Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Tax Filing Tips

1040nr Form 2011Where Can I File My 2010 Taxes For FreeTurbo Tax 2011 DownloadFiling 2010 Taxes Online FreeFederal Tax Forms 2011 Ez2009 Tax Return FormsHow To File A Amended Tax Return For 2010Fillable Tax Forms 2011Free Amended Tax ReturnWhere Can I File My 2012 Taxes For FreeForm 1040x FillableHow To File An Ammended Tax ReturnFiling Form 1040x Electronically1040-xFree Tax FilingTurbotax Free State ReturnFree Federal And State Tax Filing 2012 OnlineHow To File 2010 Taxes Online1040ez 2010 Tax FormFile 2008 Taxes Online Free H&r Block1040 Ez Form 2010Free Online State TaxFree State Tax FileState Income Tax Return2012 1040a Tax Form1040 Ez FormFree File TaxesFiling 2010 TaxesNeed To File 2012 Taxes LateIrs Web Page Income Tax Form 20122014 1040 Ez Tax FormWhere To Report State Income Tax On 1040Help Me File 1040ezIrs Amended Return InstructionsMass Income State Tax FormsForm 1040 EzTaxact 2011 Free EditionFiling 2010 Taxes Late Online FreeFiling An Amended ReturnForm 1040ez

Tax Filing Tips

Tax filing tips Index A Application for enrollment, Form 23 and Form 23-EP. Tax filing tips , Form 5434. Tax filing tips Assistance (see Tax help) Associations, Corporations, associations, partnerships, and other persons that are not individuals. Tax filing tips Attorneys, Attorneys. Tax filing tips Authorization letter, Authorization for Special Appearances C CAF number, Authorization for Special Appearances Certified public accountants (CPAs), Certified public accountants (CPAs). Tax filing tips Comments, Comments and suggestions. Tax filing tips Corporations, Corporations, associations, partnerships, and other persons that are not individuals. Tax filing tips CPAs (see Certified public accountants (CPAs)) D Disbarment, Suspension and disbarment. Tax filing tips , Censure, Disbarments, and Suspensions Disreputable conduct, Incompetence and Disreputable Conduct E Enrolled actuaries, Enrolled actuaries. Tax filing tips Enrolled agent:, Enrolled agents. Tax filing tips , How Does an Individual Become Enrolled? Enrolled retirement plan agent:, Enrolled retirement plan agents. Tax filing tips F FAX copies, FAX copies. Tax filing tips Form 23 and Form 23-EP, Form 23 and Form 23-EP. Tax filing tips Form 2587, Form 2587. Tax filing tips Form 2848, Form Required, Preparation of Form — Helpful Hints, How Do I Fill Out Form 2848? Form 5434, Form 5434. Tax filing tips Free tax services, How To Get Tax Help G Glossary, Practice Before the IRS, Authorizing a Representative H Help (see Tax help) I Inactive retirement status, Inactive retirement status. Tax filing tips Inactive roster, Inactive roster. Tax filing tips Incapacity or incompetency, Incapacity or incompetency. Tax filing tips L Loss of eligibility Failure to meet requirements, Failure to meet requirements. Tax filing tips Loss of eligibility:, Loss of Eligibility M More information (see Tax help) N Non-IRS power of attorney, Non-IRS powers of attorney. Tax filing tips O Office of Professional Responsibility, Practice Before the IRS P Partnerships, Corporations, associations, partnerships, and other persons that are not individuals. Tax filing tips Power of attorney Processing and handling, Processing and Handling Representative, Dealing With the Representative Power of attorney:, What Is a Power of Attorney?, When Is a Power of Attorney Required?, Where To File a Power of Attorney, When Is a Power of Attorney Not Required?, What Happens to the Power of Attorney When Filed? Practice before the IRS, What Is Practice Before the IRS?, Who Can Practice Before the IRS?, Who Cannot Practice Before the IRS? Processing a non-IRS power of attorney, Processing a non-IRS power of attorney. Tax filing tips Protected communication Tax shelters, Communications regarding corporate tax shelters. Tax filing tips Publications (see Tax help) R Registered tax return preparers and unenrolled return preparers, Registered tax return preparers and unenrolled return preparers. Tax filing tips Representation outside the United States, Representation Outside the United States Restrictions, Restrictions Rules of practice Due diligence, Due diligence. Tax filing tips Duties, Duties Duty to advise, Duty to advise. Tax filing tips Restrictions, Restrictions Rules of practice:, What Are the Rules of Practice? S Special appearances, Authorization for Special Appearances Students. Tax filing tips , Student. Tax filing tips , Students in LITCs and the STCP. Tax filing tips Suggestions, Comments and suggestions. Tax filing tips Suspension, Suspension and disbarment. Tax filing tips , Censure, Disbarments, and Suspensions T Tax help, How To Get Tax Help Taxpayer advocate, Taxpayer Advocate Service. Tax filing tips Termination, Incapacity or incompetency. Tax filing tips TTY/TDD information, How To Get Tax Help U Unenrolled individuals Employee, Other individuals who may serve as representatives. Tax filing tips Family member, Other individuals who may serve as representatives. Tax filing tips Fiduciary, Other individuals who may serve as representatives. Tax filing tips Individual, Other individuals who may serve as representatives. Tax filing tips Officer, Other individuals who may serve as representatives. Tax filing tips Partner, Other individuals who may serve as representatives. Tax filing tips Unenrolled individuals:, Other individuals who may serve as representatives. Tax filing tips W Where to file:, Where To File a Power of Attorney Prev  Up     Home   More Online Publications
Print - Click this link to Print this page

Contact My Local Office in Mississippi

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Clarksdale  Third & Sharkey Ave.
Clarksdale, MS 38614 

Tuesdays 9:30 a.m.- 2:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)


Services Provided

(662) 627-9101
Columbus  2209 Fifth St. N.
Columbus, MS 39705 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)


Services Provided

(662) 328-6957
Gulfport  11309 Old Highway 49
Gulfport, MS 39503 

Monday-Friday - 8:30a.m - 4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

Services Provided

(228) 831-3320
Hattiesburg  701 North Main St.
Hattiesburg, MS 39401 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:00 noon. - 1:00 p.m.)


Services Provided

(601) 264-7991
Jackson  100 W. Capital St.
Jackson, MS 39269 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**


Services Provided

(601) 292-4711
Tupelo  111 E. Troy Street
Tupelo, MS 38804 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 11:00 a.m. - 12:00 noon)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(662) 842-5870

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (601) 292-4800 in Jackson or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see  Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
100 W. Capitol Street, Stop 50
Jackson, MS 39269

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Tax Filing Tips

Tax filing tips 5. Tax filing tips   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Tax filing tips Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Reminder Foreign income. Tax filing tips   If you are a U. Tax filing tips S. Tax filing tips citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U. Tax filing tips S. Tax filing tips law. Tax filing tips This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. Tax filing tips This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). Tax filing tips If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. Tax filing tips For details, see Publication 54, Tax Guide for U. Tax filing tips S. Tax filing tips Citizens and Resident Aliens Abroad. Tax filing tips Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. Tax filing tips The following topics are included. Tax filing tips Bonuses and awards. Tax filing tips Special rules for certain employees. Tax filing tips Sickness and injury benefits. Tax filing tips The chapter explains what income is included in the employee's gross income and what is not included. Tax filing tips Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income Employee Compensation This section discusses various types of employee compensation including fringe benefits, retirement plan contributions, stock options, and restricted property. Tax filing tips Form W-2. Tax filing tips    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. Tax filing tips Include your pay on line 7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ, even if you do not receive a Form W-2. Tax filing tips   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. Tax filing tips These wages must be included on line 7 of Form 1040. Tax filing tips See Form 8919 for more information. Tax filing tips Childcare providers. Tax filing tips    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. Tax filing tips 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. Tax filing tips 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. Tax filing tips Babysitting. Tax filing tips   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Tax filing tips Miscellaneous Compensation This section discusses different types of employee compensation. Tax filing tips Advance commissions and other earnings. Tax filing tips   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. Tax filing tips    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. Tax filing tips If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), or you may be able to take a credit for that year. Tax filing tips See Repayments in chapter 12. Tax filing tips Allowances and reimbursements. Tax filing tips    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. Tax filing tips If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Tax filing tips Back pay awards. Tax filing tips    Include in income amounts you are awarded in a settlement or judgment for back pay. Tax filing tips These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Tax filing tips They should be reported to you by your employer on Form W-2. Tax filing tips Bonuses and awards. Tax filing tips   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Tax filing tips These include prizes such as vacation trips for meeting sales goals. Tax filing tips 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. Tax filing tips 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. Tax filing tips Employee achievement award. Tax filing tips   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. Tax filing tips 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. Tax filing tips Your employer can tell you whether your award is a qualified plan award. Tax filing tips 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. Tax filing tips   However, the exclusion does not apply to the following awards: 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. Tax filing tips 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. Tax filing tips Example. Tax filing tips 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. Tax filing tips Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Tax filing tips 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. Tax filing tips Differential wage payments. Tax filing tips   This is any payment made to you by an employer for any period during which you are, 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 you would have received from the employer during that period. Tax filing tips These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Tax filing tips The payments are reported as wages on Form W-2. Tax filing tips Government cost-of-living allowances. Tax filing tips   Most payments received by U. Tax filing tips S. Tax filing tips Government civilian employees for working abroad are taxable. Tax filing tips However, certain cost-of-living allowances are tax free. Tax filing tips Publication 516, U. Tax filing tips S. Tax filing tips Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Tax filing tips Nonqualified deferred compensation plans. Tax filing tips   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Tax filing tips This amount is shown on Form W-2, box 12, using code Y. Tax filing tips This amount is not included in your income. Tax filing tips   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. Tax filing tips This amount is included in your wages shown on Form W-2, box 1. Tax filing tips It is also shown on Form W-2, box 12, using code Z. Tax filing tips Note received for services. Tax filing tips    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. Tax filing tips 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. Tax filing tips Do not include that part again in your income. Tax filing tips Include the rest of the payment in your income in the year of payment. Tax filing tips   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. Tax filing tips Severance pay. Tax filing tips   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Tax filing tips Accrued leave payment. Tax filing tips    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. Tax filing tips   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. Tax filing tips You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Tax filing tips 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 the return and the wages on your Forms W-2. Tax filing tips Outplacement services. Tax filing tips   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. Tax filing tips    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). Tax filing tips Sick pay. Tax filing tips   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Tax filing tips In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. Tax filing tips A state sickness or disability fund. Tax filing tips An association of employers or employees. Tax filing tips An insurance company, if your employer paid for the plan. Tax filing tips However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Tax filing tips For more information, see Publication 525. Tax filing tips Social security and Medicare taxes paid by employer. Tax filing tips   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. Tax filing tips The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Tax filing tips However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Tax filing tips Stock appreciation rights. Tax filing tips   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Tax filing tips 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. Tax filing tips You include the cash payment in your income in the year you use the right. Tax filing tips 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. Tax filing tips 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. Tax filing tips Accounting period. Tax filing tips   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Tax filing tips Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Tax filing tips The general rule: benefits are reported for a full calendar year (January 1–December 31). Tax filing tips 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. Tax filing tips 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. Tax filing tips  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. Tax filing tips   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). Tax filing tips Form W-2. Tax filing tips   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. Tax filing tips Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Tax filing tips 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). Tax filing tips 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. Tax filing tips Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . Tax filing tips 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. Tax filing tips Long-term care coverage. Tax filing tips    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Tax filing tips However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Tax filing tips This amount will be reported as wages in box 1 of your Form W-2. Tax filing tips   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. Tax filing tips Archer MSA contributions. Tax filing tips    Contributions by your employer to your Archer MSA generally are not included in your income. Tax filing tips Their total will be reported in box 12 of Form W-2 with code R. Tax filing tips You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Tax filing tips File the form with your return. Tax filing tips Health flexible spending arrangement (health FSA). Tax filing tips   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. Tax filing tips Note. Tax filing tips Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Tax filing tips The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Tax filing tips For more information, see Notice 2012-40, 2012-26 I. Tax filing tips R. Tax filing tips B. Tax filing tips 1046, available at www. Tax filing tips irs. Tax filing tips gov/irb/2012-26 IRB/ar09. Tax filing tips html. Tax filing tips Health reimbursement arrangement (HRA). Tax filing tips   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. Tax filing tips Health savings accounts (HSA). Tax filing tips   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Tax filing tips Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Tax filing tips Contributions made by your employer are not included in your income. Tax filing tips Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Tax filing tips Distributions not used for qualified medical expenses are included in your income. Tax filing tips See Publication 969 for the requirements of an HSA. Tax filing tips   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Tax filing tips The contributions are treated as a distribution of money and are not included in the partner's gross income. Tax filing tips 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. Tax filing tips In both situations, the partner can deduct the contribution made to the partner's HSA. Tax filing tips   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. Tax filing tips The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Tax filing tips Qualified HSA funding distribution. Tax filing tips   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. Tax filing tips See Publication 590 for the requirements for these qualified HSA funding distributions. Tax filing tips Failure to maintain eligibility. Tax filing tips   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. Tax filing tips 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. Tax filing tips This income is also subject to an additional 10% tax. Tax filing tips 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. Tax filing tips See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Tax filing tips Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Tax filing tips They also are included as social security and Medicare wages in boxes 3 and 5. Tax filing tips However, they are not included as wages in box 1. Tax filing tips To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Tax filing tips File the form with your return. Tax filing tips 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. Tax filing tips 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. Tax filing tips Holiday gifts. Tax filing tips   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. Tax filing tips 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. Tax filing tips Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Tax filing tips For more information, see Publication 970, Tax Benefits for Education. Tax filing tips 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. Tax filing tips 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. Tax filing tips For exceptions, see Entire cost excluded , and Entire cost taxed , later. Tax filing tips 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. Tax filing tips Also, it is shown separately in box 12 with code C. Tax filing tips Group-term life insurance. Tax filing tips   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. Tax filing tips Permanent benefits. Tax filing tips   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. Tax filing tips Your employer should be able to tell you the amount to include in your income. Tax filing tips Accidental death benefits. Tax filing tips   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. Tax filing tips Former employer. Tax filing tips   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. Tax filing tips Also, it is shown separately in box 12 with code C. Tax filing tips Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Tax filing tips You must pay these taxes with your income tax return. Tax filing tips Include them on line 60, Form 1040, and follow the instructions for line 60. Tax filing tips For more information, see the Instructions for Form 1040. Tax filing tips Two or more employers. Tax filing tips   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. Tax filing tips 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. Tax filing tips You must figure how much to include in your income. Tax filing tips 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. Tax filing tips Figuring the taxable cost. Tax filing tips   Use the following worksheet to figure the amount to include in your income. Tax filing tips     Worksheet 5-1. Tax filing tips Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Tax filing tips Enter the total amount of your insurance coverage from your employer(s) 1. Tax filing tips   2. Tax filing tips Limit on exclusion for employer-provided group-term life insurance coverage 2. Tax filing tips 50,000 3. Tax filing tips Subtract line 2 from line 1 3. Tax filing tips   4. Tax filing tips Divide line 3 by $1,000. Tax filing tips Figure to the nearest tenth 4. Tax filing tips   5. Tax filing tips Go to Table 5-1. Tax filing tips 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. Tax filing tips   6. Tax filing tips Multiply line 4 by line 5 6. Tax filing tips   7. Tax filing tips Enter the number of full months of coverage at this cost. Tax filing tips 7. Tax filing tips   8. Tax filing tips Multiply line 6 by line 7 8. Tax filing tips   9. Tax filing tips Enter the premiums you paid per month 9. Tax filing tips       10. Tax filing tips Enter the number of months you paid the premiums 10. Tax filing tips       11. Tax filing tips Multiply line 9 by line 10. Tax filing tips 11. Tax filing tips   12. Tax filing tips Subtract line 11 from line 8. Tax filing tips Include this amount in your income as wages 12. Tax filing tips      Table 5-1. Tax filing tips Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. Tax filing tips 05 25 through 29 . Tax filing tips 06 30 through 34 . Tax filing tips 08 35 through 39 . Tax filing tips 09 40 through 44 . Tax filing tips 10 45 through 49 . Tax filing tips 15 50 through 54 . Tax filing tips 23 55 through 59 . Tax filing tips 43 60 through 64 . Tax filing tips 66 65 through 69 1. Tax filing tips 27 70 and older 2. Tax filing tips 06 Example. Tax filing tips You are 51 years old and work for employers A and B. Tax filing tips Both employers provide group-term life insurance coverage for you for the entire year. Tax filing tips Your coverage is $35,000 with employer A and $45,000 with employer B. Tax filing tips You pay premiums of $4. Tax filing tips 15 a month under the employer B group plan. Tax filing tips You figure the amount to include in your income as shown in Worksheet 5-1. Tax filing tips Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. Tax filing tips Worksheet 5-1. Tax filing tips Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. Tax filing tips Enter the total amount of your insurance coverage from your employer(s) 1. Tax filing tips 80,000 2. Tax filing tips Limit on exclusion for employer-provided group-term life insurance coverage 2. Tax filing tips 50,000 3. Tax filing tips Subtract line 2 from line 1 3. Tax filing tips 30,000 4. Tax filing tips Divide line 3 by $1,000. Tax filing tips Figure to the nearest tenth 4. Tax filing tips 30. Tax filing tips 0 5. Tax filing tips Go to Table 5-1. Tax filing tips 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. Tax filing tips . Tax filing tips 23 6. Tax filing tips Multiply line 4 by line 5 6. Tax filing tips 6. Tax filing tips 90 7. Tax filing tips Enter the number of full months of coverage at this cost. Tax filing tips 7. Tax filing tips 12 8. Tax filing tips Multiply line 6 by line 7 8. Tax filing tips 82. Tax filing tips 80 9. Tax filing tips Enter the premiums you paid per month 9. Tax filing tips 4. Tax filing tips 15     10. Tax filing tips Enter the number of months you paid the premiums 10. Tax filing tips 12     11. Tax filing tips Multiply line 9 by line 10. Tax filing tips 11. Tax filing tips 49. Tax filing tips 80 12. Tax filing tips Subtract line 11 from line 8. Tax filing tips Include this amount in your income as wages 12. Tax filing tips 33. Tax filing tips 00 Entire cost excluded. Tax filing tips   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Tax filing tips You are permanently and totally disabled and have ended your employment. Tax filing tips Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Tax filing tips A charitable organization (defined in chapter 24) 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. Tax filing tips (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Tax filing tips ) 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. Tax filing tips Entire cost taxed. Tax filing tips   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply: The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Tax filing tips You are a key employee and your employer's plan discriminates in favor of key employees. Tax filing tips 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. Tax filing tips 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. Tax filing tips You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Tax filing tips Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Tax filing tips 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. Tax filing tips Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Tax filing tips 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. Tax filing tips Exclusion limit. Tax filing tips   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Tax filing tips   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Tax filing tips   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Tax filing tips   If the benefits have a value that is more than these limits, the excess must be included in your income. Tax filing tips You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Tax filing tips Commuter highway vehicle. Tax filing tips   This is a highway vehicle that seats at least six adults (not including the driver). Tax filing tips 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). Tax filing tips Transit pass. Tax filing tips   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. Tax filing tips Qualified parking. Tax filing tips   This is parking provided to an employee at or near the employer's place of business. Tax filing tips 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. Tax filing tips It does not include parking at or near the employee's home. Tax filing tips Qualified bicycle commuting. Tax filing tips   This is reimbursement based on the number of qualified bicycle commuting months for the year. Tax filing tips 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. Tax filing tips The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Tax filing tips Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Tax filing tips (Your employer can tell you whether your retirement plan is qualified. Tax filing tips ) However, the cost of life insurance coverage included in the plan may have to be included. Tax filing tips See Group-Term Life Insurance , earlier, under Fringe Benefits. Tax filing tips 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. Tax filing tips 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. Tax filing tips For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. Tax filing tips S. Tax filing tips Civil Service Retirement Benefits, if you are a federal employee or retiree). Tax filing tips Elective deferrals. Tax filing tips   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. Tax filing tips The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Tax filing tips An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Tax filing tips However, it is included in wages subject to social security and Medicare taxes. Tax filing tips   Elective deferrals include elective contributions to the following retirement plans. Tax filing tips Cash or deferred arrangements (section 401(k) plans). Tax filing tips The Thrift Savings Plan for federal employees. Tax filing tips Salary reduction simplified employee pension plans (SARSEP). Tax filing tips Savings incentive match plans for employees (SIMPLE plans). Tax filing tips Tax-sheltered annuity plans (403(b) plans). Tax filing tips Section 501(c)(18)(D) plans. Tax filing tips Section 457 plans. Tax filing tips Qualified automatic contribution arrangements. Tax filing tips   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. Tax filing tips You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Tax filing tips 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. Tax filing tips   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. Tax filing tips Overall limit on deferrals. Tax filing tips   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) and (5) above. Tax filing tips The limit for SIMPLE plans is $12,000. Tax filing tips The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. Tax filing tips The limit for section 457 plans is the lesser of your includible compensation or $17,500. Tax filing tips Amounts deferred under specific plan limits are part of the overall limit on deferrals. Tax filing tips Designated Roth contributions. Tax filing tips   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. Tax filing tips Designated Roth contributions are treated as elective deferrals, except that they are included in income. Tax filing tips Excess deferrals. Tax filing tips   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Tax filing tips However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Tax filing tips   If you set aside more than the limit, the excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution. Tax filing tips See Publication 525 for a discussion of the tax treatment of excess deferrals. Tax filing tips Catch-up contributions. Tax filing tips   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. Tax filing tips Stock Options If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you usually will have income when you receive the option, 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. Tax filing tips However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. Tax filing tips Your employer can tell you which kind of option you hold. Tax filing tips For more information, see Publication 525. Tax filing tips Restricted Property In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. Tax filing tips However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. Tax filing tips (You can choose to include the value of the property in your income in the year it is transferred to you. Tax filing tips ) For more information, see Restricted Property in Publication 525. Tax filing tips Dividends received on restricted stock. Tax filing tips   Dividends you receive on restricted stock are treated as compensation and not as dividend income. Tax filing tips Your employer should include these payments on your Form W-2. Tax filing tips Stock you chose to include in income. Tax filing tips   Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. Tax filing tips Report them on your return as dividends. Tax filing tips For a discussion of dividends, see chapter 8. Tax filing tips    For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525. Tax filing tips Special Rules for Certain Employees This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers. Tax filing tips Clergy Generally, if you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Tax filing tips , in addition to your salary. Tax filing tips If the offering is made to the religious institution, it is not taxable to you. Tax filing tips If you are a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. Tax filing tips However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Tax filing tips See chapter 24. Tax filing tips Pension. Tax filing tips    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. Tax filing tips It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Tax filing tips Housing. Tax filing tips    Special rules for housing apply to members of the clergy. Tax filing tips Under these rules, you do not include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. Tax filing tips However, the exclusion cannot be more than the reasonable pay for your service. Tax filing tips If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. Tax filing tips The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. Tax filing tips However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you are subject to the self-employment tax. Tax filing tips For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax filing tips Members of Religious Orders If you are a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order. Tax filing tips Services performed for the order. Tax filing tips   If you are performing the services as an agent of the order in the exercise of duties required by the order, do not include in your income the amounts turned over to the order. Tax filing tips   If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. Tax filing tips Any wages you earn as an agent of an order that you turn over to the order are not included in your income. Tax filing tips Example. Tax filing tips You are a member of a church order and have taken a vow of poverty. Tax filing tips You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. Tax filing tips You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. Tax filing tips However, you remain under the general direction and control of the order. Tax filing tips You are considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order are not included in your income. Tax filing tips Services performed outside the order. Tax filing tips   If you are directed to work outside the order, your services are not an exercise of duties required by the order unless they meet both of the following requirements: They are the kind of services that are ordinarily the duties of members of the order. Tax filing tips They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. Tax filing tips If you are an employee of a third party, the services you perform for the third party will not be considered directed or required of you by the order. Tax filing tips Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. Tax filing tips Example. Tax filing tips Mark Brown is a member of a religious order and has taken a vow of poverty. Tax filing tips He renounces all claims to his earnings and turns over his earnings to the order. Tax filing tips Mark is a schoolteacher. Tax filing tips He was instructed by the superiors of the order to get a job with a private tax-exempt school. Tax filing tips Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. Tax filing tips Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. Tax filing tips The wages Mark earns working for the school are included in his income. Tax filing tips Foreign Employer Special rules apply if you work for a foreign employer. Tax filing tips U. Tax filing tips S. Tax filing tips citizen. Tax filing tips   If you are a U. Tax filing tips S. Tax filing tips citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income. Tax filing tips Social security and Medicare taxes. Tax filing tips   You are exempt from social security and Medicare employee taxes if you are employed in the United States by an international organization or a foreign government. Tax filing tips However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. Tax filing tips This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. Tax filing tips Employees of international organizations or foreign governments. Tax filing tips   Your compensation for official services to an international organization is exempt from federal income tax if you are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Tax filing tips   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. Tax filing tips You are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Tax filing tips Your work is like the work done by employees of the United States in foreign countries. Tax filing tips The foreign government gives an equal exemption to employees of the United States in its country. Tax filing tips Waiver of alien status. Tax filing tips   If you are an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. Tax filing tips See Foreign Employer in Publication 525. Tax filing tips Employment abroad. Tax filing tips   For information on the tax treatment of income earned abroad, see Publication 54. Tax filing tips Military Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. Tax filing tips Allowances generally are not taxed. Tax filing tips For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. Tax filing tips Differential wage payments. Tax filing tips   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. Tax filing tips These wages are subject to income tax withholding and are reported on a Form W-2. Tax filing tips See the discussion under Miscellaneous Compensation , earlier. Tax filing tips Military retirement pay. Tax filing tips   If your retirement pay is based on age or length of service, it is taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Tax filing tips Do not include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan. Tax filing tips   For more detailed discussion of survivor annuities, see chapter 10. Tax filing tips Disability. Tax filing tips   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. Tax filing tips Veterans' benefits. Tax filing tips   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). Tax filing tips The following amounts paid to veterans or their families are not taxable. Tax filing tips Education, training, and subsistence allowances. Tax filing tips Disability compensation and pension payments for disabilities paid either to veterans or their families. Tax filing tips Grants for homes designed for wheelchair living. Tax filing tips Grants for motor vehicles for veterans who lost their sight or the use of their limbs. Tax filing tips Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. Tax filing tips Interest on insurance dividends you leave on deposit with the VA. Tax filing tips Benefits under a dependent-care assistance program. Tax filing tips The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. Tax filing tips Payments made under the compensated work therapy program. Tax filing tips Any bonus payment by a state or political subdivision because of service in a combat zone. Tax filing tips Volunteers The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions. Tax filing tips Peace Corps. Tax filing tips   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. Tax filing tips Taxable allowances. Tax filing tips   The following allowances must be included in your income and reported as wages: Allowances paid to your spouse and minor children while you are a volunteer leader training in the United States. Tax filing tips Living allowances designated by the Director of the Peace Corps as basic compensation. Tax filing tips These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Tax filing tips Leave allowances. Tax filing tips Readjustment allowances or termination payments. Tax filing tips These are considered received by you when credited to your account. Tax filing tips Example. Tax filing tips Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Tax filing tips Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Tax filing tips Volunteers in Service to America (VISTA). Tax filing tips   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. Tax filing tips National Senior Services Corps programs. Tax filing tips   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. Tax filing tips Retired Senior Volunteer Program (RSVP). Tax filing tips Foster Grandparent Program. Tax filing tips Senior Companion Program. Tax filing tips Service Corps of Retired Executives (SCORE). Tax filing tips   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. Tax filing tips Volunteer tax counseling. Tax filing tips   Do not include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE). Tax filing tips   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. Tax filing tips See chapter 24. Tax filing tips Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. Tax filing tips In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Tax filing tips If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Tax filing tips However, certain payments may not be taxable to you. Tax filing tips Your employer should be able to give you specific details about your pension plan and tell you the amount you paid for your disability pension. Tax filing tips In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. Tax filing tips Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. Tax filing tips Cost paid by you. Tax filing tips   If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Tax filing tips If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Tax filing tips See Reimbursement in a later year in chapter 21. Tax filing tips Cafeteria plans. Tax filing tips   In most cases, if you are covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums was not included in your income, you are not considered to have paid the premiums and you must include any benefits you receive in your income. Tax filing tips If the amount of the premiums was included in your income, you are considered to have paid the premiums, and any benefits you receive are not taxable. Tax filing tips Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Tax filing tips You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. Tax filing tips Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Tax filing tips You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Tax filing tips For information on this credit and the definition of permanent and total disability, see chapter 33. Tax filing tips Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Tax filing tips Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Tax filing tips The rules for reporting pensions are explained in How To Report in chapter 10. Tax filing tips For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. Tax filing tips Retirement and profit-sharing plans. Tax filing tips   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Tax filing tips The payments must be reported as a pension or annuity. Tax filing tips For more information on pensions, see chapter 10. Tax filing tips Accrued leave payment. Tax filing tips   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Tax filing tips The payment is not a disability payment. Tax filing tips Include it in your income in the tax year you receive it. Tax filing tips Military and Government Disability Pensions Certain military and government disability pensions are not taxable. Tax filing tips Service-connected disability. Tax filing tips   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services. Tax filing tips The armed forces of any country. Tax filing tips The National Oceanic and Atmospheric Administration. Tax filing tips The Public Health Service. Tax filing tips The Foreign Service. Tax filing tips Conditions for exclusion. Tax filing tips   Do not include the disability payments in your income if any of the following conditions apply. Tax filing tips You were entitled to receive a disability payment before September 25, 1975. Tax filing tips You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975. Tax filing tips You receive the disability payments for a combat-related injury. Tax filing tips This is a personal injury or sickness that Results directly from armed conflict, Takes place while you are engaged in extra-hazardous service, Takes place under conditions simulating war, including training exercises such as maneuvers, or Is caused by an instrumentality of war. Tax filing tips You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Tax filing tips Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. Tax filing tips Pension based on years of service. Tax filing tips   If you receive a disability pension based on years of service, in most cases you must include it in your income. Tax filing tips However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. Tax filing tips You must include the rest of your pension in your income. Tax filing tips Retroactive VA determination. Tax filing tips   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. Tax filing tips You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. Tax filing tips You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. Tax filing tips The letter must show the amount withheld and the effective date of the benefit. Tax filing tips   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. Tax filing tips However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA. Tax filing tips Special statute of limitations. Tax filing tips   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. Tax filing tips However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. Tax filing tips This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination. Tax filing tips Example. Tax filing tips You retired in 2007 and receive a pension based on your years of service. Tax filing tips On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. Tax filing tips Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. Tax filing tips However, under the special limitation period, you can also file a claim for 2009 as long as you file the claim by August 1, 2014. Tax filing tips You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. Tax filing tips Terrorist attack or military action. Tax filing tips   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. Tax filing tips Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Tax filing tips Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. Tax filing tips To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. Tax filing tips A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. Tax filing tips The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits, and In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Tax filing tips Qualified long-term care services. Tax filing tips   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance and personal care services, and Required by a chronically ill individual and provided pursuant to a plan of care as prescribed by a licensed health care practitioner. Tax filing tips Chronically ill individual. Tax filing tips   A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. Tax filing tips Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Tax filing tips An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Tax filing tips Limit on exclusion. Tax filing tips   You generally can exclude from gross income up to $320 a day for 2013. Tax filing tips See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. Tax filing tips Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Tax filing tips The exemption also applies to your survivors. Tax filing tips The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Tax filing tips If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Tax filing tips For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Tax filing tips Return to work. Tax filing tips    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Tax filing tips Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Tax filing tips Railroad sick pay. Tax filing tips    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. Tax filing tips However, do not include them in your income if they are for an on-the-job injury. Tax filing tips   If you received income because of a disability, see Disability Pensions , earlier. Tax filing tips Federal Employees' Compensation Act (FECA). Tax filing tips   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Tax filing tips However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Tax filing tips Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. Tax filing tips Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Tax filing tips    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Tax filing tips For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. Tax filing tips    You can deduct the amount you spend to buy back sick leave for an earlier year to be eligible for nontaxable FECA benefits for that period. Tax filing tips It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). Tax filing tips If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. Tax filing tips Do not deduct it separately. Tax filing tips Other compensation. Tax filing tips   Many other amounts you receive as compensation for sickness or injury are not taxable. Tax filing tips These include the following amounts. Tax filing tips Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. Tax filing tips Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Tax filing tips Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Tax filing tips Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Tax filing tips This compensation must be based only on the injury and not on the period of your absence from work. Tax filing tips These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Tax filing tips Reimbursement for medical care. Tax filing tips    A reimbursement for medical care is generally not taxable. Tax filing tips However, it may reduce your medical expense deduction. Tax filing tips For more information, see chapter 21. Tax filing tips Prev  Up  Next   Home   More Online Publications