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Tax Forms 1040 Ez

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Tax Forms 1040 Ez

Tax forms 1040 ez 9. Tax forms 1040 ez   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Tax forms 1040 ez Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. Tax forms 1040 ez Amount to report as ordinary income. Tax forms 1040 ez Applicable percentage. Tax forms 1040 ez Amount to report as ordinary income. Tax forms 1040 ez Applicable percentage. Tax forms 1040 ez Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. Tax forms 1040 ez When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Tax forms 1040 ez Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. Tax forms 1040 ez Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. Tax forms 1040 ez Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. Tax forms 1040 ez Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Tax forms 1040 ez Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). Tax forms 1040 ez Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. Tax forms 1040 ez Table 9-1. Tax forms 1040 ez Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. Tax forms 1040 ez Held 24 mos. Tax forms 1040 ez  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. Tax forms 1040 ez Held 12 mos. Tax forms 1040 ez   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Tax forms 1040 ez Do not take that gain into account as section 1231 gain. Tax forms 1040 ez Section 1231 transactions. Tax forms 1040 ez   Gain or loss on the following transactions is subject to section 1231 treatment. Tax forms 1040 ez Sale or exchange of cattle and horses. Tax forms 1040 ez The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. Tax forms 1040 ez Sale or exchange of other livestock. Tax forms 1040 ez This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. Tax forms 1040 ez Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. Tax forms 1040 ez Other livestock does not include poultry. Tax forms 1040 ez Sale or exchange of depreciable personal property. Tax forms 1040 ez This property must be used in your business and held longer than 1 year. Tax forms 1040 ez Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Tax forms 1040 ez Examples of depreciable personal property include farm machinery and trucks. Tax forms 1040 ez It also includes amortizable section 197 intangibles. Tax forms 1040 ez Sale or exchange of real estate. Tax forms 1040 ez This property must be used in your business and held longer than 1 year. Tax forms 1040 ez Examples are your farm or ranch (including barns and sheds). Tax forms 1040 ez Sale or exchange of unharvested crops. Tax forms 1040 ez The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. Tax forms 1040 ez You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). Tax forms 1040 ez Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. Tax forms 1040 ez Distributive share of partnership gains and losses. Tax forms 1040 ez Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). Tax forms 1040 ez Cutting or disposal of timber. Tax forms 1040 ez Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . Tax forms 1040 ez Condemnation. Tax forms 1040 ez The condemned property (defined in chapter 11) must have been held longer than 1 year. Tax forms 1040 ez It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Tax forms 1040 ez It cannot be property held for personal use. Tax forms 1040 ez Casualty or theft. Tax forms 1040 ez The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). Tax forms 1040 ez You must have held the property longer than 1 year. Tax forms 1040 ez However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Tax forms 1040 ez Section 1231 does not apply to personal casualty gains and losses. Tax forms 1040 ez See chapter 11 for information on how to treat those gains and losses. Tax forms 1040 ez If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. Tax forms 1040 ez See Table 9-1. Tax forms 1040 ez Property for sale to customers. Tax forms 1040 ez   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Tax forms 1040 ez If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Tax forms 1040 ez Treatment as ordinary or capital. Tax forms 1040 ez   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. Tax forms 1040 ez If you have a net section 1231 loss, it is an ordinary loss. Tax forms 1040 ez If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. Tax forms 1040 ez The rest, if any, is long-term capital gain. Tax forms 1040 ez Nonrecaptured section 1231 losses. Tax forms 1040 ez   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. Tax forms 1040 ez These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Tax forms 1040 ez Example. Tax forms 1040 ez In 2013, Ben has a $2,000 net section 1231 gain. Tax forms 1040 ez To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Tax forms 1040 ez From 2008 through 2012 he had the following section 1231 gains and losses. Tax forms 1040 ez Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Tax forms 1040 ez 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. Tax forms 1040 ez Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. Tax forms 1040 ez To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Tax forms 1040 ez For more information, see chapter 3 of Publication 544. Tax forms 1040 ez Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. Tax forms 1040 ez Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. Tax forms 1040 ez See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. Tax forms 1040 ez Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Tax forms 1040 ez Personal property (either tangible or intangible). Tax forms 1040 ez Other tangible property (except buildings and their structural components) used as any of the following. Tax forms 1040 ez See Buildings and structural components below. Tax forms 1040 ez An integral part of manufacturing, production, or extraction, or of furnishing certain services. Tax forms 1040 ez A research facility in any of the activities in (a). Tax forms 1040 ez A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). Tax forms 1040 ez That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Tax forms 1040 ez Amortization of certified pollution control facilities. Tax forms 1040 ez The section 179 expense deduction. Tax forms 1040 ez Deduction for clean-fuel vehicles and certain refueling property. Tax forms 1040 ez Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Tax forms 1040 ez Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. Tax forms 1040 ez Single purpose agricultural (livestock) or horticultural structures. Tax forms 1040 ez Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Tax forms 1040 ez Buildings and structural components. Tax forms 1040 ez   Section 1245 property does not include buildings and structural components. Tax forms 1040 ez The term building includes a house, barn, warehouse, or garage. Tax forms 1040 ez The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Tax forms 1040 ez   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Tax forms 1040 ez Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Tax forms 1040 ez   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Tax forms 1040 ez Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. Tax forms 1040 ez Facility for bulk storage of fungible commodities. Tax forms 1040 ez   This is a facility used mainly for the bulk storage of fungible commodities. Tax forms 1040 ez Bulk storage means storage of a commodity in a large mass before it is used. Tax forms 1040 ez For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Tax forms 1040 ez To be fungible, a commodity must be such that one part may be used in place of another. Tax forms 1040 ez Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Tax forms 1040 ez The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. Tax forms 1040 ez The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Tax forms 1040 ez For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. Tax forms 1040 ez For details, see chapter 3 of Publication 544. Tax forms 1040 ez Use Part III of Form 4797 to figure the ordinary income part of the gain. Tax forms 1040 ez Depreciation claimed on other property or claimed by other taxpayers. Tax forms 1040 ez   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Tax forms 1040 ez Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Tax forms 1040 ez For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. Tax forms 1040 ez Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). Tax forms 1040 ez Example. Tax forms 1040 ez Jeff Free paid $120,000 for a tractor in 2012. Tax forms 1040 ez On February 23, 2013, he traded it for a chopper and paid an additional $30,000. Tax forms 1040 ez To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. Tax forms 1040 ez Jeff can also depreciate the additional $30,000 for the chopper. Tax forms 1040 ez Depreciation and amortization. Tax forms 1040 ez   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. Tax forms 1040 ez See Depreciation Recapture in chapter 3 of Publication 544 for more details. Tax forms 1040 ez Ordinary depreciation deductions. Tax forms 1040 ez Section 179 deduction (see chapter 7). Tax forms 1040 ez Any special depreciation allowance. Tax forms 1040 ez Amortization deductions for all the following costs. Tax forms 1040 ez Acquiring a lease. Tax forms 1040 ez Lessee improvements. Tax forms 1040 ez Pollution control facilities. Tax forms 1040 ez Reforestation expenses. Tax forms 1040 ez Section 197 intangibles. Tax forms 1040 ez Qualified disaster expenses. Tax forms 1040 ez Franchises, trademarks, and trade names acquired before August 11, 1993. Tax forms 1040 ez Example. Tax forms 1040 ez You file your returns on a calendar year basis. Tax forms 1040 ez In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. Tax forms 1040 ez You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. Tax forms 1040 ez You did not claim the section 179 expense deduction for the truck. Tax forms 1040 ez You sold it in May 2013 for $7,000. Tax forms 1040 ez The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). Tax forms 1040 ez Figure the gain treated as ordinary income as follows. Tax forms 1040 ez 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. Tax forms 1040 ez   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. Tax forms 1040 ez If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Tax forms 1040 ez If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Tax forms 1040 ez This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Tax forms 1040 ez Disposition of plants and animals. Tax forms 1040 ez   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. Tax forms 1040 ez If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. Tax forms 1040 ez For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. Tax forms 1040 ez For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. Tax forms 1040 ez You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. Tax forms 1040 ez Example. Tax forms 1040 ez Janet Maple sold her apple orchard in 2013 for $80,000. Tax forms 1040 ez Her adjusted basis at the time of sale was $60,000. Tax forms 1040 ez She bought the orchard in 2006, but the trees did not produce a crop until 2009. Tax forms 1040 ez Her pre-productive expenses were $6,000. Tax forms 1040 ez She elected not to use the uniform capitalization rules. Tax forms 1040 ez Janet must treat $6,000 of the gain as ordinary income. Tax forms 1040 ez Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. Tax forms 1040 ez It includes buildings and structural components that are not section 1245 property (discussed earlier). Tax forms 1040 ez It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Tax forms 1040 ez A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. Tax forms 1040 ez Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. Tax forms 1040 ez To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. Tax forms 1040 ez You will not have additional depreciation if any of the following apply to the property disposed of. Tax forms 1040 ez You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. Tax forms 1040 ez You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Tax forms 1040 ez The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. Tax forms 1040 ez These properties are depreciated using the straight line method. Tax forms 1040 ez Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Tax forms 1040 ez This applies even if no payments are received in that year. Tax forms 1040 ez If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Tax forms 1040 ez For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Tax forms 1040 ez If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. Tax forms 1040 ez To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Tax forms 1040 ez Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Tax forms 1040 ez For more information on installment sales, see chapter 10. Tax forms 1040 ez Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. Tax forms 1040 ez By gift. Tax forms 1040 ez At death. Tax forms 1040 ez In like-kind exchanges. Tax forms 1040 ez In involuntary conversions. Tax forms 1040 ez Publication 544 also explains how to handle a single transaction involving multiple properties. Tax forms 1040 ez Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. Tax forms 1040 ez Deductions for soil and water conservation expenditures (section 1252 property). Tax forms 1040 ez Exclusions from income for certain cost sharing payments (section 1255 property). Tax forms 1040 ez Section 1252 property. Tax forms 1040 ez   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. Tax forms 1040 ez Exceptions. Tax forms 1040 ez   Do not treat gain on the following transactions as gain on section 1252 property. Tax forms 1040 ez Disposition of farmland by gift. Tax forms 1040 ez Transfer of farm property at death (except for income in respect of a decedent). Tax forms 1040 ez For more information, see Regulations section 1. Tax forms 1040 ez 1252-2. Tax forms 1040 ez Amount to report as ordinary income. Tax forms 1040 ez   You report as ordinary income the lesser of the following amounts. Tax forms 1040 ez Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). Tax forms 1040 ez The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. Tax forms 1040 ez Applicable percentage. Tax forms 1040 ez   The applicable percentage is based on the length of time you held the land. Tax forms 1040 ez If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. Tax forms 1040 ez If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. Tax forms 1040 ez If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. Tax forms 1040 ez Example. Tax forms 1040 ez You acquired farmland on January 19, 2005. Tax forms 1040 ez On October 3, 2013, you sold the land at a $30,000 gain. Tax forms 1040 ez Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. Tax forms 1040 ez The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. Tax forms 1040 ez You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. Tax forms 1040 ez Section 1255 property. Tax forms 1040 ez   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. Tax forms 1040 ez If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. Tax forms 1040 ez Amount to report as ordinary income. Tax forms 1040 ez   You report as ordinary income the lesser of the following amounts. Tax forms 1040 ez The applicable percentage of the total excluded cost-sharing payments. Tax forms 1040 ez The gain on the disposition of the property. Tax forms 1040 ez You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. Tax forms 1040 ez However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. Tax forms 1040 ez Applicable percentage. Tax forms 1040 ez   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. Tax forms 1040 ez If the property is held less than 10 years after you receive the payments, the percentage is 100%. Tax forms 1040 ez After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. Tax forms 1040 ez Form 4797, Part III. Tax forms 1040 ez   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. Tax forms 1040 ez Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Office of Attorney General

Website: Office of Attorney General

Address: Office of Attorney General
Consumer Protection Division
PO Drawer 1508
Santa Fe, NM 87504-1508

Phone Number: 505-827-6009 (Santa Fe) 505-222-9100 (Albuquerque) 575-526-2280(Las Cruces) (Albuquerque)

Toll-free: 1-800-678-1508

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Regulation and Licensing Department

Website: Regulation and Licensing Department

Address: Regulation and Licensing Department
Financial Institutions Division
2550 Cerrillos Rd., 3rd Floor
Santa Fe, NM 87505

Phone Number: 505-476-4885

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Public Regulation Commission

Website: Public Regulation Commission

Address: Public Regulation Commission
Insurance Division
PO Box 1269
1120 Paseo de Peralta
Santa Fe, NM 87504

Toll-free: 1-888-427-5772 (NM)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Regulation and Licensing Department

Website: Regulation and Licensing Department

Address: Regulation and Licensing Department
Securities Division
2550 Cerrillos Rd., 3rd Floor
Santa Fe, NM 87505

Phone Number: 505-476-4580

Toll-free: 1-800-704-5533 (NM)

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Regulation Commission

Website: Public Regulation Commission

Address: Public Regulation Commission
Consumer Relations Division
1120 Paseo de Peralta
PO Box 1269
Santa Fe, NM 87501

Phone Number: 505-827-4592

Toll-free: 1-888-427-5772

TTY: 505-827-6911

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The Tax Forms 1040 Ez

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