs 2012 tax forms 1040 ez Each spouse who is an eligible individual who wants an HSA must open a separate HSA. Irs 2012 tax forms 1040 ez You cannot have a joint HSA. Irs 2012 tax forms 1040 ez High deductible health plan (HDHP). Irs 2012 tax forms 1040 ez   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Irs 2012 tax forms 1040 ez Out-of-pocket expenses include copayments and other amounts, but do not include premiums. Irs 2012 tax forms 1040 ez   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. Irs 2012 tax forms 1040 ez Preventive care includes, but is not limited to, the following. Irs 2012 tax forms 1040 ez Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. Irs 2012 tax forms 1040 ez Routine prenatal and well-child care. Irs 2012 tax forms 1040 ez Child and adult immunizations. Irs 2012 tax forms 1040 ez Tobacco cessation programs. Irs 2012 tax forms 1040 ez Obesity weight-loss programs. Irs 2012 tax forms 1040 ez Screening services. Irs 2012 tax forms 1040 ez This includes screening services for the following: Cancer. Irs 2012 tax forms 1040 ez Heart and vascular diseases. Irs 2012 tax forms 1040 ez Infectious diseases. Irs 2012 tax forms 1040 ez Mental health conditions. Irs 2012 tax forms 1040 ez Substance abuse. Irs 2012 tax forms 1040 ez Metabolic, nutritional, and endocrine conditions. Irs 2012 tax forms 1040 ez Musculoskeletal disorders. Irs 2012 tax forms 1040 ez Obstetric and gynecological conditions. Irs 2012 tax forms 1040 ez Pediatric conditions. Irs 2012 tax forms 1040 ez Vision and hearing disorders. Irs 2012 tax forms 1040 ez For more information on screening services, see Notice 2004-23, 2004-15 I. Irs 2012 tax forms 1040 ez R. Irs 2012 tax forms 1040 ez B. Irs 2012 tax forms 1040 ez 725 available at www. Irs 2012 tax forms 1040 ez irs. Irs 2012 tax forms 1040 ez gov/irb/2004-15_IRB/ar10. Irs 2012 tax forms 1040 ez html. Irs 2012 tax forms 1040 ez     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. Irs 2012 tax forms 1040 ez      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Irs 2012 tax forms 1040 ez Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Irs 2012 tax forms 1040 ez    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. Irs 2012 tax forms 1040 ez      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Irs 2012 tax forms 1040 ez Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Irs 2012 tax forms 1040 ez   Self-only HDHP coverage is an HDHP covering only an eligible individual. Irs 2012 tax forms 1040 ez Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. Irs 2012 tax forms 1040 ez This is family HDHP coverage. Irs 2012 tax forms 1040 ez Family plans that do not meet the high deductible rules. Irs 2012 tax forms 1040 ez   There are some family plans that have deductibles for both the family as a whole and for individual family members. Irs 2012 tax forms 1040 ez Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Irs 2012 tax forms 1040 ez If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez You have family health insurance coverage in 2013. Irs 2012 tax forms 1040 ez The annual deductible for the family plan is $3,500. Irs 2012 tax forms 1040 ez This plan also has an individual deductible of $1,500 for each family member. Irs 2012 tax forms 1040 ez The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. Irs 2012 tax forms 1040 ez Other health coverage. Irs 2012 tax forms 1040 ez   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Irs 2012 tax forms 1040 ez However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Irs 2012 tax forms 1040 ez    You can have additional insurance that provides benefits only for the following items. Irs 2012 tax forms 1040 ez Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. Irs 2012 tax forms 1040 ez A specific disease or illness. Irs 2012 tax forms 1040 ez A fixed amount per day (or other period) of hospitalization. Irs 2012 tax forms 1040 ez   You can also have coverage (whether provided through insurance or otherwise) for the following items. Irs 2012 tax forms 1040 ez Accidents. Irs 2012 tax forms 1040 ez Disability. Irs 2012 tax forms 1040 ez Dental care. Irs 2012 tax forms 1040 ez Vision care. Irs 2012 tax forms 1040 ez Long-term care. Irs 2012 tax forms 1040 ez    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. Irs 2012 tax forms 1040 ez For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. Irs 2012 tax forms 1040 ez Prescription drug plans. Irs 2012 tax forms 1040 ez   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. Irs 2012 tax forms 1040 ez If you can receive benefits before that deductible is met, you are not an eligible individual. Irs 2012 tax forms 1040 ez Other employee health plans. Irs 2012 tax forms 1040 ez   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. Irs 2012 tax forms 1040 ez Health FSAs and HRAs are discussed later. Irs 2012 tax forms 1040 ez   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. Irs 2012 tax forms 1040 ez Limited-purpose health FSA or HRA. Irs 2012 tax forms 1040 ez These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Irs 2012 tax forms 1040 ez Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. Irs 2012 tax forms 1040 ez Suspended HRA. Irs 2012 tax forms 1040 ez Before the beginning of an HRA coverage period, you can elect to suspend the HRA. Irs 2012 tax forms 1040 ez The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. Irs 2012 tax forms 1040 ez When the suspension period ends, you are no longer eligible to make contributions to an HSA. Irs 2012 tax forms 1040 ez Post-deductible health FSA or HRA. Irs 2012 tax forms 1040 ez These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. Irs 2012 tax forms 1040 ez The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. Irs 2012 tax forms 1040 ez Retirement HRA. Irs 2012 tax forms 1040 ez This arrangement pays or reimburses only those medical expenses incurred after retirement. Irs 2012 tax forms 1040 ez After retirement you are no longer eligible to make contributions to an HSA. Irs 2012 tax forms 1040 ez Health FSA – grace period. Irs 2012 tax forms 1040 ez   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. Irs 2012 tax forms 1040 ez See Flexible Spending Arrangements (FSAs) , later. Irs 2012 tax forms 1040 ez Contributions to an HSA Any eligible individual can contribute to an HSA. Irs 2012 tax forms 1040 ez For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. Irs 2012 tax forms 1040 ez For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Irs 2012 tax forms 1040 ez Family members or any other person may also make contributions on behalf of an eligible individual. Irs 2012 tax forms 1040 ez Contributions to an HSA must be made in cash. Irs 2012 tax forms 1040 ez Contributions of stock or property are not allowed. Irs 2012 tax forms 1040 ez Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. Irs 2012 tax forms 1040 ez For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. Irs 2012 tax forms 1040 ez If you have family HDHP coverage, you can contribute up to $6,450. Irs 2012 tax forms 1040 ez For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. Irs 2012 tax forms 1040 ez If you have family HDHP coverage you can contribute up to $6,550. Irs 2012 tax forms 1040 ez If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. Irs 2012 tax forms 1040 ez However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. Irs 2012 tax forms 1040 ez If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. Irs 2012 tax forms 1040 ez Last-month rule. Irs 2012 tax forms 1040 ez   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. Irs 2012 tax forms 1040 ez You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. Irs 2012 tax forms 1040 ez Testing period. Irs 2012 tax forms 1040 ez   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. Irs 2012 tax forms 1040 ez For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. Irs 2012 tax forms 1040 ez For example, December 1, 2013, through December 31, 2014. Irs 2012 tax forms 1040 ez   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. Irs 2012 tax forms 1040 ez You include this amount in your income in the year in which you fail to be an eligible individual. Irs 2012 tax forms 1040 ez This amount is also subject to a 10% additional tax. Irs 2012 tax forms 1040 ez The income and additional tax are shown on Form 8889, Part III. Irs 2012 tax forms 1040 ez Example 1. Irs 2012 tax forms 1040 ez Chris, age 53, becomes an eligible individual on December 1, 2013. Irs 2012 tax forms 1040 ez He has family HDHP coverage on that date. Irs 2012 tax forms 1040 ez Under the last-month rule, he contributes $6,450 to his HSA. Irs 2012 tax forms 1040 ez Chris fails to be an eligible individual in June 2014. Irs 2012 tax forms 1040 ez Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. Irs 2012 tax forms 1040 ez Chris uses the worksheet in the Form 8889 instructions to determine this amount. Irs 2012 tax forms 1040 ez January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. Irs 2012 tax forms 1040 ez 00 Total for all months $6,450. Irs 2012 tax forms 1040 ez 00 Limitation. Irs 2012 tax forms 1040 ez Divide the total by 12 $537. Irs 2012 tax forms 1040 ez 50 Chris would include $5,912. Irs 2012 tax forms 1040 ez 50 ($6,450. Irs 2012 tax forms 1040 ez 00 – $537. Irs 2012 tax forms 1040 ez 50) in his gross income on his 2014 tax return. Irs 2012 tax forms 1040 ez Also, a 10% additional tax applies to this amount. Irs 2012 tax forms 1040 ez Example 2. Irs 2012 tax forms 1040 ez Erika, age 39, has self-only HDHP coverage on January 1, 2013. Irs 2012 tax forms 1040 ez Erika changes to family HDHP coverage on November 1, 2013. Irs 2012 tax forms 1040 ez Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. Irs 2012 tax forms 1040 ez Erika fails to be an eligible individual in March 2014. Irs 2012 tax forms 1040 ez Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. Irs 2012 tax forms 1040 ez Erika uses the worksheet in the Form 8889 instructions to determine this amount. Irs 2012 tax forms 1040 ez January $3,250. Irs 2012 tax forms 1040 ez 00 February $3,250. Irs 2012 tax forms 1040 ez 00 March $3,250. Irs 2012 tax forms 1040 ez 00 April $3,250. Irs 2012 tax forms 1040 ez 00 May $3,250. Irs 2012 tax forms 1040 ez 00 June $3,250. Irs 2012 tax forms 1040 ez 00 July $3,250. Irs 2012 tax forms 1040 ez 00 August $3,250. Irs 2012 tax forms 1040 ez 00 September $3,250. Irs 2012 tax forms 1040 ez 00 October $3,250. Irs 2012 tax forms 1040 ez 00 November $6,450. Irs 2012 tax forms 1040 ez 00 December $6,450. Irs 2012 tax forms 1040 ez 00 Total for all months $45,400. Irs 2012 tax forms 1040 ez 00 Limitation. Irs 2012 tax forms 1040 ez Divide the total by 12 $3,783. Irs 2012 tax forms 1040 ez 34 Erika would include $2,666. Irs 2012 tax forms 1040 ez 67 ($6,450 – $3,783. Irs 2012 tax forms 1040 ez 34) in her gross income on her 2014 tax return. Irs 2012 tax forms 1040 ez Also, a 10% additional tax applies to this amount. Irs 2012 tax forms 1040 ez Additional contribution. Irs 2012 tax forms 1040 ez   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. Irs 2012 tax forms 1040 ez For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). Irs 2012 tax forms 1040 ez However, see Enrolled in Medicare , later. Irs 2012 tax forms 1040 ez If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. Irs 2012 tax forms 1040 ez Reduction of contribution limit. Irs 2012 tax forms 1040 ez   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. Irs 2012 tax forms 1040 ez A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. Irs 2012 tax forms 1040 ez Rules for married people. Irs 2012 tax forms 1040 ez   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. Irs 2012 tax forms 1040 ez If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. Irs 2012 tax forms 1040 ez You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. Irs 2012 tax forms 1040 ez After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. Irs 2012 tax forms 1040 ez The rules for married people apply only if both spouses are eligible individuals. Irs 2012 tax forms 1040 ez If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. Irs 2012 tax forms 1040 ez If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. Irs 2012 tax forms 1040 ez Each spouse must make the additional contribution to his or her own HSA. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez For 2013, Mr. Irs 2012 tax forms 1040 ez Auburn and his wife are both eligible individuals. Irs 2012 tax forms 1040 ez They each have family coverage under separate HDHPs. Irs 2012 tax forms 1040 ez Mr. Irs 2012 tax forms 1040 ez Auburn is 58 years old and Mrs. Irs 2012 tax forms 1040 ez Auburn is 53. Irs 2012 tax forms 1040 ez Mr. Irs 2012 tax forms 1040 ez and Mrs. Irs 2012 tax forms 1040 ez Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. Irs 2012 tax forms 1040 ez If they split it equally, Mr. Irs 2012 tax forms 1040 ez Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. Irs 2012 tax forms 1040 ez Auburn can contribute $3,225 to an HSA. Irs 2012 tax forms 1040 ez Employer contributions. Irs 2012 tax forms 1040 ez   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. Irs 2012 tax forms 1040 ez This includes amounts contributed to your account by your employer through a cafeteria plan. Irs 2012 tax forms 1040 ez Enrolled in Medicare. Irs 2012 tax forms 1040 ez   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez You turned age 65 in July 2013 and enrolled in Medicare. Irs 2012 tax forms 1040 ez You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. Irs 2012 tax forms 1040 ez Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). Irs 2012 tax forms 1040 ez Qualified HSA funding distribution. Irs 2012 tax forms 1040 ez   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. Irs 2012 tax forms 1040 ez This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. Irs 2012 tax forms 1040 ez For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. Irs 2012 tax forms 1040 ez   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. Irs 2012 tax forms 1040 ez The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. Irs 2012 tax forms 1040 ez The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. Irs 2012 tax forms 1040 ez The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. Irs 2012 tax forms 1040 ez   You can make only one qualified HSA funding distribution during your lifetime. Irs 2012 tax forms 1040 ez However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. Irs 2012 tax forms 1040 ez The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. Irs 2012 tax forms 1040 ez You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). Irs 2012 tax forms 1040 ez Funding distribution – testing period. Irs 2012 tax forms 1040 ez   You must remain an eligible individual during the testing period. Irs 2012 tax forms 1040 ez For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. Irs 2012 tax forms 1040 ez For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. Irs 2012 tax forms 1040 ez   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. Irs 2012 tax forms 1040 ez You include this amount in income in the year in which you fail to be an eligible individual. Irs 2012 tax forms 1040 ez This amount is also subject to a 10% additional tax. Irs 2012 tax forms 1040 ez The income and the additional tax are shown on Form 8889, Part III. Irs 2012 tax forms 1040 ez   Each qualified HSA funding distribution allowed has its own testing period. Irs 2012 tax forms 1040 ez For example, you are an eligible individual, age 45, with self-only HDHP coverage. Irs 2012 tax forms 1040 ez On June 18, 2013, you make a qualified HSA funding distribution of $3,250. Irs 2012 tax forms 1040 ez On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. Irs 2012 tax forms 1040 ez Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. Irs 2012 tax forms 1040 ez Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. Irs 2012 tax forms 1040 ez   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. Irs 2012 tax forms 1040 ez If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. Irs 2012 tax forms 1040 ez Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. Irs 2012 tax forms 1040 ez Archer MSAs and other HSAs. Irs 2012 tax forms 1040 ez   You can roll over amounts from Archer MSAs and other HSAs into an HSA. Irs 2012 tax forms 1040 ez You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Irs 2012 tax forms 1040 ez Rollover contributions do not need to be in cash. Irs 2012 tax forms 1040 ez Rollovers are not subject to the annual contribution limits. Irs 2012 tax forms 1040 ez   You must roll over the amount within 60 days after the date of receipt. Irs 2012 tax forms 1040 ez You can make only one rollover contribution to an HSA during a 1-year period. Irs 2012 tax forms 1040 ez Note. Irs 2012 tax forms 1040 ez If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. Irs 2012 tax forms 1040 ez There is no limit on the number of these transfers. Irs 2012 tax forms 1040 ez Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. Irs 2012 tax forms 1040 ez When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. Irs 2012 tax forms 1040 ez If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. Irs 2012 tax forms 1040 ez Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. Irs 2012 tax forms 1040 ez Your employer must notify you and the trustee of your HSA that the contribution is for 2013. Irs 2012 tax forms 1040 ez The contribution will be reported on your 2014 Form W-2. Irs 2012 tax forms 1040 ez Reporting Contributions on Your Return Contributions made by your employer are not included in your income. Irs 2012 tax forms 1040 ez Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. Irs 2012 tax forms 1040 ez Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. Irs 2012 tax forms 1040 ez Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Irs 2012 tax forms 1040 ez The contributions are treated as a distribution of money and are not included in the partner's gross income. Irs 2012 tax forms 1040 ez Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. Irs 2012 tax forms 1040 ez In both situations, the partner can deduct the contribution made to the partner's HSA. Irs 2012 tax forms 1040 ez Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. Irs 2012 tax forms 1040 ez The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Irs 2012 tax forms 1040 ez Form 8889. Irs 2012 tax forms 1040 ez   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. Irs 2012 tax forms 1040 ez Contributions made by your employer and qualified HSA funding distributions are also shown on the form. Irs 2012 tax forms 1040 ez   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. Irs 2012 tax forms 1040 ez Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. Irs 2012 tax forms 1040 ez Follow the instructions for Form 8889. Irs 2012 tax forms 1040 ez Report your HSA deduction on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez Excess contributions. Irs 2012 tax forms 1040 ez   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Irs 2012 tax forms 1040 ez Excess contributions are not deductible. Irs 2012 tax forms 1040 ez Excess contributions made by your employer are included in your gross income. Irs 2012 tax forms 1040 ez If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Irs 2012 tax forms 1040 ez   Generally, you must pay a 6% excise tax on excess contributions. Irs 2012 tax forms 1040 ez See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Irs 2012 tax forms 1040 ez The excise tax applies to each tax year the excess contribution remains in the account. Irs 2012 tax forms 1040 ez   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Irs 2012 tax forms 1040 ez You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. Irs 2012 tax forms 1040 ez You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Irs 2012 tax forms 1040 ez If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. Irs 2012 tax forms 1040 ez If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. Irs 2012 tax forms 1040 ez Deducting an excess contribution in a later year. Irs 2012 tax forms 1040 ez   You may be able to deduct excess contributions for previous years that are still in your HSA. Irs 2012 tax forms 1040 ez The excess contribution you can deduct for the current year is the lesser of the following two amounts. Irs 2012 tax forms 1040 ez Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. Irs 2012 tax forms 1040 ez The total excess contributions in your HSA at the beginning of the year. Irs 2012 tax forms 1040 ez   Amounts contributed for the year include contributions by you, your employer, and any other person. Irs 2012 tax forms 1040 ez They also include any qualified HSA funding distribution made to your HSA. Irs 2012 tax forms 1040 ez Any excess contribution remaining at the end of a tax year is subject to the excise tax. Irs 2012 tax forms 1040 ez See Form 5329. Irs 2012 tax forms 1040 ez Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Irs 2012 tax forms 1040 ez When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. Irs 2012 tax forms 1040 ez You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. Irs 2012 tax forms 1040 ez If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Irs 2012 tax forms 1040 ez You do not have to make distributions from your HSA each year. Irs 2012 tax forms 1040 ez If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Irs 2012 tax forms 1040 ez Generally, a distribution is money you get from your health savings account. Irs 2012 tax forms 1040 ez Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. Irs 2012 tax forms 1040 ez The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Irs 2012 tax forms 1040 ez Qualified medical expenses. Irs 2012 tax forms 1040 ez   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Irs 2012 tax forms 1040 ez These are explained in Publication 502, Medical and Dental Expenses. Irs 2012 tax forms 1040 ez   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. Irs 2012 tax forms 1040 ez A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Irs 2012 tax forms 1040 ez   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. Irs 2012 tax forms 1040 ez State law determines when an HSA is established. Irs 2012 tax forms 1040 ez An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. Irs 2012 tax forms 1040 ez   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. Irs 2012 tax forms 1040 ez   Qualified medical expenses are those incurred by the following persons. Irs 2012 tax forms 1040 ez You and your spouse. Irs 2012 tax forms 1040 ez All dependents you claim on your tax return. Irs 2012 tax forms 1040 ez Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Irs 2012 tax forms 1040 ez    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. Irs 2012 tax forms 1040 ez You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. Irs 2012 tax forms 1040 ez Insurance premiums. Irs 2012 tax forms 1040 ez   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. Irs 2012 tax forms 1040 ez Health care continuation coverage (such as coverage under COBRA). Irs 2012 tax forms 1040 ez Health care coverage while receiving unemployment compensation under federal or state law. Irs 2012 tax forms 1040 ez Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). Irs 2012 tax forms 1040 ez   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. Irs 2012 tax forms 1040 ez See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). Irs 2012 tax forms 1040 ez   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. Irs 2012 tax forms 1040 ez For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. Irs 2012 tax forms 1040 ez Health coverage tax credit. Irs 2012 tax forms 1040 ez   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. Irs 2012 tax forms 1040 ez See Publication 502 for more information on this credit. Irs 2012 tax forms 1040 ez Deemed distributions from HSAs. Irs 2012 tax forms 1040 ez   The following situations result in deemed taxable distributions from your HSA. Irs 2012 tax forms 1040 ez You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. Irs 2012 tax forms 1040 ez Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. Irs 2012 tax forms 1040 ez You used any portion of any of your HSAs as security for a loan at any time in 2013. Irs 2012 tax forms 1040 ez You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. Irs 2012 tax forms 1040 ez   Any deemed distribution will not be treated as used to pay qualified medical expenses. Irs 2012 tax forms 1040 ez These distributions are included in your income and are subject to the additional 20% tax, discussed later. Irs 2012 tax forms 1040 ez Recordkeeping. Irs 2012 tax forms 1040 ez You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Irs 2012 tax forms 1040 ez Do not send these records with your tax return. Irs 2012 tax forms 1040 ez Keep them with your tax records. Irs 2012 tax forms 1040 ez Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Irs 2012 tax forms 1040 ez If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. Irs 2012 tax forms 1040 ez However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Irs 2012 tax forms 1040 ez Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Irs 2012 tax forms 1040 ez Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez You may have to pay an additional 20% tax on your taxable distribution. Irs 2012 tax forms 1040 ez HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. Irs 2012 tax forms 1040 ez Additional tax. Irs 2012 tax forms 1040 ez   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. Irs 2012 tax forms 1040 ez Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez Exceptions. Irs 2012 tax forms 1040 ez   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Irs 2012 tax forms 1040 ez Balance in an HSA An HSA is generally exempt from tax. Irs 2012 tax forms 1040 ez You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Irs 2012 tax forms 1040 ez Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Irs 2012 tax forms 1040 ez Earnings on amounts in an HSA are not included in your income while held in the HSA. Irs 2012 tax forms 1040 ez Death of HSA Holder You should choose a beneficiary when you set up your HSA. Irs 2012 tax forms 1040 ez What happens to that HSA when you die depends on whom you designate as the beneficiary. Irs 2012 tax forms 1040 ez Spouse is the designated beneficiary. Irs 2012 tax forms 1040 ez   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. Irs 2012 tax forms 1040 ez Spouse is not the designated beneficiary. Irs 2012 tax forms 1040 ez   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. Irs 2012 tax forms 1040 ez If your estate is the beneficiary, the value is included on your final income tax return. Irs 2012 tax forms 1040 ez The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Irs 2012 tax forms 1040 ez Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. Irs 2012 tax forms 1040 ez You must file the form even if only your employer or your spouse's employer made contributions to the HSA. Irs 2012 tax forms 1040 ez If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. Irs 2012 tax forms 1040 ez Enter “statement” at the top of each Form 8889 and complete the form as instructed. Irs 2012 tax forms 1040 ez Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. Irs 2012 tax forms 1040 ez Attach the statements to your tax return after the controlling Form 8889. Irs 2012 tax forms 1040 ez Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. Irs 2012 tax forms 1040 ez Unlike the previous discussions, “you” refers to the employer and not to the employee. Irs 2012 tax forms 1040 ez Health plan. Irs 2012 tax forms 1040 ez   If you want your employees to be able to have an HSA, they must have an HDHP. Irs 2012 tax forms 1040 ez You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Irs 2012 tax forms 1040 ez Contributions. Irs 2012 tax forms 1040 ez   You can make contributions to your employees' HSAs. Irs 2012 tax forms 1040 ez You deduct the contributions on your business income tax return for the year in which you make the contributions. Irs 2012 tax forms 1040 ez If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. Irs 2012 tax forms 1040 ez   For more information on employer contributions, see Notice 2008-59, 2008-29 I. Irs 2012 tax forms 1040 ez R. Irs 2012 tax forms 1040 ez B. Irs 2012 tax forms 1040 ez 123, questions 23 through 27, available at www. Irs 2012 tax forms 1040 ez irs. Irs 2012 tax forms 1040 ez gov/irb/2008-29_IRB/ar11. Irs 2012 tax forms 1040 ez html. Irs 2012 tax forms 1040 ez Comparable contributions. Irs 2012 tax forms 1040 ez   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. Irs 2012 tax forms 1040 ez Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Irs 2012 tax forms 1040 ez The comparability rules do not apply to contributions made through a cafeteria plan. Irs 2012 tax forms 1040 ez Comparable participating employees. Irs 2012 tax forms 1040 ez   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). Irs 2012 tax forms 1040 ez   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. Irs 2012 tax forms 1040 ez   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. Irs 2012 tax forms 1040 ez The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. Irs 2012 tax forms 1040 ez For a sample of the notice, see Regulation 54. Irs 2012 tax forms 1040 ez 4980G-4 A-14(c). Irs 2012 tax forms 1040 ez You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. Irs 2012 tax forms 1040 ez Note. Irs 2012 tax forms 1040 ez For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. Irs 2012 tax forms 1040 ez Excise tax. Irs 2012 tax forms 1040 ez   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Irs 2012 tax forms 1040 ez Employment taxes. Irs 2012 tax forms 1040 ez   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. Irs 2012 tax forms 1040 ez You must report the contributions in box 12 of the Form W-2 you file for each employee. Irs 2012 tax forms 1040 ez This includes the amounts the employee elected to contribute through a cafeteria plan. Irs 2012 tax forms 1040 ez Enter code “W” in box 12. Irs 2012 tax forms 1040 ez Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). Irs 2012 tax forms 1040 ez After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. Irs 2012 tax forms 1040 ez A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. Irs 2012 tax forms 1040 ez Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. Irs 2012 tax forms 1040 ez What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. Irs 2012 tax forms 1040 ez You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez The interest or other earnings on the assets in your Archer MSA are tax free. Irs 2012 tax forms 1040 ez Distributions may be tax free if you pay qualified medical expenses. Irs 2012 tax forms 1040 ez See Qualified medical expenses , later. Irs 2012 tax forms 1040 ez The contributions remain in your Archer MSA from year to year until you use them. Irs 2012 tax forms 1040 ez An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. Irs 2012 tax forms 1040 ez Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. Irs 2012 tax forms 1040 ez An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). Irs 2012 tax forms 1040 ez A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. Irs 2012 tax forms 1040 ez You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. Irs 2012 tax forms 1040 ez You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. Irs 2012 tax forms 1040 ez If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. Irs 2012 tax forms 1040 ez This is true even if the other person does not actually claim your exemption. Irs 2012 tax forms 1040 ez Small employer. Irs 2012 tax forms 1040 ez   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. Irs 2012 tax forms 1040 ez The definition of small employer is modified for new employers and growing employers. Irs 2012 tax forms 1040 ez Growing employer. Irs 2012 tax forms 1040 ez   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. Irs 2012 tax forms 1040 ez The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. Irs 2012 tax forms 1040 ez Changing employers. Irs 2012 tax forms 1040 ez   If you change employers, your Archer MSA moves with you. Irs 2012 tax forms 1040 ez However, you may not make additional contributions unless you are otherwise eligible. Irs 2012 tax forms 1040 ez High deductible health plan (HDHP). Irs 2012 tax forms 1040 ez   To be eligible for an Archer MSA, you must be covered under an HDHP. Irs 2012 tax forms 1040 ez An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. Irs 2012 tax forms 1040 ez Limits. Irs 2012 tax forms 1040 ez   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. Irs 2012 tax forms 1040 ez   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. Irs 2012 tax forms 1040 ez   There are some family plans that have deductibles for both the family as a whole and for individual family members. Irs 2012 tax forms 1040 ez Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Irs 2012 tax forms 1040 ez If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez You have family health insurance coverage in 2013. Irs 2012 tax forms 1040 ez The annual deductible for the family plan is $5,500. Irs 2012 tax forms 1040 ez This plan also has an individual deductible of $2,000 for each family member. Irs 2012 tax forms 1040 ez The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. Irs 2012 tax forms 1040 ez Other health coverage. Irs 2012 tax forms 1040 ez   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Irs 2012 tax forms 1040 ez However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Irs 2012 tax forms 1040 ez However, you can have additional insurance that provides benefits only for the following items. Irs 2012 tax forms 1040 ez Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. Irs 2012 tax forms 1040 ez A specific disease or illness. Irs 2012 tax forms 1040 ez A fixed amount per day (or other period) of hospitalization. Irs 2012 tax forms 1040 ez You can also have coverage (whether provided through insurance or otherwise) for the following items. Irs 2012 tax forms 1040 ez Accidents. Irs 2012 tax forms 1040 ez Disability. Irs 2012 tax forms 1040 ez Dental care. Irs 2012 tax forms 1040 ez Vision care. Irs 2012 tax forms 1040 ez Long-term care. Irs 2012 tax forms 1040 ez Contributions to an MSA Contributions to an Archer MSA must be made in cash. Irs 2012 tax forms 1040 ez You cannot contribute stock or other property to an Archer MSA. Irs 2012 tax forms 1040 ez Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. Irs 2012 tax forms 1040 ez (You do not pay tax on these contributions. Irs 2012 tax forms 1040 ez ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. Irs 2012 tax forms 1040 ez Both you and your employer cannot make contributions to your Archer MSA in the same year. Irs 2012 tax forms 1040 ez You do not have to make contributions to your Archer MSA every year. Irs 2012 tax forms 1040 ez    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. Irs 2012 tax forms 1040 ez Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. Irs 2012 tax forms 1040 ez An income limit. Irs 2012 tax forms 1040 ez Annual deductible limit. Irs 2012 tax forms 1040 ez   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. Irs 2012 tax forms 1040 ez You must have the HDHP all year to contribute the full amount. Irs 2012 tax forms 1040 ez If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Irs 2012 tax forms 1040 ez Example 1. Irs 2012 tax forms 1040 ez You have an HDHP for your family all year in 2013. Irs 2012 tax forms 1040 ez The annual deductible is $5,000. Irs 2012 tax forms 1040 ez You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. Irs 2012 tax forms 1040 ez Example 2. Irs 2012 tax forms 1040 ez You have an HDHP for your family for the entire months of July through December 2013 (6 months). Irs 2012 tax forms 1040 ez The annual deductible is $5,000. Irs 2012 tax forms 1040 ez You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. Irs 2012 tax forms 1040 ez If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. Irs 2012 tax forms 1040 ez The contribution limit is split equally between you unless you agree on a different division. Irs 2012 tax forms 1040 ez Income limit. Irs 2012 tax forms 1040 ez   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. Irs 2012 tax forms 1040 ez   If you are self-employed, you cannot contribute more than your net self-employment income. Irs 2012 tax forms 1040 ez This is your income from self-employment minus expenses (including the deductible part of self-employment tax). Irs 2012 tax forms 1040 ez Example 1. Irs 2012 tax forms 1040 ez Noah Paul earned $25,000 from ABC Company in 2013. Irs 2012 tax forms 1040 ez Through ABC, he had an HDHP for his family for the entire year. Irs 2012 tax forms 1040 ez The annual deductible was $5,000. Irs 2012 tax forms 1040 ez He can contribute up to $3,750 to his Archer MSA (75% × $5,000). Irs 2012 tax forms 1040 ez He can contribute the full amount because he earned more than $3,750 at ABC. Irs 2012 tax forms 1040 ez Example 2. Irs 2012 tax forms 1040 ez Westley Lawrence is self-employed. Irs 2012 tax forms 1040 ez He had an HDHP for his family for the entire year in 2013. Irs 2012 tax forms 1040 ez The annual deductible was $5,000. Irs 2012 tax forms 1040 ez Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). Irs 2012 tax forms 1040 ez However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. Irs 2012 tax forms 1040 ez Therefore, he is limited to a contribution of $2,500. Irs 2012 tax forms 1040 ez Individuals enrolled in Medicare. Irs 2012 tax forms 1040 ez   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. Irs 2012 tax forms 1040 ez However, you may be eligible for a Medicare Advantage MSA, discussed later. Irs 2012 tax forms 1040 ez When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. Irs 2012 tax forms 1040 ez Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. Irs 2012 tax forms 1040 ez You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. Irs 2012 tax forms 1040 ez Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. Irs 2012 tax forms 1040 ez Follow the instructions for Form 8853 and complete the worksheet in the instructions. Irs 2012 tax forms 1040 ez Report your Archer MSA deduction on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez Excess contributions. Irs 2012 tax forms 1040 ez   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. Irs 2012 tax forms 1040 ez Excess contributions are not deductible. Irs 2012 tax forms 1040 ez Excess contributions made by your employer are included in your gross income. Irs 2012 tax forms 1040 ez If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Irs 2012 tax forms 1040 ez   Generally, you must pay a 6% excise tax on excess contributions. Irs 2012 tax forms 1040 ez See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Irs 2012 tax forms 1040 ez The excise tax applies to each tax year the excess contribution remains in the account. Irs 2012 tax forms 1040 ez   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Irs 2012 tax forms 1040 ez You withdraw the excess contributions by the due date, including extensions, of your tax return. Irs 2012 tax forms 1040 ez You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Irs 2012 tax forms 1040 ez Deducting an excess contribution in a later year. Irs 2012 tax forms 1040 ez   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. Irs 2012 tax forms 1040 ez The excess contribution you can deduct in the current year is the lesser of the following two amounts. Irs 2012 tax forms 1040 ez Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. Irs 2012 tax forms 1040 ez The total excess contributions in your Archer MSA at the beginning of the year. Irs 2012 tax forms 1040 ez   Any excess contributions remaining at the end of a tax year are subject to the excise tax. Irs 2012 tax forms 1040 ez See Form 5329. Irs 2012 tax forms 1040 ez Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Irs 2012 tax forms 1040 ez When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. Irs 2012 tax forms 1040 ez You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). Irs 2012 tax forms 1040 ez If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. Irs 2012 tax forms 1040 ez You do not have to make withdrawals from your Archer MSA each year. Irs 2012 tax forms 1040 ez If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Irs 2012 tax forms 1040 ez A distribution is money you get from your Archer MSA. Irs 2012 tax forms 1040 ez The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Irs 2012 tax forms 1040 ez Qualified medical expenses. Irs 2012 tax forms 1040 ez   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Irs 2012 tax forms 1040 ez These are explained in Publication 502. Irs 2012 tax forms 1040 ez   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. Irs 2012 tax forms 1040 ez A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Irs 2012 tax forms 1040 ez   Qualified medical expenses are those incurred by the following persons. Irs 2012 tax forms 1040 ez You and your spouse. Irs 2012 tax forms 1040 ez All dependents you claim on your tax return. Irs 2012 tax forms 1040 ez Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Irs 2012 tax forms 1040 ez    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. Irs 2012 tax forms 1040 ez    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. Irs 2012 tax forms 1040 ez Special rules for insurance premiums. Irs 2012 tax forms 1040 ez   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. Irs 2012 tax forms 1040 ez You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. Irs 2012 tax forms 1040 ez Health coverage tax credit. Irs 2012 tax forms 1040 ez   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. Irs 2012 tax forms 1040 ez See Publication 502 for information on this credit. Irs 2012 tax forms 1040 ez Deemed distributions from Archer MSAs. Irs 2012 tax forms 1040 ez   The following situations result in deemed taxable distributions from your Archer MSA. Irs 2012 tax forms 1040 ez You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. Irs 2012 tax forms 1040 ez Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. Irs 2012 tax forms 1040 ez You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. Irs 2012 tax forms 1040 ez You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. Irs 2012 tax forms 1040 ez   Any deemed distribution will not be treated as used to pay qualified medical expenses. Irs 2012 tax forms 1040 ez These distributions are included in your income and are subject to the additional 20% tax, discussed later. Irs 2012 tax forms 1040 ez Recordkeeping. Irs 2012 tax forms 1040 ez You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Irs 2012 tax forms 1040 ez Do not send these records with your tax return. Irs 2012 tax forms 1040 ez Keep them with your tax records. Irs 2012 tax forms 1040 ez Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Irs 2012 tax forms 1040 ez If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. Irs 2012 tax forms 1040 ez Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. Irs 2012 tax forms 1040 ez Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez You may have to pay an additional 20% tax, discussed later, on your taxable distribution. Irs 2012 tax forms 1040 ez If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. Irs 2012 tax forms 1040 ez Rollovers. Irs 2012 tax forms 1040 ez   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. Irs 2012 tax forms 1040 ez An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. Irs 2012 tax forms 1040 ez See the Form 8853 instructions for more information. Irs 2012 tax forms 1040 ez Additional tax. Irs 2012 tax forms 1040 ez   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. Irs 2012 tax forms 1040 ez Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez Report the additional tax in the total on Form 1040 or Form 1040NR. Irs 2012 tax forms 1040 ez Exceptions. Irs 2012 tax forms 1040 ez   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Irs 2012 tax forms 1040 ez Balance in an Archer MSA An Archer MSA is generally exempt from tax. Irs 2012 tax forms 1040 ez You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Irs 2012 tax forms 1040 ez Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Irs 2012 tax forms 1040 ez Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. Irs 2012 tax forms 1040 ez Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. Irs 2012 tax forms 1040 ez What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. Irs 2012 tax forms 1040 ez Spouse is the designated beneficiary. Irs 2012 tax forms 1040 ez   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. Irs 2012 tax forms 1040 ez Spouse is not the designated beneficiary. Irs 2012 tax forms 1040 ez   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. Irs 2012 tax forms 1040 ez   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. Irs 2012 tax forms 1040 ez The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Irs 2012 tax forms 1040 ez Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. Irs 2012 tax forms 1040 ez You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. Irs 2012 tax forms 1040 ez If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. Irs 2012 tax forms 1040 ez Enter “statement” at the top of each Form 8853 and complete the form as instructed. Irs 2012 tax forms 1040 ez Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. Irs 2012 tax forms 1040 ez Attach the statements to your tax return after the controlling Form 8853. Irs 2012 tax forms 1040 ez Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. Irs 2012 tax forms 1040 ez Unlike the previous discussions, “you” refers to the employer and not to the employee. Irs 2012 tax forms 1040 ez Health plan. Irs 2012 tax forms 1040 ez   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. Irs 2012 tax forms 1040 ez You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Irs 2012 tax forms 1040 ez Contributions. Irs 2012 tax forms 1040 ez   You can make contributions to your employees' Archer MSAs. Irs 2012 tax forms 1040 ez You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. Irs 2012 tax forms 1040 ez If you are filing Form 1040, Schedule C, this is Part II, line 14. Irs 2012 tax forms 1040 ez Comparable contributions. Irs 2012 tax forms 1040 ez   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. Irs 2012 tax forms 1040 ez Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Irs 2012 tax forms 1040 ez Comparable participating employees. Irs 2012 tax forms 1040 ez   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). Irs 2012 tax forms 1040 ez Excise tax. Irs 2012 tax forms 1040 ez   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Irs 2012 tax forms 1040 ez Employment taxes. Irs 2012 tax forms 1040 ez   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. Irs 2012 tax forms 1040 ez You must report the contributions in box 12 of the Form W-2 you file for each employee. Irs 2012 tax forms 1040 ez Enter code “R” in box 12. Irs 2012 tax forms 1040 ez Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. Irs 2012 tax forms 1040 ez To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. Irs 2012 tax forms 1040 ez A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. Irs 2012 tax forms 1040 ez The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. Irs 2012 tax forms 1040 ez An HDHP is a special health insurance policy that has a high deductible. Irs 2012 tax forms 1040 ez You choose the policy you want to use as part of your Medicare Advantage MSA plan. Irs 2012 tax forms 1040 ez However, the policy must be approved by the Medicare program. Irs 2012 tax forms 1040 ez Medicare Advantage MSAs are administered through the federal Medicare program. Irs 2012 tax forms 1040 ez You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. Irs 2012 tax forms 1040 ez medicare. Irs 2012 tax forms 1040 ez gov. Irs 2012 tax forms 1040 ez Note. Irs 2012 tax forms 1040 ez You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. Irs 2012 tax forms 1040 ez Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. Irs 2012 tax forms 1040 ez FSAs are usually funded through voluntary salary reduction agreements with your employer. Irs 2012 tax forms 1040 ez No employment or federal income taxes are deducted from your contribution. Irs 2012 tax forms 1040 ez The employer may also contribute. Irs 2012 tax forms 1040 ez Note. Irs 2012 tax forms 1040 ez Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. Irs 2012 tax forms 1040 ez For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. Irs 2012 tax forms 1040 ez What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. Irs 2012 tax forms 1040 ez Contributions made by your employer can be excluded from your gross income. Irs 2012 tax forms 1040 ez No employment or federal income taxes are deducted from the contributions. Irs 2012 tax forms 1040 ez Withdrawals may be tax free if you pay qualified medical expenses. Irs 2012 tax forms 1040 ez See Qualified medical expenses , later. Irs 2012 tax forms 1040 ez You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. Irs 2012 tax forms 1040 ez Qualifying for an FSA Health FSAs are employer-established benefit plans. Irs 2012 tax forms 1040 ez These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. Irs 2012 tax forms 1040 ez Employers have complete flexibility to offer various combinations of benefits in designing their plan. Irs 2012 tax forms 1040 ez You do not have to be covered under any other health care plan to participate. Irs 2012 tax forms 1040 ez Self-employed persons are not eligible for an FSA. Irs 2012 tax forms 1040 ez Certain limitations may apply if you are a highly compensated participant or a key employee. Irs 2012 tax forms 1040 ez Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. Irs 2012 tax forms 1040 ez This is sometimes called a salary reduction agreement. Irs 2012 tax forms 1040 ez The employer may also contribute to your FSA if specified in the plan. Irs 2012 tax forms 1040 ez You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. Irs 2012 tax forms 1040 ez However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. Irs 2012 tax forms 1040 ez When To Contribute At the
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Staying Healthy as a Senior

Your mental and physical health is important in this stage of life. Staying healthy means eating nutritious foods, exercising, and getting regular medical check-ups. Prevention and early detection are the best defense against illness and disease.


The Irs 2012 Tax Forms 1040 Ez

Irs 2012 tax forms 1040 ez 10. Irs 2012 tax forms 1040 ez   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. Irs 2012 tax forms 1040 ez Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Irs 2012 tax forms 1040 ez Use Schedule SE to figure net earnings from self-employment. Irs 2012 tax forms 1040 ez Sole proprietor or independent contractor. Irs 2012 tax forms 1040 ez   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. Irs 2012 tax forms 1040 ez SE tax rate. Irs 2012 tax forms 1040 ez    For 2013, the SE tax rate on net earnings is 15. Irs 2012 tax forms 1040 ez 3% (12. Irs 2012 tax forms 1040 ez 4% social security tax plus 2. Irs 2012 tax forms 1040 ez 9% Medicare tax). Irs 2012 tax forms 1040 ez Maximum earnings subject to self-employment tax. Irs 2012 tax forms 1040 ez    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Irs 2012 tax forms 1040 ez 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Irs 2012 tax forms 1040 ez   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Irs 2012 tax forms 1040 ez 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Irs 2012 tax forms 1040 ez   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Irs 2012 tax forms 1040 ez 4% social security part of the SE tax on any of your net earnings. Irs 2012 tax forms 1040 ez However, you must pay the 2. Irs 2012 tax forms 1040 ez 9% Medicare part of the SE tax on all your net earnings. Irs 2012 tax forms 1040 ez Special Rules and Exceptions Aliens. Irs 2012 tax forms 1040 ez   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez citizens. Irs 2012 tax forms 1040 ez Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez social security system. Irs 2012 tax forms 1040 ez However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez residents for self-employment tax purposes. Irs 2012 tax forms 1040 ez For more information on aliens, see Publication 519, U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez Tax Guide for Aliens. Irs 2012 tax forms 1040 ez Child employed by parent. Irs 2012 tax forms 1040 ez   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. Irs 2012 tax forms 1040 ez Church employee. Irs 2012 tax forms 1040 ez    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. Irs 2012 tax forms 1040 ez 28 or more in wages from the church or organization. Irs 2012 tax forms 1040 ez For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Irs 2012 tax forms 1040 ez Fishing crew member. Irs 2012 tax forms 1040 ez   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. Irs 2012 tax forms 1040 ez You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. Irs 2012 tax forms 1040 ez The pay is not more than $100 per trip. Irs 2012 tax forms 1040 ez The pay is received only if there is a minimum catch. Irs 2012 tax forms 1040 ez The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. Irs 2012 tax forms 1040 ez You get a share of the catch or a share of the proceeds from the sale of the catch. Irs 2012 tax forms 1040 ez Your share depends on the amount of the catch. Irs 2012 tax forms 1040 ez The boat's operating crew normally numbers fewer than 10 individuals. Irs 2012 tax forms 1040 ez (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. Irs 2012 tax forms 1040 ez ) Notary public. Irs 2012 tax forms 1040 ez   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). Irs 2012 tax forms 1040 ez State or local government employee. Irs 2012 tax forms 1040 ez   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. Irs 2012 tax forms 1040 ez Foreign government or international organization employee. Irs 2012 tax forms 1040 ez   You are subject to SE tax if both the following conditions are true. Irs 2012 tax forms 1040 ez You are a U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. Irs 2012 tax forms 1040 ez Your employer is not required to withhold social security and Medicare taxes from your wages. Irs 2012 tax forms 1040 ez U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez citizen or resident alien residing abroad. Irs 2012 tax forms 1040 ez    If you are a self-employed U. Irs 2012 tax forms 1040 ez S. Irs 2012 tax forms 1040 ez citizen or resident alien living outside the United States, in most cases you must pay SE tax. Irs 2012 tax forms 1040 ez Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. Irs 2012 tax forms 1040 ez Exception. Irs 2012 tax forms 1040 ez    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. Irs 2012 tax forms 1040 ez Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. Irs 2012 tax forms 1040 ez The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. Irs 2012 tax forms 1040 ez   For more information, see the Instructions for Schedule SE (Form 1040). Irs 2012 tax forms 1040 ez More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. Irs 2012 tax forms 1040 ez A loss from one business reduces your profit from another business. Irs 2012 tax forms 1040 ez Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. Irs 2012 tax forms 1040 ez Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Irs 2012 tax forms 1040 ez It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. Irs 2012 tax forms 1040 ez Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. Irs 2012 tax forms 1040 ez If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. Irs 2012 tax forms 1040 ez Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Irs 2012 tax forms 1040 ez The regular method. Irs 2012 tax forms 1040 ez The nonfarm optional method. Irs 2012 tax forms 1040 ez The farm optional method. Irs 2012 tax forms 1040 ez You must use the regular method unless you are eligible to use one or both of the optional methods. Irs 2012 tax forms 1040 ez Why use an optional method?    You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Irs 2012 tax forms 1040 ez You want to receive credit for social security benefit coverage. Irs 2012 tax forms 1040 ez You incurred child or dependent care expenses for which you could claim a credit. Irs 2012 tax forms 1040 ez (An optional method may increase your earned income, which could increase your credit. Irs 2012 tax forms 1040 ez ) You are entitled to the earned income credit. Irs 2012 tax forms 1040 ez (An optional method may increase your earned income, which could increase your credit. Irs 2012 tax forms 1040 ez ) You are entitled to the additional child tax credit. Irs 2012 tax forms 1040 ez (An optional method may increase your earned income, which could increase your credit. Irs 2012 tax forms 1040 ez ) Effects of using an optional method. Irs 2012 tax forms 1040 ez   Using an optional method could increase your SE tax. Irs 2012 tax forms 1040 ez Paying more SE tax could result in your getting higher benefits when you retire. Irs 2012 tax forms 1040 ez   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller tax or no tax using the regular method. Irs 2012 tax forms 1040 ez   The optional methods may be used only to figure your SE tax. Irs 2012 tax forms 1040 ez To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. Irs 2012 tax forms 1040 ez Regular Method Multiply your total earnings subject to SE tax by 92. Irs 2012 tax forms 1040 ez 35% (. Irs 2012 tax forms 1040 ez 9235) to get your net earnings under the regular method. Irs 2012 tax forms 1040 ez See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Irs 2012 tax forms 1040 ez Net earnings figured using the regular method are also called actual net earnings. Irs 2012 tax forms 1040 ez Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. Irs 2012 tax forms 1040 ez You may use this method if you meet all the following tests. Irs 2012 tax forms 1040 ez You are self-employed on a regular basis. Irs 2012 tax forms 1040 ez This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Irs 2012 tax forms 1040 ez The net earnings can be from either farm or nonfarm earnings or both. Irs 2012 tax forms 1040 ez You have used this method less than 5 years. Irs 2012 tax forms 1040 ez (There is a 5-year lifetime limit. Irs 2012 tax forms 1040 ez ) The years do not have to be one after another. Irs 2012 tax forms 1040 ez Your net nonfarm profits were: Less than $5,024, and Less than 72. Irs 2012 tax forms 1040 ez 189% of your gross nonfarm income. Irs 2012 tax forms 1040 ez Net nonfarm profits. Irs 2012 tax forms 1040 ez   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). Irs 2012 tax forms 1040 ez   However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Irs 2012 tax forms 1040 ez Gross nonfarm income. Irs 2012 tax forms 1040 ez   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). Irs 2012 tax forms 1040 ez Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. Irs 2012 tax forms 1040 ez Table 10-1. Irs 2012 tax forms 1040 ez Figuring Nonfarm Net Earnings IF your gross nonfarm income is. Irs 2012 tax forms 1040 ez . Irs 2012 tax forms 1040 ez . Irs 2012 tax forms 1040 ez THEN your net earnings are equal to. Irs 2012 tax forms 1040 ez . Irs 2012 tax forms 1040 ez . Irs 2012 tax forms 1040 ez $6,960 or less Two-thirds of your gross nonfarm income. Irs 2012 tax forms 1040 ez More than $6,960 $4,640 Actual net earnings. Irs 2012 tax forms 1040 ez   Your actual net earnings are 92. Irs 2012 tax forms 1040 ez 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. Irs 2012 tax forms 1040 ez 35% (. Irs 2012 tax forms 1040 ez 9235) to get actual net earnings). Irs 2012 tax forms 1040 ez Actual net earnings are equivalent to net earnings figured using the regular method. Irs 2012 tax forms 1040 ez Optional net earnings less than actual net earnings. Irs 2012 tax forms 1040 ez   You cannot use this method to report an amount less than your actual net earnings from self-employment. Irs 2012 tax forms 1040 ez Gross nonfarm income of $6,960 or less. Irs 2012 tax forms 1040 ez   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. Irs 2012 tax forms 1040 ez Example 1. Irs 2012 tax forms 1040 ez Net nonfarm profit less than $5,024 and less than 72. Irs 2012 tax forms 1040 ez 189% of gross nonfarm income. Irs 2012 tax forms 1040 ez Ann Green runs a craft business. Irs 2012 tax forms 1040 ez Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. Irs 2012 tax forms 1040 ez She meets the test for being self-employed on a regular basis. Irs 2012 tax forms 1040 ez She has used the nonfarm optional method less than 5 years. Irs 2012 tax forms 1040 ez Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . Irs 2012 tax forms 1040 ez 9235). Irs 2012 tax forms 1040 ez Because her net profit is less than $5,024 and less than 72. Irs 2012 tax forms 1040 ez 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). Irs 2012 tax forms 1040 ez Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. Irs 2012 tax forms 1040 ez Example 2. Irs 2012 tax forms 1040 ez Net nonfarm profit less than $5,024 but not less than 72. Irs 2012 tax forms 1040 ez 189% of gross nonfarm income. Irs 2012 tax forms 1040 ez Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. Irs 2012 tax forms 1040 ez She must use the regular method to figure her net earnings. Irs 2012 tax forms 1040 ez She cannot use the nonfarm optional method because her net profit is not less than 72. Irs 2012 tax forms 1040 ez 189% of her gross income. Irs 2012 tax forms 1040 ez Example 3. Irs 2012 tax forms 1040 ez Net loss from a nonfarm business. Irs 2012 tax forms 1040 ez Assume that in Example 1 Ann has a net loss of $700. Irs 2012 tax forms 1040 ez She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. Irs 2012 tax forms 1040 ez Example 4. Irs 2012 tax forms 1040 ez Nonfarm net earnings less than $400. Irs 2012 tax forms 1040 ez Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. Irs 2012 tax forms 1040 ez In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. Irs 2012 tax forms 1040 ez Gross nonfarm income of more than $6,960. Irs 2012 tax forms 1040 ez   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. Irs 2012 tax forms 1040 ez Example 1. Irs 2012 tax forms 1040 ez Net nonfarm profit less than $5,024 and less than 72. Irs 2012 tax forms 1040 ez 189% of gross nonfarm income. Irs 2012 tax forms 1040 ez John White runs an appliance repair shop. Irs 2012 tax forms 1040 ez His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. Irs 2012 tax forms 1040 ez He meets the test for being self-employed on a regular basis. Irs 2012 tax forms 1040 ez He has used the nonfarm optional method less than 5 years. Irs 2012 tax forms 1040 ez His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . Irs 2012 tax forms 1040 ez 9235). Irs 2012 tax forms 1040 ez Because his net profit is less than $5,024 and less than 72. Irs 2012 tax forms 1040 ez 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. Irs 2012 tax forms 1040 ez Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. Irs 2012 tax forms 1040 ez Example 2. Irs 2012 tax forms 1040 ez Net nonfarm profit not less than $5,024. Irs 2012 tax forms 1040 ez Assume that in Example 1 John's net profit is $5,400. Irs 2012 tax forms 1040 ez He must use the regular method. Irs 2012 tax forms 1040 ez He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. Irs 2012 tax forms 1040 ez Example 3. Irs 2012 tax forms 1040 ez Net loss from a nonfarm business. Irs 2012 tax forms 1040 ez Assume that in Example 1 John has a net loss of $700. Irs 2012 tax forms 1040 ez He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. Irs 2012 tax forms 1040 ez Farm Optional Method Use the farm optional method only for earnings from a farming business. Irs 2012 tax forms 1040 ez See Publication 225 for information about this method. Irs 2012 tax forms 1040 ez Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. Irs 2012 tax forms 1040 ez To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. Irs 2012 tax forms 1040 ez Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. Irs 2012 tax forms 1040 ez Add the net earnings figured under each method to arrive at your total net earnings from self-employment. Irs 2012 tax forms 1040 ez You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Irs 2012 tax forms 1040 ez If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez You are a self-employed farmer. Irs 2012 tax forms 1040 ez You also operate a retail grocery store. Irs 2012 tax forms 1040 ez Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. Irs 2012 tax forms 1040 ez Table 10-2. Irs 2012 tax forms 1040 ez Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. Irs 2012 tax forms 1040 ez Method 1. Irs 2012 tax forms 1040 ez Using the regular method for both farm and nonfarm income. Irs 2012 tax forms 1040 ez Method 2. Irs 2012 tax forms 1040 ez Using the optional method for farm income and the regular method for nonfarm income. Irs 2012 tax forms 1040 ez Method 3. Irs 2012 tax forms 1040 ez Using the regular method for farm income and the optional method for nonfarm income. Irs 2012 tax forms 1040 ez Method 4. Irs 2012 tax forms 1040 ez Using the optional method for both farm and nonfarm income. Irs 2012 tax forms 1040 ez Note. Irs 2012 tax forms 1040 ez Actual net earnings is the same as net earnings figured using the regular method. Irs 2012 tax forms 1040 ez Table 10-3. Irs 2012 tax forms 1040 ez Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. Irs 2012 tax forms 1040 ez Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Irs 2012 tax forms 1040 ez Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. Irs 2012 tax forms 1040 ez Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Irs 2012 tax forms 1040 ez Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Irs 2012 tax forms 1040 ez Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. Irs 2012 tax forms 1040 ez However, certain taxpayers must use Section B—Long Schedule SE. Irs 2012 tax forms 1040 ez If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Irs 2012 tax forms 1040 ez Joint return. Irs 2012 tax forms 1040 ez   Even if you file a joint return, you cannot file a joint Schedule SE. Irs 2012 tax forms 1040 ez This is true whether one spouse or both spouses have earnings subject to SE tax. Irs 2012 tax forms 1040 ez If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. Irs 2012 tax forms 1040 ez However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Irs 2012 tax forms 1040 ez Attach both schedules to the joint return. Irs 2012 tax forms 1040 ez More than one business. Irs 2012 tax forms 1040 ez   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. Irs 2012 tax forms 1040 ez A loss from one business will reduce your profit from another business. Irs 2012 tax forms 1040 ez File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. Irs 2012 tax forms 1040 ez Example. Irs 2012 tax forms 1040 ez You are the sole proprietor of two separate businesses. Irs 2012 tax forms 1040 ez You operate a restaurant that made a net profit of $25,000. Irs 2012 tax forms 1040 ez You also have a cabinetmaking business that had a net loss of $500. Irs 2012 tax forms 1040 ez You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. Irs 2012 tax forms 1040 ez You file Schedule SE showing total earnings subject to SE tax of $24,500. Irs 2012 tax forms 1040 ez Prev  Up  Next   Home   More Online Publications