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Irs free efile 3. Irs free efile   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 free efile Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. Irs free efile An exclusion from gross income is generally income you receive that is not included in your U. Irs free efile S. Irs free efile income and is not subject to U. Irs free efile S. Irs free efile tax. Irs free efile This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. Irs free efile 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 free efile Useful Items - You may want to see: Publication 54 Tax Guide for U. Irs free efile S. Irs free efile Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. Irs free efile Resident Aliens Resident aliens may be able to exclude the following items from their gross income. Irs free efile 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 free efile The exclusion is $97,600 in 2013. Irs free efile In addition, you may be able to exclude or deduct certain foreign housing amounts. Irs free efile 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 free efile For more information, see Publication 54. Irs free efile Foreign country. Irs free efile    A foreign country is any territory under the sovereignty of a government other than that of the United States. Irs free efile   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. Irs free efile 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 free efile   The term “foreign country” does not include U. Irs free efile S. Irs free efile possessions or territories. Irs free efile It does not include the Antarctic region. Irs free efile Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. Irs free efile Interest Income Interest income that is not connected with a U. Irs free efile S. Irs free efile 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 free efile State and local government obligations. Irs free efile   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. Irs free efile S. Irs free efile possession, generally is not included in income. Irs free efile However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. Irs free efile Portfolio interest. Irs free efile   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. Irs free efile To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. Irs free efile Note. Irs free efile For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. Irs free efile Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. Irs free efile Obligations in registered form. Irs free efile   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 free efile   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 free efile   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 free efile For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. Irs free efile Obligations not in registered form. Irs free efile    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 free efile 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 free efile   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. Irs free efile In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. Irs free efile Interest that does not qualify as portfolio interest. Irs free efile   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. Irs free efile You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. Irs free efile Contingent interest. Irs free efile   Portfolio interest does not include contingent interest. Irs free efile 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 free efile For exceptions, see Internal Revenue Code section 871(h)(4)(C). Irs free efile Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. Irs free efile Related persons. Irs free efile   Related persons include the following. Irs free efile Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Irs free efile ), and lineal descendants (children, grandchildren, etc. Irs free efile ). Irs free efile Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. Irs free efile Certain corporations, partnerships, and other entities. Irs free efile For details, see Nondeductible Loss in chapter 2 of Publication 544. Irs free efile Exception for existing debt. Irs free efile   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 free efile Dividend Income The following dividend income is exempt from the 30% tax. Irs free efile Certain dividends paid by foreign corporations. Irs free efile   There is no 30% tax on U. Irs free efile S. Irs free efile source dividends you receive from a foreign corporation. Irs free efile See Second exception under Dividends in chapter 2 for how to figure the amount of U. Irs free efile S. Irs free efile source dividends. Irs free efile Certain interest-related dividends. Irs free efile   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 free efile The mutual fund will designate in writing which dividends are interest-related dividends. Irs free efile Certain short-term capital gain dividends. Irs free efile   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 free efile The mutual fund will designate in writing which dividends are short-term capital gain dividends. Irs free efile 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 free efile Services Performed for Foreign Employer If you were paid by a foreign employer, your U. Irs free efile S. Irs free efile source income may be exempt from U. Irs free efile S. Irs free efile tax, but only if you meet one of the situations discussed next. Irs free efile Employees of foreign persons, organizations, or offices. Irs free efile   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. Irs free efile S. Irs free efile sources and is tax exempt if you meet all three of the following conditions. Irs free efile 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 free efile S. Irs free efile corporation, a U. Irs free efile S. Irs free efile partnership, or a U. Irs free efile S. Irs free efile citizen or resident. Irs free efile 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 free efile Your pay for these services is not more than $3,000. Irs free efile If you do not meet all three conditions, your income from personal services performed in the United States is U. Irs free efile S. Irs free efile source income and is taxed according to the rules in chapter 4. Irs free efile   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 free efile 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 free efile If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. Irs free efile   A day means a calendar day during any part of which you are physically present in the United States. Irs free efile Example 1. Irs free efile During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. Irs free efile S. Irs free efile partnership. Irs free efile 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 free efile That office paid him a total gross salary of $2,800 for those services. Irs free efile During 2013, he was not engaged in a trade or business in the United States. Irs free efile The salary is not considered U. Irs free efile S. Irs free efile source income and is exempt from U. Irs free efile S. Irs free efile tax. Irs free efile Example 2. Irs free efile 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 free efile He received $2,875 in 2013, and $1,625 in 2014. Irs free efile 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 free efile Henry's salary is U. Irs free efile S. Irs free efile source income and is taxed under the rules in chapter 4. Irs free efile Crew members. Irs free efile   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 free efile S. Irs free efile possession is not U. Irs free efile S. Irs free efile source income and is exempt from U. Irs free efile S. Irs free efile tax. Irs free efile This exemption does not apply to compensation for services performed on foreign aircraft. Irs free efile Students and exchange visitors. Irs free efile   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 free efile   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 free efile It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. Irs free efile   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 free efile Foreign employer. Irs free efile   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 free efile S. Irs free efile possession by a U. Irs free efile S. Irs free efile corporation, a U. Irs free efile S. Irs free efile partnership, or an individual who is a U. Irs free efile S. Irs free efile citizen or resident. Irs free efile   The term “foreign employer” does not include a foreign government. Irs free efile Pay from a foreign government that is exempt from U. Irs free efile S. Irs free efile income tax is discussed in chapter 10. Irs free efile Income from certain annuities. Irs free efile   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. Irs free efile S. Irs free efile income tax if you meet both of the following conditions. Irs free efile 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 free efile 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 free efile S. Irs free efile citizens or residents. Irs free efile   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 free efile S. Irs free efile citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. Irs free efile   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 free efile Income affected by treaties. Irs free efile   Income of any kind that is exempt from U. Irs free efile S. Irs free efile tax under a treaty to which the United States is a party is excluded from your gross income. Irs free efile Income on which the tax is only limited by treaty, however, is included in gross income. Irs free efile See chapter 9. Irs free efile 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 free efile 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 free efile If you are married and file a joint return, you may be able to exclude up to $500,000. Irs free efile For information on the requirements for this exclusion, see Publication 523. Irs free efile This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. Irs free efile 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 free efile The rules discussed here apply to both resident and nonresident aliens. Irs free efile If a nonresident alien receives a grant that is not from U. Irs free efile S. Irs free efile sources, it is not subject to U. Irs free efile S. Irs free efile tax. Irs free efile See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. Irs free efile S. Irs free efile sources. Irs free efile 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 free efile Candidate for a degree. Irs free efile   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 free efile Eligible educational institution. Irs free efile   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 free efile Qualified education expenses. Irs free efile   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 free efile These items must be required of all students in your course of instruction. Irs free efile 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 free efile Expenses that do not qualify. Irs free efile   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 free efile This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Irs free efile Scholarship or fellowship amounts used to pay these costs are taxable. Irs free efile Amounts used to pay expenses that do not qualify. Irs free efile   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 free efile Payment for services. Irs free efile   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 free efile This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. Irs free efile Example. Irs free efile On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. Irs free efile As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. Irs free efile Of the $2,500 scholarship, $1,000 represents payment for her services. Irs free efile Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. Irs free efile Prev  Up  Next   Home   More Online Publications
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Phone Forums - Retirement Plans

Free phone forums featuring IRS employees discussing retirement plan topics.

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  • Enrolled Agents and Enrolled Retirement Plan Agents may earn CE credit for attending the entire phone forum. The forum is also intended to meet the CE requirements for Enrolled Actuaries, but the final decision rests with the Joint Board for the Enrollment of Actuaries. Other professional groups should consult with their licensing agencies regarding CE credit.
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If you have question(s), please contact us at ep.phoneforum@irs.gov.



Recently Held Phone Forums

An Overview of the 2013 Cumulative List of Changes in Plan Qualification- March 13, 2014 - Discussed the list of changes plan sponsors and practitioners must make to a plan before submitting determination letter applications beginning February 1, 2014 (Notice 2013-84). 
Handouts: An Overview of the 2013 Cumulative List of Changes in Plan Qualification presentation and Notice 2013-84

Upcoming Employee Plans Guidance Phone Forum - February 26, 2014 (scheduled previously for October 29, 2013) - Reviewed retirement benefit items on the 2013-2014 Priority Guidance Plan released on August 9 and other projects in EP Technical Guidance.
Handout: Employee Plans Technical Guidance

Ethical Standards of Employee Benefits Practice – What to Ask and Say to Clients, and What to Tell the IRS - January 29, 2014 (rebroadcast February 6, 2014) - Discussed an employee benefits practitioner’s ethical standards of conduct under Circular 230 for communications with clients and the IRS. 
Handout: Ethical Standards for Employee Benefits Practitioners

The Employee Plans Team Audit Program - November 21, 2013 -(transcript) - Discussed EPTA, our large case audit program. 
Handout: The Employee Plans Team Audit Program Presentation

How to prepare for an IRS Employee Plans Audit - August 29, 2013 - Two Sessions - Discussed latest information about the Employee Plans Examinations process.
Handout: Tools to Prepare for an Audit presentation

The Importance of Good Internal Controls - August 8, 2013 - (transcript) - Discussed how effective internal controls are essential to preventing costly mistakes that could jeopardize a retirement plan’s tax-favored status.
Handout: The Importance of Good Internal Controls presentation

EPCRS: Correcting 401(k) Plan Mistakes – Two Sessions - July 25, 2013 - (transcript) - Discussed correcting common 401(k) plan mistakes under EPCRS Revenue Procedure 2013-12, and how to find, fix and avoid them.
Handout: EPCRS: Correcting 401(k) Plan Mistakes presentation

What You Need to Know about the 403(b) Pre-Approved Plan Program - June 25, 2013 - (audio) - Discussed the upcoming 403(b) Pre-Approved Plan Program outlined in Revenue Procedure 2013-22.
Handout: 403(b) Pre-Approved Plan Program Presentation

403(b) Corrections and Examination Trends - May 23, 2013 - (audio) Discussed Revenue Procedure 2013-12 including guidance on correcting 403(b) plan failures and updates to the Employee Plans Compliance Resolution System.
Handout: 403(b) Plan Correction Issues Presentation

What You Need to Know About the IRS Final 401(k) Questionnaire Report and Next Steps - May 13, 2013 - Discussed significant findings and next steps (including outreach, guidance and compliance projects) and a new self-audit tool to help 401(k) plan sponsors avoid costly mistakes. 
Handout: Final 401(k) Questionnaire Report Presentation (Updated)

Defined Benefit Plan Update - April 23, 2013 - (transcript) - Discussed recent developments affecting defined benefit plans.
Handout: Defined Benefit Plan Update Presentation

International Issues Involving Retirement Plans in U.S. Territories  - March 21, 2013 - Discussed audit results and recurring issues of retirement plans in U.S. Territories, and Employee Plans’ 2013 fiscal year strategies and operating priorities.
Handout: International Issues Involving Retirement Plans in U.S. Territories Presentation

Overview of the 2012 Cumulative List of Plan Qualification Changes - February 28, 2013 - (audio) - Discussed the list of plan changes to by plan sponsors and practitioners submitting determination letter applications during the period beginning February 1, 2013 (Notice 2012-76).
Handout: Overview of the 2012 Cumulative List of Plan Qualification Changes Presentation

Employee Plans Compliance Resolution System Changes - February 21, 2013 - Session #1 & 2 - (audio) - Discussed Revenue Procedure 2013-12 and the various changes to the IRS correction programs.
Handout: EPCRS Changes Presentation

Ethical Standards for and Accountability of Practitioners Offering Tax Advice Relating to Employee Benefit Plans - February 13, 2013 (audio) - Discussed professional standards of conduct applicable to, and the accountability of, individuals that provide tax advice relating to employee benefit plans.  
Handout: Ethical Standards Presentation

Retirement plans can make loans, hardship distributions to Sandy victims - December 11, 2012 (audio)- Discussed Announcement 2012-44 and the options available to employees their families and plan sponsors.
Handout: Hurricane Sandy Relief Presentation

MAP-21: Changes to Segment Rates - September 27, 2012 - (audio) - Discussed the Moving Ahead for Progress in the 21st Century Act (MAP-21) and recently released related guidance.
Handout: MAP-21 Presentation

EPCRS: Correction of 401(k) Plan Mistakes (September 7, 2012) - (audio) - How to correct common mistakes in 401(k) plans.
Handouts: Correction Methods for 401(k) Failures Presentation

Lifetime Annuity Guidance (August 28, 2012) (Audio and Transcript) - Guidance designed to encourage lifetime annuity options for retirees. The presentation included Revenue Ruling 2012-3, Revenue Ruling 2012-4, and proposed regulations under sections 401(a)(9) and 417(e)(3) of the Code.
Handout: Lifetime Annuity Guidance Presentation

Operating Under the Written Plan Requirements and Common Issues Identified in 403(b) Plans (June 12, 2012) (transcript)- Frequent questions pertaining to the 403(b) written plan requirements and how the IRS is approaching the written plan requirement under audit.
Handouts: Operating Under the Written Plan Requirements and Common Issues Identified in 403(b) Plans Presentation

Governmental Plan Proposed Guidance (May 15, 2012) (transcript) - Proposed drafts of the general guidance on possible standards for determining if a retirement plan is a governmental plan under IRC section 414(d).

Indian Tribal Government Retirement Plans (April 24, 2012) - Possible standards for determining whether a plan of an Indian Tribal Government is a governmental plan within the meaning of section 414(d) of the Code.

EP Determination Letter Program Update (March 30, 2012) (transcript) - Important changes to the Employee Plans determination letter program.
Handout: EP Determination Letter Program Update Presentation

401(k) Questionnaire Interim Report IRS Phone Forum (March 6, 2012) (transcript) - 401(k) Questionnaire Interim Report, its next steps, and current issues.
Handout: 401(k) Questionnaire Interim Report Presentation

Funding-Based Benefit Restrictions - (February 23, 2012) (transcript)- funding-based benefit restrictions under IRC section 436.
Handout: Funding-Based Benefit Restrictions Presentation

Self Correction Program (SCP) and Closing Agreement Program (CAP) (November 30, 2011) (transcript) - current EPCRS issues, procedures and CAP sanctions
Handout: SCP and CAP Presentation

Determination Letter Issues Regarding Employee Stock Ownership Plans (October 28, 2011) (transcript) - technical issues affecting ESOPs and recurring issues noted in ESOP determination letter submissions
Handout: Determination Letter Issues Regarding Employee Stock Ownership Plans Presentation

Current Developments and Issues from the office of Employee Plans Rulings and Agreements (September 21, 2011) (transcript) - technical guidance hot topics and voluntary compliance applications
Handout: Current Developments and Issues Presentation

Participant Loans (September 12, 2011) (transcript) - treatment of loans as distributions, taxability and IRC §4975
Handout: Participants Loans Presentation
Helpful Links: The Fix Is In: Common Plan Mistakes - Participant Loans in 401(k) Plans; The Fix Is In: Common Plan Mistakes - Plan Loan Failures and Deemed Distributions;  Retirement Plans FAQs regarding Loans

EPCRS: Plan Correction Issues (August 25, 2011)  (transcript) - recurring issues found in EPCRS and tips to avoid common mistakes
Handout: EPCRS: Plan Correction Issues Presentation

Ethics for Employee Plans Practitioners (July 29, 2011) (transcript)- ethical standards of practice before the IRS applicable to employee benefits practitioners
Handout: Ethics for Employee Plans Practitioners Presentation

Funding Standards and Relief for Single and Multiemployer Plans (April 28, 2011) (transcript) - funding standards applicable to single and multiemployer pension plans
Handout: Funding Standards Presentation

Form 5330 - Completion and Processing Tidbits (March 24, 2011) (transcript) - proper completion and processing of the Form 5330, along with ways to avoid common mistakes
Handouts:

EP Technical Guidance (March 4, 2011) (transcript) - recent published guidance and updates on current IRS initiatives
Handout: EP Technical Guidance Presentation

In-Plan Roth Rollover Phone Forum (December 20, 2010) (Transcript) - recent guidance on in-plan Roth rollovers for 401(k) and 403(b) plans
Handout: In-Plan Roth Rollover Phone Forum Presentation

Hybrid Plans (November 23, 2010) (Transcript) - new hybrid plan regulations
Handouts:

Page Last Reviewed or Updated: 14-Mar-2014

The Irs Free Efile

Irs free efile Internal Revenue Bulletin:  2013-12  March 18, 2013  Rev. Irs free efile Proc. Irs free efile 2013-21 Table of Contents SECTION 1. Irs free efile PURPOSE SECTION 2. Irs free efile BACKGROUND SECTION 3. Irs free efile SCOPE SECTION 4. Irs free efile APPLICATION. Irs free efile 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs free efile . Irs free efile 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs free efile SECTION 5. Irs free efile EFFECTIVE DATE SECTION 6. Irs free efile DRAFTING INFORMATION SECTION 1. Irs free efile PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, including a separate table of inclusion amounts for lessees of trucks and vans. Irs free efile The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Irs free efile SECTION 2. Irs free efile BACKGROUND . Irs free efile 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Irs free efile For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Irs free efile The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Irs free efile This change reflects the higher rate of price inflation for trucks and vans since 1988. Irs free efile . Irs free efile 02 Section 331(a) of the American Taxpayer Relief Act of 2012, Pub. Irs free efile L. Irs free efile No. Irs free efile 112-240, 126 Stat. Irs free efile 2313 (Jan. Irs free efile 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014. Irs free efile Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Irs free efile . Irs free efile 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Irs free efile Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Irs free efile Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)). Irs free efile Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Irs free efile This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Irs free efile . Irs free efile 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Irs free efile The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Irs free efile Under § 1. Irs free efile 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Irs free efile One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Irs free efile Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Irs free efile SECTION 3. Irs free efile SCOPE . Irs free efile 01 The limitations on depreciation deductions in section 4. Irs free efile 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2013, and continue to apply for each taxable year that the passenger automobile remains in service. Irs free efile . Irs free efile 02 The tables in section 4. Irs free efile 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2013. Irs free efile Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Irs free efile See Rev. Irs free efile Proc. Irs free efile 2008-22, 2008-1 C. Irs free efile B. Irs free efile 658, for passenger automobiles first leased during calendar year 2008; Rev. Irs free efile Proc. Irs free efile 2009-24, 2009-17 I. Irs free efile R. Irs free efile B. Irs free efile 885, for passenger automobiles first leased during calendar year 2009; Rev. Irs free efile Proc. Irs free efile 2010-18, 2010-09 I. Irs free efile R. Irs free efile B. Irs free efile 427, as amplified and modified by section 4. Irs free efile 03 of Rev. Irs free efile Proc. Irs free efile 2011-21, 2011-12 I. Irs free efile R. Irs free efile B. Irs free efile 560, for passenger automobiles first leased during calendar year 2010; Rev. Irs free efile Proc. Irs free efile 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. Irs free efile Proc. Irs free efile 2012-23, 2012-14 I. Irs free efile R. Irs free efile B. Irs free efile 712, for passenger automobiles first leased during calendar year 2012. Irs free efile SECTION 4. Irs free efile APPLICATION . Irs free efile 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs free efile (1) Amount of the inflation adjustment. Irs free efile (a) Passenger automobiles (other than trucks or vans). Irs free efile Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Irs free efile Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Irs free efile The new car component of the CPI was 115. Irs free efile 2 for October 1987 and 143. Irs free efile 787 for October 2012. Irs free efile The October 2012 index exceeded the October 1987 index by 28. Irs free efile 587. Irs free efile Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24. Irs free efile 8 percent (28. Irs free efile 587/115. Irs free efile 2 x 100%). Irs free efile The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs free efile 248, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2013. Irs free efile This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013. Irs free efile (b) Trucks and vans. Irs free efile To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. Irs free efile The new truck component of the CPI was 112. Irs free efile 4 for October 1987 and 149. Irs free efile 386 for October 2012. Irs free efile The October 2012 index exceeded the October 1987 index by 36. Irs free efile 986. Irs free efile Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32. Irs free efile 9 percent (36. Irs free efile 986/112. Irs free efile 4 x 100%). Irs free efile The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs free efile 329, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Irs free efile This adjustment applies to all trucks and vans that are first placed in service in calendar year 2013. Irs free efile (2) Amount of the limitation. Irs free efile Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. Irs free efile Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction applies. Irs free efile Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply. Irs free efile REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 . Irs free efile 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs free efile A taxpayer must follow the procedures in § 1. Irs free efile 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2013. Irs free efile In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Irs free efile REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 2 4 6 7 8 19,500 20,000 2 5 6 9 9 20,000 20,500 2 5 8 9 11 20,500 21,000 3 6 8 10 12 21,000 21,500 3 6 10 11 13 21,500 22,000 3 7 10 13 14 22,000 23,000 4 8 11 14 16 23,000 24,000 4 9 14 16 18 24,000 25,000 5 10 15 18 21 25,000 26,000 5 12 16 21 23 26,000 27,000 6 12 19 23 25 27,000 28,000 6 14 20 25 28 28,000 29,000 7 15 22 27 30 29,000 30,000 7 16 24 29 33 30,000 31,000 8 17 26 31 35 31,000 32,000 8 19 27 33 38 32,000 33,000 9 20 29 35 40 33,000 34,000 10 21 31 37 43 34,000 35,000 10 22 33 39 45 35,000 36,000 11 23 35 41 48 36,000 37,000 11 25 36 43 50 37,000 38,000 12 26 38 45 53 38,000 39,000 12 27 40 47 55 39,000 40,000 13 28 42 49 58 40,000 41,000 13 29 44 52 59 41,000 42,000 14 30 45 54 63 42,000 43,000 14 32 47 56 64 43,000 44,000 15 33 48 59 67 44,000 45,000 15 34 51 60 69 45,000 46,000 16 35 52 63 72 46,000 47,000 17 36 54 65 74 47,000 48,000 17 38 55 67 77 48,000 49,000 18 39 57 69 79 49,000 50,000 18 40 59 71 82 50,000 51,000 19 41 61 73 84 51,000 52,000 19 42 63 75 87 52,000 53,000 20 43 65 77 89 53,000 54,000 20 45 66 79 92 54,000 55,000 21 46 68 81 94 55,000 56,000 21 47 70 84 96 56,000 57,000 22 48 72 85 99 57,000 58,000 22 50 73 88 101 58,000 59,000 23 51 75 90 103 59,000 60,000 24 52 76 92 106 60,000 62,000 24 54 79 95 110 62,000 64,000 25 56 83 99 115 64,000 66,000 27 58 87 103 120 66,000 68,000 28 60 90 108 125 68,000 70,000 29 63 93 112 130 70,000 72,000 30 65 97 117 134 72,000 74,000 31 68 100 121 139 74,000 76,000 32 70 104 125 144 76,000 78,000 33 73 107 129 149 78,000 80,000 34 75 111 133 154 80,000 85,000 36 79 117 141 162 85,000 90,000 39 85 126 151 174 90,000 95,000 41 91 135 162 186 95,000 100,000 44 97 144 172 199 100,000 110,000 48 106 157 188 217 110,000 120,000 53 118 174 210 241 120,000 130,000 59 129 193 230 266 130,000 140,000 64 141 210 252 290 140,000 150,000 70 153 227 273 315 150,000 160,000 75 165 245 294 339 160,000 170,000 80 177 263 315 363 170,000 180,000 86 189 280 336 388 180,000 190,000 91 201 298 357 412 190,000 200,000 97 212 316 378 436 200,000 210,000 102 224 333 400 461 210,000 220,000 107 236 351 420 486 220,000 230,000 113 248 368 442 509 230,000 240,000 118 260 386 463 534 240,000 And up 124 272 403 484 558 REV. Irs free efile PROC. Irs free efile 2013-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 1 3 4 5 6 19,500 20,000 2 3 5 6 7 20,000 20,500 2 4 6 7 8 20,500 21,000 2 5 7 8 9 21,000 21,500 2 5 8 9 11 21,500 22,000 3 6 8 10 12 22,000 23,000 3 7 10 11 14 23,000 24,000 4 8 11 14 16 24,000 25,000 4 9 14 16 18 25,000 26,000 5 10 15 18 21 26,000 27,000 5 12 17 20 23 27,000 28,000 6 13 18 23 25 28,000 29,000 6 14 20 25 28 29,000 30,000 7 15 22 27 30 30,000 31,000 7 16 24 29 33 31,000 32,000 8 17 26 31 35 32,000 33,000 8 19 27 33 38 33,000 34,000 9 20 29 35 41 34,000 35,000 10 21 31 37 43 35,000 36,000 10 22 33 39 46 36,000 37,000 11 23 35 41 48 37,000 38,000 11 25 36 43 51 38,000 39,000 12 26 38 45 53 39,000 40,000 12 27 40 48 55 40,000 41,000 13 28 42 49 58 41,000 42,000 13 29 44 52 60 42,000 43,000 14 30 46 54 62 43,000 44,000 14 32 47 56 65 44,000 45,000 15 33 48 59 67 45,000 46,000 15 34 51 60 70 46,000 47,000 16 35 52 63 72 47,000 48,000 17 36 54 65 74 48,000 49,000 17 38 55 67 77 49,000 50,000 18 39 57 69 79 50,000 51,000 18 40 59 71 82 51,000 52,000 19 41 61 73 84 52,000 53,000 19 42 63 75 87 53,000 54,000 20 43 65 77 89 54,000 55,000 20 45 66 80 91 55,000 56,000 21 46 68 81 94 56,000 57,000 21 47 70 84 96 57,000 58,000 22 48 72 86 98 58,000 59,000 22 50 73 88 101 59,000 60,000 23 51 75 90 103 60,000 62,000 24 52 78 93 108 62,000 64,000 25 55 81 97 113 64,000 66,000 26 57 85 101 118 66,000 68,000 27 60 88 106 122 68,000 70,000 28 62 92 110 127 70,000 72,000 29 64 96 114 132 72,000 74,000 30 67 99 118 137 74,000 76,000 31 69 103 122 142 76,000 78,000 32 72 105 127 147 78,000 80,000 34 73 110 131 151 80,000 85,000 35 78 116 138 160 85,000 90,000 38 84 124 149 172 90,000 95,000 41 90 133 160 184 95,000 100,000 44 95 142 171 196 100,000 110,000 48 104 156 186 214 110,000 120,000 53 116 173 207 240 120,000 130,000 58 128 191 228 264 130,000 140,000 64 140 208 249 288 140,000 150,000 69 152 226 270 313 150,000 160,000 75 164 243 292 336 160,000 170,000 80 176 261 312 361 170,000 180,000 85 188 278 334 386 180,000 190,000 91 199 296 355 410 190,000 200,000 96 211 314 376 434 200,000 210,000 101 223 332 397 459 210,000 220,000 107 235 349 418 483 220,000 230,000 112 247 367 439 507 230,000 240,000 118 259 384 460 532 240,000 And up 123 271 401 482 556 SECTION 5. Irs free efile EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013. Irs free efile SECTION 6. Irs free efile DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Irs free efile Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Irs free efile For further information regarding this revenue procedure, contact Mr. Irs free efile Harvey at (202) 622-4930 (not a toll-free call). Irs free efile Prev  Up  Next   Home   More Internal Revenue Bulletins