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Irs 2012 Tax Forms

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Irs 2012 Tax Forms

Irs 2012 tax forms 3. Irs 2012 tax forms   Exclusions From Gross Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident AliensForeign Earned Income and Housing Amount Nonresident AliensInterest Income Dividend Income Services Performed for Foreign Employer Gambling Winnings From Dog or Horse Racing Gain From the Sale of Your Main Home Scholarships and Fellowship GrantsExpenses that do not qualify. Irs 2012 tax forms Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. Irs 2012 tax forms An exclusion from gross income is generally income you receive that is not included in your U. Irs 2012 tax forms S. Irs 2012 tax forms income and is not subject to U. Irs 2012 tax forms S. Irs 2012 tax forms tax. Irs 2012 tax forms This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. Irs 2012 tax forms Topics - This chapter discusses: Nontaxable interest, Nontaxable dividends, Certain compensation paid by a foreign employer, Gain from sale of home, and Scholarships and fellowship grants. Irs 2012 tax forms Useful Items - You may want to see: Publication 54 Tax Guide for U. Irs 2012 tax forms S. Irs 2012 tax forms Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. Irs 2012 tax forms Resident Aliens Resident aliens may be able to exclude the following items from their gross income. Irs 2012 tax forms Foreign Earned Income and Housing Amount If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. Irs 2012 tax forms The exclusion is $97,600 in 2013. Irs 2012 tax forms In addition, you may be able to exclude or deduct certain foreign housing amounts. Irs 2012 tax forms You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. Irs 2012 tax forms For more information, see Publication 54. Irs 2012 tax forms Foreign country. Irs 2012 tax forms    A foreign country is any territory under the sovereignty of a government other than that of the United States. Irs 2012 tax forms   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. Irs 2012 tax forms It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Irs 2012 tax forms   The term “foreign country” does not include U. Irs 2012 tax forms S. Irs 2012 tax forms possessions or territories. Irs 2012 tax forms It does not include the Antarctic region. Irs 2012 tax forms Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. Irs 2012 tax forms Interest Income Interest income that is not connected with a U. Irs 2012 tax forms S. Irs 2012 tax forms trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, Deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law (if the interest paid or credited can be deducted by the association), and Amounts held by an insurance company under an agreement to pay interest on them. Irs 2012 tax forms State and local government obligations. Irs 2012 tax forms   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. Irs 2012 tax forms S. Irs 2012 tax forms possession, generally is not included in income. Irs 2012 tax forms However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. Irs 2012 tax forms Portfolio interest. Irs 2012 tax forms   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. Irs 2012 tax forms To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. Irs 2012 tax forms Note. Irs 2012 tax forms For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. Irs 2012 tax forms Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. Irs 2012 tax forms Obligations in registered form. Irs 2012 tax forms   Portfolio interest includes interest paid on an obligation that is in registered form, and for which you have received documentation that the beneficial owner of the obligation is not a United States person. Irs 2012 tax forms   Generally, an obligation is in registered form if: (i) the obligation is registered as to both principal and any stated interest with the issuer (or its agent) and any transfer of the obligation may be effected only by surrender of the old obligation and reissuance to the new holder; (ii) the right to principal and stated interest with respect to the obligation may be transferred only through a book entry system maintained by the issuer or its agent; or (iii) the obligation is registered as to both principal and stated interest with the issuer or its agent and can be transferred both by surrender and reissuance and through a book entry system. Irs 2012 tax forms   An obligation that would otherwise be considered to be in registered form is not considered to be in registered form as of a particular time if it can be converted at any time in the future into an obligation that is not in registered form. Irs 2012 tax forms For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. Irs 2012 tax forms Obligations not in registered form. Irs 2012 tax forms    For obligations issued before March 19, 2012, interest on an obligation that is not in registered form (bearer obligation) is portfolio interest if the obligation is foreign-targeted. Irs 2012 tax forms A bearer obligation is foreign-targeted if: There are arrangements to ensure that the obligation will be sold, or resold in connection with the original issue, only to a person who is not a United States person, Interest on the obligation is payable only outside the United States and its possessions, and The face of the obligation contains a statement that any United States person who holds the obligation will be subject to limits under the United States income tax laws. Irs 2012 tax forms   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. Irs 2012 tax forms In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. Irs 2012 tax forms Interest that does not qualify as portfolio interest. Irs 2012 tax forms   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. Irs 2012 tax forms You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. Irs 2012 tax forms Contingent interest. Irs 2012 tax forms   Portfolio interest does not include contingent interest. Irs 2012 tax forms Contingent interest is either of the following: Interest that is determined by reference to: Any receipts, sales, or other cash flow of the debtor or related person, Income or profits of the debtor or related person, Any change in value of any property of the debtor or a related person, or Any dividend, partnership distributions, or similar payments made by the debtor or a related person. Irs 2012 tax forms For exceptions, see Internal Revenue Code section 871(h)(4)(C). Irs 2012 tax forms Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. Irs 2012 tax forms Related persons. Irs 2012 tax forms   Related persons include the following. Irs 2012 tax forms Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Irs 2012 tax forms ), and lineal descendants (children, grandchildren, etc. Irs 2012 tax forms ). Irs 2012 tax forms Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. Irs 2012 tax forms Certain corporations, partnerships, and other entities. Irs 2012 tax forms For details, see Nondeductible Loss in chapter 2 of Publication 544. Irs 2012 tax forms Exception for existing debt. Irs 2012 tax forms   Contingent interest does not include interest paid or accrued on any debt with a fixed term that was issued: On or before April 7, 1993, or After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter before that debt was issued. Irs 2012 tax forms Dividend Income The following dividend income is exempt from the 30% tax. Irs 2012 tax forms Certain dividends paid by foreign corporations. Irs 2012 tax forms   There is no 30% tax on U. Irs 2012 tax forms S. Irs 2012 tax forms source dividends you receive from a foreign corporation. Irs 2012 tax forms See Second exception under Dividends in chapter 2 for how to figure the amount of U. Irs 2012 tax forms S. Irs 2012 tax forms source dividends. Irs 2012 tax forms Certain interest-related dividends. Irs 2012 tax forms   There is no 30% tax on interest-related dividends from sources within the United States that you receive from a mutual fund or other regulated investment company in 2013. Irs 2012 tax forms The mutual fund will designate in writing which dividends are interest-related dividends. Irs 2012 tax forms Certain short-term capital gain dividends. Irs 2012 tax forms   There may not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you receive from a mutual fund or other regulated investment company. Irs 2012 tax forms The mutual fund will designate in writing which dividends are short-term capital gain dividends. Irs 2012 tax forms This tax relief will not apply to you if you are present in the United States for 183 days or more during your tax year. Irs 2012 tax forms Services Performed for Foreign Employer If you were paid by a foreign employer, your U. Irs 2012 tax forms S. Irs 2012 tax forms source income may be exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms tax, but only if you meet one of the situations discussed next. Irs 2012 tax forms Employees of foreign persons, organizations, or offices. Irs 2012 tax forms   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. Irs 2012 tax forms S. Irs 2012 tax forms sources and is tax exempt if you meet all three of the following conditions. Irs 2012 tax forms You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U. Irs 2012 tax forms S. Irs 2012 tax forms corporation, a U. Irs 2012 tax forms S. Irs 2012 tax forms partnership, or a U. Irs 2012 tax forms S. Irs 2012 tax forms citizen or resident. Irs 2012 tax forms You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. Irs 2012 tax forms Your pay for these services is not more than $3,000. Irs 2012 tax forms If you do not meet all three conditions, your income from personal services performed in the United States is U. Irs 2012 tax forms S. Irs 2012 tax forms source income and is taxed according to the rules in chapter 4. Irs 2012 tax forms   If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States. Irs 2012 tax forms To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. Irs 2012 tax forms If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. Irs 2012 tax forms   A day means a calendar day during any part of which you are physically present in the United States. Irs 2012 tax forms Example 1. Irs 2012 tax forms During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. Irs 2012 tax forms S. Irs 2012 tax forms partnership. Irs 2012 tax forms Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2013 performing personal services for the overseas office of the partnership. Irs 2012 tax forms That office paid him a total gross salary of $2,800 for those services. Irs 2012 tax forms During 2013, he was not engaged in a trade or business in the United States. Irs 2012 tax forms The salary is not considered U. Irs 2012 tax forms S. Irs 2012 tax forms source income and is exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms tax. Irs 2012 tax forms Example 2. Irs 2012 tax forms The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2013 was $4,500. Irs 2012 tax forms He received $2,875 in 2013, and $1,625 in 2014. Irs 2012 tax forms During 2013, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. Irs 2012 tax forms Henry's salary is U. Irs 2012 tax forms S. Irs 2012 tax forms source income and is taxed under the rules in chapter 4. Irs 2012 tax forms Crew members. Irs 2012 tax forms   Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U. Irs 2012 tax forms S. Irs 2012 tax forms possession is not U. Irs 2012 tax forms S. Irs 2012 tax forms source income and is exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms tax. Irs 2012 tax forms This exemption does not apply to compensation for services performed on foreign aircraft. Irs 2012 tax forms Students and exchange visitors. Irs 2012 tax forms   Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. Irs 2012 tax forms   This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. Irs 2012 tax forms It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. Irs 2012 tax forms   A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Irs 2012 tax forms Foreign employer. Irs 2012 tax forms   A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation, or An office or place of business maintained in a foreign country or in a U. Irs 2012 tax forms S. Irs 2012 tax forms possession by a U. Irs 2012 tax forms S. Irs 2012 tax forms corporation, a U. Irs 2012 tax forms S. Irs 2012 tax forms partnership, or an individual who is a U. Irs 2012 tax forms S. Irs 2012 tax forms citizen or resident. Irs 2012 tax forms   The term “foreign employer” does not include a foreign government. Irs 2012 tax forms Pay from a foreign government that is exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms income tax is discussed in chapter 10. Irs 2012 tax forms Income from certain annuities. Irs 2012 tax forms   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms income tax if you meet both of the following conditions. Irs 2012 tax forms You receive the annuity only because: You performed personal services outside the United States while you were a nonresident alien, or You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices . Irs 2012 tax forms At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U. Irs 2012 tax forms S. Irs 2012 tax forms citizens or residents. Irs 2012 tax forms   If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if: You are a resident of a country that gives a substantially equal exclusion to U. Irs 2012 tax forms S. Irs 2012 tax forms citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. Irs 2012 tax forms   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. Irs 2012 tax forms Income affected by treaties. Irs 2012 tax forms   Income of any kind that is exempt from U. Irs 2012 tax forms S. Irs 2012 tax forms tax under a treaty to which the United States is a party is excluded from your gross income. Irs 2012 tax forms Income on which the tax is only limited by treaty, however, is included in gross income. Irs 2012 tax forms See chapter 9. Irs 2012 tax forms Gambling Winnings From Dog or Horse Racing You can exclude from your gross income winnings from legal wagers initiated outside the United States in a parimutuel pool with respect to a live horse or dog race in the United States. Irs 2012 tax forms Gain From the Sale of Your Main Home If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. Irs 2012 tax forms If you are married and file a joint return, you may be able to exclude up to $500,000. Irs 2012 tax forms For information on the requirements for this exclusion, see Publication 523. Irs 2012 tax forms This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. Irs 2012 tax forms Scholarships and Fellowship Grants If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. Irs 2012 tax forms The rules discussed here apply to both resident and nonresident aliens. Irs 2012 tax forms If a nonresident alien receives a grant that is not from U. Irs 2012 tax forms S. Irs 2012 tax forms sources, it is not subject to U. Irs 2012 tax forms S. Irs 2012 tax forms tax. Irs 2012 tax forms See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. Irs 2012 tax forms S. Irs 2012 tax forms sources. Irs 2012 tax forms A scholarship or fellowship is excludable from income only if: You are a candidate for a degree at an eligible educational institution, and You use the scholarship or fellowship to pay qualified education expenses. Irs 2012 tax forms Candidate for a degree. Irs 2012 tax forms   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Irs 2012 tax forms Eligible educational institution. Irs 2012 tax forms   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Irs 2012 tax forms Qualified education expenses. Irs 2012 tax forms   These are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Irs 2012 tax forms These items must be required of all students in your course of instruction. Irs 2012 tax forms However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. Irs 2012 tax forms Expenses that do not qualify. Irs 2012 tax forms   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Irs 2012 tax forms This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Irs 2012 tax forms Scholarship or fellowship amounts used to pay these costs are taxable. Irs 2012 tax forms Amounts used to pay expenses that do not qualify. Irs 2012 tax forms   A scholarship amount used to pay any expense that does not qualify is taxable, even if the expense is a fee that must be paid to the institution as a condition of enrollment or attendance. Irs 2012 tax forms Payment for services. Irs 2012 tax forms   You cannot exclude from income the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. Irs 2012 tax forms This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. Irs 2012 tax forms Example. Irs 2012 tax forms On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. Irs 2012 tax forms As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. Irs 2012 tax forms Of the $2,500 scholarship, $1,000 represents payment for her services. Irs 2012 tax forms Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. Irs 2012 tax forms Prev  Up  Next   Home   More Online Publications
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The Irs 2012 Tax Forms

Irs 2012 tax forms Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. Irs 2012 tax forms Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. Irs 2012 tax forms Method 2. Irs 2012 tax forms How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. Irs 2012 tax forms In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Irs 2012 tax forms You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. Irs 2012 tax forms Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. Irs 2012 tax forms If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Irs 2012 tax forms These wages must be included on line 7 of Form 1040. Irs 2012 tax forms See Form 8919 for more information. Irs 2012 tax forms Childcare providers. Irs 2012 tax forms   If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Irs 2012 tax forms If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Irs 2012 tax forms You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Irs 2012 tax forms Babysitting. Irs 2012 tax forms   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Irs 2012 tax forms Bankruptcy. Irs 2012 tax forms   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. Irs 2012 tax forms Your W-2 will show your total wages and withheld income tax for the year. Irs 2012 tax forms On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. Irs 2012 tax forms Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. Irs 2012 tax forms If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. Irs 2012 tax forms   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. Irs 2012 tax forms For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. Irs 2012 tax forms   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. Irs 2012 tax forms The statement must show the allocation and describe the method used to make the allocation. Irs 2012 tax forms For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. Irs 2012 tax forms R. Irs 2012 tax forms B. Irs 2012 tax forms 596, available at www. Irs 2012 tax forms irs. Irs 2012 tax forms gov/irb/2006-40_IRB/ar12. Irs 2012 tax forms html. Irs 2012 tax forms Miscellaneous Compensation This section discusses many types of employee compensation. Irs 2012 tax forms The subjects are arranged in alphabetical order. Irs 2012 tax forms Advance commissions and other earnings. Irs 2012 tax forms   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Irs 2012 tax forms    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Irs 2012 tax forms If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. Irs 2012 tax forms See Repayments , later. Irs 2012 tax forms Allowances and reimbursements. Irs 2012 tax forms    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs 2012 tax forms If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Irs 2012 tax forms Back pay awards. Irs 2012 tax forms   Include in income amounts you are awarded in a settlement or judgment for back pay. Irs 2012 tax forms These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Irs 2012 tax forms They should be reported to you by your employer on Form W-2. Irs 2012 tax forms Bonuses and awards. Irs 2012 tax forms    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Irs 2012 tax forms These include prizes such as vacation trips for meeting sales goals. Irs 2012 tax forms If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Irs 2012 tax forms However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Irs 2012 tax forms Employee achievement award. Irs 2012 tax forms   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Irs 2012 tax forms However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Irs 2012 tax forms Your employer can tell you whether your award is a qualified plan award. Irs 2012 tax forms Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Irs 2012 tax forms   However, the exclusion does not apply to the following awards. Irs 2012 tax forms A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Irs 2012 tax forms A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Irs 2012 tax forms Example. Irs 2012 tax forms Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Irs 2012 tax forms Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Irs 2012 tax forms However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 − $1,600) in his income. Irs 2012 tax forms Differential wage payments. Irs 2012 tax forms   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. Irs 2012 tax forms These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Irs 2012 tax forms The payments are reported as wages on Form W-2. Irs 2012 tax forms Government cost-of-living allowances. Irs 2012 tax forms   Most payments received by U. Irs 2012 tax forms S. Irs 2012 tax forms Government civilian employees for working abroad are taxable. Irs 2012 tax forms However, certain cost-of-living allowances are tax free. Irs 2012 tax forms Publication 516, U. Irs 2012 tax forms S. Irs 2012 tax forms Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Irs 2012 tax forms Nonqualified deferred compensation plans. Irs 2012 tax forms   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Irs 2012 tax forms This amount is shown on Form W-2, box 12, using code Y. Irs 2012 tax forms This amount is not included in your income. Irs 2012 tax forms   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Irs 2012 tax forms This amount is included in your wages shown on Form W-2, box 1. Irs 2012 tax forms It is also shown on Form W-2, box 12, using code Z. Irs 2012 tax forms Nonqualified deferred compensation plans of nonqualified entities. Irs 2012 tax forms   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Irs 2012 tax forms For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. Irs 2012 tax forms A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. Irs 2012 tax forms Note received for services. Irs 2012 tax forms   If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Irs 2012 tax forms When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Irs 2012 tax forms Do not include that part again in your income. Irs 2012 tax forms Include the rest of the payment in your income in the year of payment. Irs 2012 tax forms   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Irs 2012 tax forms Severance pay. Irs 2012 tax forms   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Irs 2012 tax forms Accrued leave payment. Irs 2012 tax forms   If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Irs 2012 tax forms   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Irs 2012 tax forms You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Irs 2012 tax forms Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. Irs 2012 tax forms Outplacement services. Irs 2012 tax forms   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Irs 2012 tax forms    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Irs 2012 tax forms Sick pay. Irs 2012 tax forms   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Irs 2012 tax forms In addition, you must include in your income sick pay benefits received from any of the following payers. Irs 2012 tax forms A welfare fund. Irs 2012 tax forms A state sickness or disability fund. Irs 2012 tax forms An association of employers or employees. Irs 2012 tax forms An insurance company, if your employer paid for the plan. Irs 2012 tax forms However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Irs 2012 tax forms For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Irs 2012 tax forms Social security and Medicare taxes paid by employer. Irs 2012 tax forms   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Irs 2012 tax forms The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Irs 2012 tax forms However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Irs 2012 tax forms Stock appreciation rights. Irs 2012 tax forms   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Irs 2012 tax forms When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Irs 2012 tax forms You include the cash payment in income in the year you use the right. Irs 2012 tax forms Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Irs 2012 tax forms Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Irs 2012 tax forms See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. Irs 2012 tax forms Recipient of fringe benefit. Irs 2012 tax forms   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. Irs 2012 tax forms You are considered to be the recipient even if it is given to another person, such as a member of your family. Irs 2012 tax forms An example is a car your employer gives to your spouse for services you perform. Irs 2012 tax forms The car is considered to have been provided to you and not to your spouse. Irs 2012 tax forms   You do not have to be an employee of the provider to be a recipient of a fringe benefit. Irs 2012 tax forms If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. Irs 2012 tax forms Provider of benefit. Irs 2012 tax forms   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. Irs 2012 tax forms The provider can be a client or customer of an independent contractor. Irs 2012 tax forms Accounting period. Irs 2012 tax forms   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Irs 2012 tax forms Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Irs 2012 tax forms The general rule: benefits are reported for a full calendar year (January 1–December 31). Irs 2012 tax forms The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Irs 2012 tax forms For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Irs 2012 tax forms Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Irs 2012 tax forms   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Irs 2012 tax forms Form W-2. Irs 2012 tax forms   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Irs 2012 tax forms Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Irs 2012 tax forms However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Irs 2012 tax forms Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Irs 2012 tax forms Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . Irs 2012 tax forms For information on the items covered in this section, other than Long-term care coverage , see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Irs 2012 tax forms Long-term care coverage. Irs 2012 tax forms   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Irs 2012 tax forms However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Irs 2012 tax forms This amount will be reported as wages in box 1 of your Form W-2. Irs 2012 tax forms Archer MSA contributions. Irs 2012 tax forms    Contributions by your employer to your Archer MSA generally are not included in your income. Irs 2012 tax forms Their total will be reported in box 12 of Form W-2, with code R. Irs 2012 tax forms You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Irs 2012 tax forms File the form with your return. Irs 2012 tax forms Health flexible spending arrangement (health FSA). Irs 2012 tax forms   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Irs 2012 tax forms   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Irs 2012 tax forms The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Irs 2012 tax forms For more information, see Notice 2012-40, 2012-26 I. Irs 2012 tax forms R. Irs 2012 tax forms B. Irs 2012 tax forms 1046, available at www. Irs 2012 tax forms irs. Irs 2012 tax forms gov/irb/2012-26 IRB/ar09. Irs 2012 tax forms html. Irs 2012 tax forms Health reimbursement arrangement (HRA). Irs 2012 tax forms   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Irs 2012 tax forms Health savings accounts (HSA). Irs 2012 tax forms   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Irs 2012 tax forms Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Irs 2012 tax forms Contributions made by your employer are not included in your income. Irs 2012 tax forms Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Irs 2012 tax forms Distributions not used for qualified medical expenses are included in your income. Irs 2012 tax forms See Publication 969 for the requirements of an HSA. Irs 2012 tax forms   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Irs 2012 tax forms The contributions are treated as a distribution of money and are not included in the partner's gross income. Irs 2012 tax forms Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Irs 2012 tax forms In both situations, the partner can deduct the contribution made to the partner's HSA. Irs 2012 tax forms   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Irs 2012 tax forms The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Irs 2012 tax forms Qualified HSA funding distribution. Irs 2012 tax forms   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Irs 2012 tax forms See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. Irs 2012 tax forms Failure to maintain eligibility. Irs 2012 tax forms   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Irs 2012 tax forms If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Irs 2012 tax forms This income is also subject to an additional 10% tax. Irs 2012 tax forms Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Irs 2012 tax forms See Instructions for Form 8839, Qualified Adoption Expenses, for more information. Irs 2012 tax forms Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Irs 2012 tax forms They also are included as social security and Medicare wages in boxes 3 and 5. Irs 2012 tax forms However, they are not included as wages in box 1. Irs 2012 tax forms To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Irs 2012 tax forms File the form with your return. Irs 2012 tax forms Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. Irs 2012 tax forms The gym must be used primarily by employees, their spouses, and their dependent children. Irs 2012 tax forms If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. Irs 2012 tax forms De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Irs 2012 tax forms In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Irs 2012 tax forms Also see Employee Discounts , later. Irs 2012 tax forms Holiday gifts. Irs 2012 tax forms   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Irs 2012 tax forms However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Irs 2012 tax forms Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Irs 2012 tax forms Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. Irs 2012 tax forms The amount you can exclude is limited to the lesser of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Irs 2012 tax forms Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. Irs 2012 tax forms Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. Irs 2012 tax forms To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Irs 2012 tax forms See the Instructions for Form 2441 for more information. Irs 2012 tax forms Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Irs 2012 tax forms For more information, see Publication 970. Irs 2012 tax forms Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. Irs 2012 tax forms The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. Irs 2012 tax forms However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). Irs 2012 tax forms The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. Irs 2012 tax forms For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. Irs 2012 tax forms (Ask your employer for this percentage. Irs 2012 tax forms ) For a discount on services, 20%. Irs 2012 tax forms Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. Irs 2012 tax forms If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). Irs 2012 tax forms Qualified retirement planning services paid for you by your employer may be excluded from your income. Irs 2012 tax forms For more information, see Retirement Planning Services , later. Irs 2012 tax forms Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Irs 2012 tax forms However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Irs 2012 tax forms For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. Irs 2012 tax forms If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Irs 2012 tax forms Also, it is shown separately in box 12 with code C. Irs 2012 tax forms Group-term life insurance. Irs 2012 tax forms   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Irs 2012 tax forms Permanent benefits. Irs 2012 tax forms   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Irs 2012 tax forms Your employer should be able to tell you the amount to include in your income. Irs 2012 tax forms Accidental death benefits. Irs 2012 tax forms   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Irs 2012 tax forms Former employer. Irs 2012 tax forms   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Irs 2012 tax forms Also, it is shown separately in box 12 with code C. Irs 2012 tax forms Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Irs 2012 tax forms You must pay these taxes with your income tax return. Irs 2012 tax forms Include them on line 60, Form 1040, and follow the instructions forline 60. Irs 2012 tax forms For more information, see the Instructions for Form 1040. Irs 2012 tax forms Two or more employers. Irs 2012 tax forms   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Irs 2012 tax forms If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Irs 2012 tax forms You must figure how much to include in your income. Irs 2012 tax forms Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Irs 2012 tax forms Figuring the taxable cost. Irs 2012 tax forms    Use the following worksheet to figure the amount to include in your income. Irs 2012 tax forms   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. Irs 2012 tax forms However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . Irs 2012 tax forms Worksheet 1. Irs 2012 tax forms Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Irs 2012 tax forms Enter the total amount of your insurance coverage from your employer(s) 1. Irs 2012 tax forms   2. Irs 2012 tax forms Limit on exclusion for employer-provided group-term life insurance coverage 2. Irs 2012 tax forms 50,000 3. Irs 2012 tax forms Subtract line 2 from line 1 3. Irs 2012 tax forms   4. Irs 2012 tax forms Divide line 3 by $1,000. Irs 2012 tax forms Figure to the nearest tenth 4. Irs 2012 tax forms   5. Irs 2012 tax forms Go to Table 1. Irs 2012 tax forms Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Irs 2012 tax forms   6. Irs 2012 tax forms Multiply line 4 by line 5 6. Irs 2012 tax forms     7. Irs 2012 tax forms Enter the number of full months of coverage at this cost 7. Irs 2012 tax forms   8. Irs 2012 tax forms Multiply line 6 by line 7 8. Irs 2012 tax forms   9. Irs 2012 tax forms Enter the premiums you paid per month 9. Irs 2012 tax forms       10. Irs 2012 tax forms Enter the number of months you paid the  premiums 10. Irs 2012 tax forms       11. Irs 2012 tax forms Multiply line 9 by line 10. Irs 2012 tax forms 11. Irs 2012 tax forms   12. Irs 2012 tax forms Subtract line 11 from line 8. Irs 2012 tax forms Include this amount in your income as wages 12. Irs 2012 tax forms   Table 1. Irs 2012 tax forms Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . Irs 2012 tax forms 05     25 through 29 . Irs 2012 tax forms 06     30 through 34 . Irs 2012 tax forms 08     35 through 39 . Irs 2012 tax forms 09     40 through 44 . Irs 2012 tax forms 10     45 through 49 . Irs 2012 tax forms 15     50 through 54 . Irs 2012 tax forms 23     55 through 59 . Irs 2012 tax forms 43     60 through 64 . Irs 2012 tax forms 66     65 through 69 1. Irs 2012 tax forms 27     70 and older 2. Irs 2012 tax forms 06   Example. Irs 2012 tax forms You are 51 years old and work for employers A and B. Irs 2012 tax forms Both employers provide group-term life insurance coverage for you for the entire year. Irs 2012 tax forms Your coverage is $35,000 with employer A and $45,000 with employer B. Irs 2012 tax forms You pay premiums of $4. Irs 2012 tax forms 15 a month under the employer B group plan. Irs 2012 tax forms You figure the amount to include in your income as follows. Irs 2012 tax forms   Worksheet 1. Irs 2012 tax forms Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. Irs 2012 tax forms Enter the total amount of your insurance coverage from your employer(s) 1. Irs 2012 tax forms 80,000 2. Irs 2012 tax forms Limit on exclusion for employer-provided group-term life insurance coverage 2. Irs 2012 tax forms 50,000 3. Irs 2012 tax forms Subtract line 2 from line 1 3. Irs 2012 tax forms 30,000 4. Irs 2012 tax forms Divide line 3 by $1,000. Irs 2012 tax forms Figure to the nearest tenth 4. Irs 2012 tax forms 30. Irs 2012 tax forms 0 5. Irs 2012 tax forms Go to Table 1. Irs 2012 tax forms Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Irs 2012 tax forms . Irs 2012 tax forms 23 6. Irs 2012 tax forms Multiply line 4 by line 5 6. Irs 2012 tax forms 6. Irs 2012 tax forms 90 7. Irs 2012 tax forms Enter the number of full months of coverage at this cost. Irs 2012 tax forms 7. Irs 2012 tax forms 12 8. Irs 2012 tax forms Multiply line 6 by line 7 8. Irs 2012 tax forms 82. Irs 2012 tax forms 80 9. Irs 2012 tax forms Enter the premiums you paid per month 9. Irs 2012 tax forms 4. Irs 2012 tax forms 15     10. Irs 2012 tax forms Enter the number of months you paid the premiums 10. Irs 2012 tax forms 12     11. Irs 2012 tax forms Multiply line 9 by line 10. Irs 2012 tax forms 11. Irs 2012 tax forms 49. Irs 2012 tax forms 80 12. Irs 2012 tax forms Subtract line 11 from line 8. Irs 2012 tax forms Include this amount in your income as wages 12. Irs 2012 tax forms 33. Irs 2012 tax forms 00 The total amount to include in income for the cost of excess group-term life insurance is $33. Irs 2012 tax forms Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. Irs 2012 tax forms You must add it to the wages shown on your Forms W-2 and include the total on your return. Irs 2012 tax forms Entire cost excluded. Irs 2012 tax forms   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Irs 2012 tax forms You are permanently and totally disabled and have ended your employment. Irs 2012 tax forms Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Irs 2012 tax forms A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Irs 2012 tax forms (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Irs 2012 tax forms ) The plan existed on January 1, 1984, and: You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Irs 2012 tax forms Entire cost taxed. Irs 2012 tax forms   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. Irs 2012 tax forms The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Irs 2012 tax forms You are a key employee and your employer's plan discriminates in favor of key employees. Irs 2012 tax forms Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Irs 2012 tax forms The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. Irs 2012 tax forms The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. Irs 2012 tax forms (You must accept it in order to be able to properly perform your duties. Irs 2012 tax forms ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. Irs 2012 tax forms See De Minimis (Minimal) Benefits , earlier. Irs 2012 tax forms Faculty lodging. Irs 2012 tax forms   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. Irs 2012 tax forms However, the lodging must be qualified campus lodging, and you must pay an adequate rent. Irs 2012 tax forms Academic health center. Irs 2012 tax forms   This is an organization that meets the following conditions. Irs 2012 tax forms Its principal purpose or function is to provide medical or hospital care or medical education or research. Irs 2012 tax forms It receives payments for graduate medical education under the Social Security Act. Irs 2012 tax forms One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. Irs 2012 tax forms Qualified campus lodging. Irs 2012 tax forms   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. Irs 2012 tax forms The lodging must be located on or near a campus of the educational institution or academic health center. Irs 2012 tax forms Adequate rent. Irs 2012 tax forms   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. Irs 2012 tax forms If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. Irs 2012 tax forms   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. Irs 2012 tax forms Example. Irs 2012 tax forms Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. Irs 2012 tax forms The house is appraised at $200,000. Irs 2012 tax forms The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. Irs 2012 tax forms Carl pays an annual rent of $11,000. Irs 2012 tax forms Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). Irs 2012 tax forms If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). Irs 2012 tax forms Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. Irs 2012 tax forms See Publication 521 for more information. Irs 2012 tax forms No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). Irs 2012 tax forms In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. Irs 2012 tax forms Example. Irs 2012 tax forms You are employed as a flight attendant for a company that owns both an airline and a hotel chain. Irs 2012 tax forms Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. Irs 2012 tax forms The value of the personal flight is not included in your income. Irs 2012 tax forms However, the value of the hotel room is included in your income because you do not work in the hotel business. Irs 2012 tax forms Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Irs 2012 tax forms Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Irs 2012 tax forms You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Irs 2012 tax forms Also, see Financial Counseling Fees , earlier. Irs 2012 tax forms Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Irs 2012 tax forms A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Irs 2012 tax forms Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Irs 2012 tax forms However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Irs 2012 tax forms Exclusion limit. Irs 2012 tax forms   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Irs 2012 tax forms   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Irs 2012 tax forms   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Irs 2012 tax forms   If the benefits have a value that is more than these limits, the excess must be included in your income. Irs 2012 tax forms You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Irs 2012 tax forms Commuter highway vehicle. Irs 2012 tax forms   This is a highway vehicle that seats at least six adults (not including the driver). Irs 2012 tax forms At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Irs 2012 tax forms Transit pass. Irs 2012 tax forms   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Irs 2012 tax forms Qualified parking. Irs 2012 tax forms   This is parking provided to an employee at or near the employer's place of business. Irs 2012 tax forms It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Irs 2012 tax forms It does not include parking at or near the employee's home. Irs 2012 tax forms Qualified bicycle commuting. Irs 2012 tax forms   This is reimbursement based on the number of qualified bicycle commuting months for the year. Irs 2012 tax forms A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Irs 2012 tax forms The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Irs 2012 tax forms Tuition Reduction You can exclude a qualified tuition reduction from your income. Irs 2012 tax forms This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. Irs 2012 tax forms For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. Irs 2012 tax forms Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. Irs 2012 tax forms For more information, see Publication 970. Irs 2012 tax forms Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. Irs 2012 tax forms Example. Irs 2012 tax forms You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. Irs 2012 tax forms The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. Irs 2012 tax forms Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. Irs 2012 tax forms For an exception, see Group-Term Life Insurance , earlier. Irs 2012 tax forms General valuation rule. Irs 2012 tax forms   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. Irs 2012 tax forms If you pay fair market value for a fringe benefit, no amount is included in your income. Irs 2012 tax forms Fair market value. Irs 2012 tax forms   The fair market value of a fringe benefit is determined by all the facts and circumstances. Irs 2012 tax forms It is the amount you would have to pay a third party to buy or lease the benefit. Irs 2012 tax forms This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. Irs 2012 tax forms Employer-provided vehicles. Irs 2012 tax forms   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. Irs 2012 tax forms   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. Irs 2012 tax forms An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. Irs 2012 tax forms The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. Irs 2012 tax forms Flights on employer-provided aircraft. Irs 2012 tax forms   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. Irs 2012 tax forms   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. Irs 2012 tax forms The division must be based on all the facts, including which employee or employees control the use of the aircraft. Irs 2012 tax forms Special valuation rules. Irs 2012 tax forms   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. Irs 2012 tax forms If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. Irs 2012 tax forms You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. Irs 2012 tax forms   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. Irs 2012 tax forms The special valuation rules are the following. Irs 2012 tax forms The automobile lease rule. Irs 2012 tax forms The vehicle cents-per-mile rule. Irs 2012 tax forms The commuting rule. Irs 2012 tax forms The unsafe conditions commuting rule. Irs 2012 tax forms The employer-operated eating-facility rule. Irs 2012 tax forms   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Irs 2012 tax forms    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. Irs 2012 tax forms 61-21(g) and 1. Irs 2012 tax forms 61-21(h) of the regulations. Irs 2012 tax forms Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Irs 2012 tax forms (Your employer can tell you whether your retirement plan is qualified. Irs 2012 tax forms ) However, the cost of life insurance coverage included in the plan may have to be included. Irs 2012 tax forms See Group-Term Life Insurance , earlier, under Fringe Benefits. Irs 2012 tax forms If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Irs 2012 tax forms However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Irs 2012 tax forms For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. Irs 2012 tax forms S. Irs 2012 tax forms Civil Service Retirement Benefits, if you are a federal employee or retiree). Irs 2012 tax forms Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Irs 2012 tax forms The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Irs 2012 tax forms An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Irs 2012 tax forms However, it is included in wages subject to social security and Medicare taxes. Irs 2012 tax forms Elective deferrals include elective contributions to the following retirement plans. Irs 2012 tax forms Cash or deferred arrangements (section 401(k) plans). Irs 2012 tax forms The Thrift Savings Plan for federal employees. Irs 2012 tax forms Salary reduction simplified employee pension plans (SARSEP). Irs 2012 tax forms Savings incentive match plans for employees (SIMPLE plans). Irs 2012 tax forms Tax-sheltered annuity plans (403(b) plans). Irs 2012 tax forms Section 501(c)(18)(D) plans. Irs 2012 tax forms (But see Reporting by employer , later. Irs 2012 tax forms ) Section 457 plans. Irs 2012 tax forms Qualified automatic contribution arrangements. Irs 2012 tax forms   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Irs 2012 tax forms You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Irs 2012 tax forms The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Irs 2012 tax forms   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Irs 2012 tax forms Overall limit on deferrals. Irs 2012 tax forms   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. Irs 2012 tax forms The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. Irs 2012 tax forms Amounts deferred under specific plan limits are part of the overall limit on deferrals. Irs 2012 tax forms   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Irs 2012 tax forms However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Irs 2012 tax forms Catch-up contributions. Irs 2012 tax forms   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. Irs 2012 tax forms For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. Irs 2012 tax forms   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. Irs 2012 tax forms SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. Irs 2012 tax forms Section 457 plans, see Limit for deferrals under section 457 plans , later. Irs 2012 tax forms Limit for deferrals under SIMPLE plans. Irs 2012 tax forms   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. Irs 2012 tax forms Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. Irs 2012 tax forms Limit for tax-sheltered annuities. Irs 2012 tax forms   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. Irs 2012 tax forms However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. Irs 2012 tax forms $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Irs 2012 tax forms   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. Irs 2012 tax forms   For more information, see Publication 571. Irs 2012 tax forms Limit for deferral under section 501(c)(18) plans. Irs 2012 tax forms   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. Irs 2012 tax forms Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. Irs 2012 tax forms Limit for deferrals under section 457 plans. Irs 2012 tax forms   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. Irs 2012 tax forms However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. Irs 2012 tax forms See Increased limit , later. Irs 2012 tax forms Includible compensation. Irs 2012 tax forms   This is the pay you received for the year from the employer who maintained the section 457 plan. Irs 2012 tax forms In most cases, it includes all the following payments. Irs 2012 tax forms Wages and salaries. Irs 2012 tax forms Fees for professional services. Irs 2012 tax forms The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. Irs 2012 tax forms Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. Irs 2012 tax forms Commissions and tips. Irs 2012 tax forms Fringe benefits. Irs 2012 tax forms Bonuses. Irs 2012 tax forms Employer contributions (elective deferrals) to: The section 457 plan. Irs 2012 tax forms Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. Irs 2012 tax forms A salary reduction simplified employee pension (SARSEP). Irs 2012 tax forms A tax-sheltered annuity (section 403(b) plan). Irs 2012 tax forms A savings incentive match plan for employees (SIMPLE plan). Irs 2012 tax forms A section 125 cafeteria plan. Irs 2012 tax forms   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. Irs 2012 tax forms Your wages as defined for income tax withholding purposes. Irs 2012 tax forms Your wages as reported in box 1 of Form W-2. Irs 2012 tax forms Your wages that are subject to social security withholding (including elective deferrals). Irs 2012 tax forms Increased limit. Irs 2012 tax forms   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). Irs 2012 tax forms Catch-up contributions. Irs 2012 tax forms   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. Irs 2012 tax forms If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. Irs 2012 tax forms However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. Irs 2012 tax forms Designated Roth contributions. Irs 2012 tax forms   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Irs 2012 tax forms Designated Roth contributions are treated as elective deferrals, except that they are included in income. Irs 2012 tax forms Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. Irs 2012 tax forms   Qualified distributions from a Roth plan are not included in income. Irs 2012 tax forms In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. Irs 2012 tax forms Reporting by employer. Irs 2012 tax forms   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Irs 2012 tax forms Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. Irs 2012 tax forms Section 501(c)(18)(D) contributions. Irs 2012 tax forms   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. Irs 2012 tax forms The amount you contributed should be identified with code “H” in box 12. Irs 2012 tax forms You may deduct the amount deferred subject to the limits that apply. Irs 2012 tax forms Include your deduction in the total on Form 1040, line 36. Irs 2012 tax forms Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. Irs 2012 tax forms Designated Roth contributions. Irs 2012 tax forms    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. Irs 2012 tax forms Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. Irs 2012 tax forms Excess deferrals. Irs 2012 tax forms   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. Irs 2012 tax forms If the plan permits, the excess amount will be distributed to you. Irs 2012 tax forms If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. Irs 2012 tax forms You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. Irs 2012 tax forms The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. Irs 2012 tax forms   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. Irs 2012 tax forms File Form 1040 to add the excess deferral amount to your wages on line 7. Irs 2012 tax forms Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. Irs 2012 tax forms Excess not distributed. Irs 2012 tax forms   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. Irs 2012 tax forms Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. Irs 2012 tax forms Excess distributed to you. Irs 2012 tax forms   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. Irs 2012 tax forms If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Irs 2012 tax forms Any income on the excess deferral taken out is taxable in the tax year in which you take it out. Irs 2012 tax forms If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. Irs 2012 tax forms    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Irs 2012 tax forms Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. Irs 2012 tax forms If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. Irs 2012 tax forms Add the excess deferral amount to your wages on your 2013 tax return. Irs 2012 tax forms If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Irs 2012 tax forms Do not add this amount to your wages on your 2013 return. Irs 2012 tax forms If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. Irs 2012 tax forms If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. Irs 2012 tax forms S. Irs 2012 tax forms Individual Income Tax Return. Irs 2012 tax forms If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. Irs 2012 tax forms If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. Irs 2012 tax forms Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. Irs 2012 tax forms Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Irs 2012 tax forms Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. Irs 2012 tax forms ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Irs 2012 tax forms It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Irs 2012 tax forms Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. Irs 2012 tax forms If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. Irs 2012 tax forms You must include the excess contributions in your income as wages on Form 1040, line 7. Irs 2012 tax forms You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. Irs 2012 tax forms If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. Irs 2012 tax forms The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. Irs 2012 tax forms You should receive a Form 1099-R for the year the excess contributions are distributed to you. Irs 2012 tax forms Add the distribution to your wages for that year. Irs 2012 tax forms Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Irs 2012 tax forms It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Irs 2012 tax forms Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. Irs 2012 tax forms Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. Irs 2012 tax forms A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. Irs 2012 tax forms A corrective payment consisting of your after-tax contributions is not taxable. Irs 2012 tax forms If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. Irs 2012 tax forms Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. Irs 2012 tax forms Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. Irs 2012 tax forms Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Irs 2012 tax forms It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Irs 2012 tax forms Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. Irs 2012 tax forms The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Irs 2012 tax forms Your employer can tell you which kind of option you hold. Irs 2012 tax forms Nonstatutory Stock Options Grant of option. Irs 2012 tax forms   If you are granted a nonstatutory stock option, you may have income when you receive the option. Irs 2012 tax forms The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. Irs 2012 tax forms The fair market value of an option can be readily determined if it is actively traded on an established market. Irs 2012 tax forms    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. Irs 2012 tax forms You can transfer the option. Irs 2012 tax forms You can exercise the option immediately in full. Irs 2012 tax forms The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. Irs 2012 tax forms The fair market value of the option privilege can be readily determined. Irs 2012 tax forms The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. Irs 2012 tax forms For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. Irs 2012 tax forms The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Irs 2012 tax forms If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. Irs 2012 tax forms For more information on the excise tax, see Internal Revenue Code section 4985. Irs 2012 tax forms Option with readily determinable value. Irs 2012 tax forms   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Irs 2012 tax forms See Restricted Property , later, for rules on how much income to include and when to include it. Irs 2012 tax forms However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. Irs 2012 tax forms Option without readily determinable value. Irs 2012 tax forms   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Irs 2012 tax forms    Exercise or transfer of option. Irs 2012 tax forms   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. Irs 2012 tax forms Option with readily determinable value. Irs 2012 tax forms   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. Irs 2012 tax forms Option without readily determinable value. Irs 2012 tax forms   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope