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Turbo State Tax Free

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Turbo State Tax Free

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

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.

If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2-month extension date. However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.

Where to File

If you are a U.S. citizen or resident alien (Green Card Holder) and you live in a foreign country, mail your U.S. tax return to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA

Estimated tax payments should be mailed with form 1040-ES to:

Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
USA

Taxpayers with an AGI (Adjusted Gross Income) of $58,000 or less can electronically file their tax return for free using freefile. Taxpayers with an AGI greater than $58,000 can either use the Free File Fillable Forms or efile by purchasing commercial software. A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best for you, view the complete Free File Software list and the services provided.

Taxpayer Identification Number

Each taxpayer who files, or is claimed as a dependent on, a U.S. tax return will need a social security number (SSN) or individual taxpayer identification number (ITIN). To obtain a SSN, use form SS-5, Application for a Social Security Card. To get form SS-5, or to find out if you are eligible for a social security card, contact a Social Security Office or visit Social Security International Operations. If you, or your spouse, are not eligible for a SSN, you can obtain an ITIN by filing form W-7 along with appropriate documentation.

Exchange Rates

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars. Taxpayers generally use the yearly average exchange rate to report foreign-earned income that was received regularly throughout the year. However, if you had foreign transactions on specific days, you may also use the exchange rates for those days. Exchange rates can be found at Foreign Currency and Currency Exchange Rates. Yearly average currency exchange rates for most countries can be found at Yearly Average Currency Exchange Rates.

How to Get Tax Help

The IRS Office in Philadelphia provides international tax assistance. This office is open Monday through Friday from 6:00 a.m. to 11:00 p.m. EST and can be contacted by:

  • Phone: 1 (267) 941-1000 (not toll-free)
  • FAX:1 (267) 941-1055
  • Email: Email the IRS
    (e-mail is for general tax questions; NOT questions regarding your tax account)
  • Mail: Internal Revenue Service
    Philadelphia, Pa 19255-0725

The IRS has customer service personnel available to provide tax assistance in the following Embassies and Consulates abroad:

 

Permanent IRS Offices Outside the United States
Office Address Office Phone Numbers and Email

U.S. Consulate
Internal Revenue Service
Frankfurt
Giessener Str.
30
60435 Frankfurt am Main
Germany

Walk-in assistance by appointment only
Tuesdays 9:00 a.m.-12:30 p.m.
Call (49) (69) 7535-3811 to request an appointment.

Phone Service
Tel: [49] (69) 7535-3823
9:00 a.m.-12:30 p.m. and 1:30 p.m.-3:30 p.m.
Monday through Thursday
U.S. Embassy
Internal Revenue Service
London
24/31 Grosvenor Square
London W1A 1 AE
England
Walk-in assistance
Tuesday through Thursday
9:00 a.m. - 1:00 p.m. and 2:00 p.m. - 4:00 p.m.

Phone Service
Tel: [44] (207) 894-0477
Monday 9 a.m. to 4 p.m.
Tuesday through Thursday 9 a.m. to 12:00 noon.
Fax: [44] (207) 495-4224
U.S. Embassy
Internal Revenue Service
2 Avenue Gabriel
75382 Paris Cedex 08
France
Walk-in assistance
Monday through Friday
9:00 a.m.- 12:00 noon

Phone Service
Tel. [33] (1) 4312-2555
Monday - Friday 9:00 a.m. - 12:00 noon and 1:30 p.m. - 3:30 p.m.
Fax: +33-1-4312-2303
Email: irs.paris@irs.gov
U.S. Embassy Beijing
Internal Revenue Service
No. 55 An Jia Lou Lu
Beijing 100600
Peoples Republic of China
Walk-in assistance by appointment only.
Wednesdays 1:00 p.m. – 4:00 p.m.
Call or email to request an appointment.

Phone Service
Tel: [86] (10) 8531-3983
Fax: [86] (10) 8531-4287
Email: irs.beijing@irs.gov (for all inquiries)

 

Help with Unresolved Tax Problems

If you are experiencing a tax problem that is causing you economic harm or has not been resolved through normal channels, you can contact the Taxpayer Advocate.

References/Related Topics

Page Last Reviewed or Updated: 31-Jan-2014

The Turbo State Tax Free

Turbo state tax free 15. Turbo state tax free   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. Turbo state tax free More information. Turbo state tax free Special SituationsException for sales to related persons. Turbo state tax free Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. Turbo state tax free  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. Turbo state tax free See Mortgage ending early under Points in chapter 23. Turbo state tax free Introduction This chapter explains the tax rules that apply when you sell your main home. Turbo state tax free In most cases, your main home is the one in which you live most of the time. Turbo state tax free If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). Turbo state tax free See Excluding the Gain , later. Turbo state tax free Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Turbo state tax free If you have gain that cannot be excluded, it is taxable. Turbo state tax free Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). Turbo state tax free You may also have to complete Form 4797, Sales of Business Property. Turbo state tax free See Reporting the Sale , later. Turbo state tax free If you have a loss on the sale, you generally cannot deduct it on your return. Turbo state tax free However, you may need to report it. Turbo state tax free See Reporting the Sale , later. Turbo state tax free The following are main topics in this chapter. Turbo state tax free Figuring gain or loss. Turbo state tax free Basis. Turbo state tax free Excluding the gain. Turbo state tax free Ownership and use tests. Turbo state tax free Reporting the sale. Turbo state tax free Other topics include the following. Turbo state tax free Business use or rental of home. Turbo state tax free Recapturing a federal mortgage subsidy. Turbo state tax free Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. Turbo state tax free ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Turbo state tax free To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Turbo state tax free Land. Turbo state tax free   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Turbo state tax free However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. Turbo state tax free See Vacant land under Main Home in Publication 523 for more information. Turbo state tax free Example. Turbo state tax free You buy a piece of land and move your main home to it. Turbo state tax free Then you sell the land on which your main home was located. Turbo state tax free This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Turbo state tax free More than one home. Turbo state tax free   If you have more than one home, you can exclude gain only from the sale of your main home. Turbo state tax free You must include in income gain from the sale of any other home. Turbo state tax free If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year. Turbo state tax free Example 1. Turbo state tax free You own two homes, one in New York and one in Florida. Turbo state tax free From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Turbo state tax free In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Turbo state tax free You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Turbo state tax free Example 2. Turbo state tax free You own a house, but you live in another house that you rent. Turbo state tax free The rented house is your main home. Turbo state tax free Example 3. Turbo state tax free You own two homes, one in Virginia and one in New Hampshire. Turbo state tax free In 2009 and 2010, you lived in the Virginia home. Turbo state tax free In 2011 and 2012, you lived in the New Hampshire home. Turbo state tax free In 2013, you lived again in the Virginia home. Turbo state tax free Your main home in 2009, 2010, and 2013 is the Virginia home. Turbo state tax free Your main home in 2011 and 2012 is the New Hampshire home. Turbo state tax free You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Turbo state tax free Property used partly as your main home. Turbo state tax free   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Turbo state tax free For details, see Business Use or Rental of Home , later. Turbo state tax free Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Turbo state tax free Subtract the adjusted basis from the amount realized to get your gain or loss. Turbo state tax free     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. Turbo state tax free It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Turbo state tax free Payment by employer. Turbo state tax free   You may have to sell your home because of a job transfer. Turbo state tax free If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Turbo state tax free Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. Turbo state tax free Option to buy. Turbo state tax free   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Turbo state tax free If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Turbo state tax free Report this amount on Form 1040, line 21. Turbo state tax free Form 1099-S. Turbo state tax free   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. Turbo state tax free   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Turbo state tax free Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Turbo state tax free Amount Realized The amount realized is the selling price minus selling expenses. Turbo state tax free Selling expenses. Turbo state tax free   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Turbo state tax free ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Turbo state tax free This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Turbo state tax free For information on how to figure your home's adjusted basis, see Determining Basis , later. Turbo state tax free Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Turbo state tax free Gain on sale. Turbo state tax free   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. Turbo state tax free Loss on sale. Turbo state tax free   If the amount realized is less than the adjusted basis, the difference is a loss. Turbo state tax free A loss on the sale of your main home cannot be deducted. Turbo state tax free Jointly owned home. Turbo state tax free   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Turbo state tax free Separate returns. Turbo state tax free   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Turbo state tax free Your ownership interest is generally determined by state law. Turbo state tax free Joint owners not married. Turbo state tax free   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Turbo state tax free Each of you applies the rules discussed in this chapter on an individual basis. Turbo state tax free Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Turbo state tax free Foreclosure or repossession. Turbo state tax free   If your home was foreclosed on or repossessed, you have a disposition. Turbo state tax free See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. Turbo state tax free Abandonment. Turbo state tax free   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Turbo state tax free Trading (exchanging) homes. Turbo state tax free   If you trade your old home for another home, treat the trade as a sale and a purchase. Turbo state tax free Example. Turbo state tax free You owned and lived in a home with an adjusted basis of $41,000. Turbo state tax free A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Turbo state tax free This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). Turbo state tax free If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Turbo state tax free Transfer to spouse. Turbo state tax free   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. Turbo state tax free This is true even if you receive cash or other consideration for the home. Turbo state tax free As a result, the rules in this chapter do not apply. Turbo state tax free More information. Turbo state tax free   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. Turbo state tax free Involuntary conversion. Turbo state tax free   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Turbo state tax free This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . Turbo state tax free Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Turbo state tax free Your basis in your home is determined by how you got the home. Turbo state tax free Generally, your basis is its cost if you bought it or built it. Turbo state tax free If you got it in some other way (inheritance, gift, etc. Turbo state tax free ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Turbo state tax free While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Turbo state tax free The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Turbo state tax free See Adjusted Basis , later. Turbo state tax free You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. Turbo state tax free Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Turbo state tax free Purchase. Turbo state tax free   If you bought your home, your basis is its cost to you. Turbo state tax free This includes the purchase price and certain settlement or closing costs. Turbo state tax free In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Turbo state tax free If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. Turbo state tax free Settlement fees or closing costs. Turbo state tax free   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Turbo state tax free You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Turbo state tax free A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Turbo state tax free    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. Turbo state tax free It also lists some settlement costs that cannot be included in basis. Turbo state tax free   Also see Publication 523 for additional items and a discussion of basis other than cost. Turbo state tax free Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Turbo state tax free To figure your adjusted basis, you can use Worksheet 1 in Publication 523. Turbo state tax free Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Turbo state tax free Increases to basis. Turbo state tax free   These include the following. Turbo state tax free Additions and other improvements that have a useful life of more than 1 year. Turbo state tax free Special assessments for local improvements. Turbo state tax free Amounts you spent after a casualty to restore damaged property. Turbo state tax free Improvements. Turbo state tax free   These add to the value of your home, prolong its useful life, or adapt it to new uses. Turbo state tax free You add the cost of additions and other improvements to the basis of your property. Turbo state tax free   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. Turbo state tax free An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. Turbo state tax free Repairs. Turbo state tax free   These maintain your home in good condition but do not add to its value or prolong its life. Turbo state tax free You do not add their cost to the basis of your property. Turbo state tax free   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. Turbo state tax free Decreases to basis. Turbo state tax free   These include the following. Turbo state tax free Discharge of qualified principal residence indebtedness that was excluded from income. Turbo state tax free Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Turbo state tax free For details, see Publication 4681. Turbo state tax free Gain you postponed from the sale of a previous home before May 7, 1997. Turbo state tax free Deductible casualty losses. Turbo state tax free Insurance payments you received or expect to receive for casualty losses. Turbo state tax free Payments you received for granting an easement or right-of-way. Turbo state tax free Depreciation allowed or allowable if you used your home for business or rental purposes. Turbo state tax free Energy-related credits allowed for expenditures made on the residence. Turbo state tax free (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Turbo state tax free ) Adoption credit you claimed for improvements added to the basis of your home. Turbo state tax free Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Turbo state tax free Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Turbo state tax free An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Turbo state tax free District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). Turbo state tax free General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Turbo state tax free Discharges of qualified principal residence indebtedness. Turbo state tax free   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Turbo state tax free This exclusion applies to discharges made after 2006 and before 2014. Turbo state tax free If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. Turbo state tax free   File Form 982 with your tax return. Turbo state tax free See the form's instructions for detailed information. Turbo state tax free Recordkeeping. Turbo state tax free You should keep records to prove your home's adjusted basis. Turbo state tax free Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Turbo state tax free But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Turbo state tax free Keep records proving the basis of both homes as long as they are needed for tax purposes. Turbo state tax free The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Turbo state tax free Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Turbo state tax free This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Turbo state tax free To qualify, you must meet the ownership and use tests described later. Turbo state tax free You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Turbo state tax free You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. Turbo state tax free If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Turbo state tax free See Publication 505, Tax Withholding and Estimated Tax. Turbo state tax free Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Turbo state tax free You meet the ownership test. Turbo state tax free You meet the use test. Turbo state tax free During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Turbo state tax free For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. Turbo state tax free You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Turbo state tax free Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Turbo state tax free This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Turbo state tax free Exception. Turbo state tax free   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Turbo state tax free However, the maximum amount you may be able to exclude will be reduced. Turbo state tax free See Reduced Maximum Exclusion , later. Turbo state tax free Example 1—home owned and occupied for at least 2 years. Turbo state tax free Mya bought and moved into her main home in September 2011. Turbo state tax free She sold the home at a gain in October 2013. Turbo state tax free During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Turbo state tax free She meets the ownership and use tests. Turbo state tax free Example 2—ownership test met but use test not met. Turbo state tax free Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Turbo state tax free He later sold the home for a gain. Turbo state tax free He owned the home during the entire 5-year period ending on the date of sale. Turbo state tax free He meets the ownership test but not the use test. Turbo state tax free He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Turbo state tax free Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Turbo state tax free You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Turbo state tax free Temporary absence. Turbo state tax free   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Turbo state tax free The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Turbo state tax free Example 1. Turbo state tax free David Johnson, who is single, bought and moved into his home on February 1, 2011. Turbo state tax free Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Turbo state tax free David sold the house on March 1, 2013. Turbo state tax free Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. Turbo state tax free The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Turbo state tax free Example 2. Turbo state tax free Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. Turbo state tax free He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. Turbo state tax free On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. Turbo state tax free Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Turbo state tax free He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. Turbo state tax free Ownership and use tests met at different times. Turbo state tax free   You can meet the ownership and use tests during different 2-year periods. Turbo state tax free However, you must meet both tests during the 5-year period ending on the date of the sale. Turbo state tax free Example. Turbo state tax free Beginning in 2002, Helen Jones lived in a rented apartment. Turbo state tax free The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Turbo state tax free In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Turbo state tax free On July 12, 2013, while still living in her daughter's home, she sold her condominium. Turbo state tax free Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Turbo state tax free She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Turbo state tax free She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Turbo state tax free The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Turbo state tax free Cooperative apartment. Turbo state tax free   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. Turbo state tax free Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Turbo state tax free Exception for individuals with a disability. Turbo state tax free   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Turbo state tax free Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Turbo state tax free If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Turbo state tax free Previous home destroyed or condemned. Turbo state tax free   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Turbo state tax free This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. Turbo state tax free Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Turbo state tax free Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Turbo state tax free   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Turbo state tax free You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. Turbo state tax free This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Turbo state tax free   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Turbo state tax free For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. Turbo state tax free Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Turbo state tax free (But see Special rules for joint returns , next. Turbo state tax free ) Special rules for joint returns. Turbo state tax free   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Turbo state tax free You are married and file a joint return for the year. Turbo state tax free Either you or your spouse meets the ownership test. Turbo state tax free Both you and your spouse meet the use test. Turbo state tax free During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Turbo state tax free If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Turbo state tax free For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Turbo state tax free Example 1—one spouse sells a home. Turbo state tax free Emily sells her home in June 2013 for a gain of $300,000. Turbo state tax free She marries Jamie later in the year. Turbo state tax free She meets the ownership and use tests, but Jamie does not. Turbo state tax free Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Turbo state tax free The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Turbo state tax free Example 2—each spouse sells a home. Turbo state tax free The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Turbo state tax free He meets the ownership and use tests on his home, but Emily does not. Turbo state tax free Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Turbo state tax free However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Turbo state tax free Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Turbo state tax free The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Turbo state tax free Sale of main home by surviving spouse. Turbo state tax free   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Turbo state tax free   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Turbo state tax free The sale or exchange took place after 2008. Turbo state tax free The sale or exchange took place no more than 2 years after the date of death of your spouse. Turbo state tax free You have not remarried. Turbo state tax free You and your spouse met the use test at the time of your spouse's death. Turbo state tax free You or your spouse met the ownership test at the time of your spouse's death. Turbo state tax free Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Turbo state tax free Example. Turbo state tax free   Harry owned and used a house as his main home since 2009. Turbo state tax free Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. Turbo state tax free Harry died on August 15, 2013, and Wilma inherited the property. Turbo state tax free Wilma sold the property on September 3, 2013, at which time she had not remarried. Turbo state tax free Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Turbo state tax free Home transferred from spouse. Turbo state tax free   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Turbo state tax free Use of home after divorce. Turbo state tax free   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Turbo state tax free Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Turbo state tax free This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Turbo state tax free In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Turbo state tax free A change in place of employment. Turbo state tax free Health. Turbo state tax free Unforeseen circumstances. Turbo state tax free Unforeseen circumstances. Turbo state tax free   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. Turbo state tax free   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. Turbo state tax free Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. Turbo state tax free But you must meet the ownership and use tests. Turbo state tax free Periods of nonqualified use. Turbo state tax free   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. Turbo state tax free Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. Turbo state tax free Exceptions. Turbo state tax free   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Turbo state tax free The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. Turbo state tax free Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. Turbo state tax free Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. Turbo state tax free Calculation. Turbo state tax free   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. Turbo state tax free Example 1. Turbo state tax free On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Turbo state tax free She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Turbo state tax free The house was rented from June 1, 2009, to March 31, 2011. Turbo state tax free Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Turbo state tax free Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Turbo state tax free During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Turbo state tax free Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Turbo state tax free Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. Turbo state tax free 321. Turbo state tax free To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. Turbo state tax free 321. Turbo state tax free Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. Turbo state tax free Example 2. Turbo state tax free William owned and used a house as his main home from 2007 through 2010. Turbo state tax free On January 1, 2011, he moved to another state. Turbo state tax free He rented his house from that date until April 30, 2013, when he sold it. Turbo state tax free During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Turbo state tax free He must report the sale on Form 4797 because it was rental property at the time of sale. Turbo state tax free Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Turbo state tax free Because he met the ownership and use tests, he can exclude gain up to $250,000. Turbo state tax free However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Turbo state tax free Depreciation after May 6, 1997. Turbo state tax free   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Turbo state tax free If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Turbo state tax free See Publication 544 for more information. Turbo state tax free Property used partly for business or rental. Turbo state tax free   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. Turbo state tax free Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. Turbo state tax free If any of these conditions apply, report the entire gain or loss. Turbo state tax free For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. Turbo state tax free If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). Turbo state tax free See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. Turbo state tax free Installment sale. Turbo state tax free    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. Turbo state tax free These sales are called “installment sales. Turbo state tax free ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. Turbo state tax free You may be able to report the part of the gain you cannot exclude on the installment basis. Turbo state tax free    Use Form 6252, Installment Sale Income, to report the sale. Turbo state tax free Enter your exclusion on line 15 of Form 6252. Turbo state tax free Seller-financed mortgage. Turbo state tax free   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. Turbo state tax free You must separately report as interest income the interest you receive as part of each payment. Turbo state tax free If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). Turbo state tax free The buyer must give you his or her SSN, and you must give the buyer your SSN. Turbo state tax free Failure to meet these requirements may result in a $50 penalty for each failure. Turbo state tax free If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. Turbo state tax free More information. Turbo state tax free   For more information on installment sales, see Publication 537, Installment Sales. Turbo state tax free Special Situations The situations that follow may affect your exclusion. Turbo state tax free Sale of home acquired in a like-kind exchange. Turbo state tax free   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. Turbo state tax free Gain from a like-kind exchange is not taxable at the time of the exchange. Turbo state tax free This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. Turbo state tax free To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. Turbo state tax free For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. Turbo state tax free Home relinquished in a like-kind exchange. Turbo state tax free   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. Turbo state tax free Expatriates. Turbo state tax free   You cannot claim the exclusion if the expatriation tax applies to you. Turbo state tax free The expatriation tax applies to certain U. Turbo state tax free S. Turbo state tax free citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). Turbo state tax free For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. Turbo state tax free S. Turbo state tax free Tax Guide for Aliens. Turbo state tax free Home destroyed or condemned. Turbo state tax free   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. Turbo state tax free   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. Turbo state tax free Sale of remainder interest. Turbo state tax free   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. Turbo state tax free If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. Turbo state tax free Exception for sales to related persons. Turbo state tax free   You cannot exclude gain from the sale of a remainder interest in your home to a related person. Turbo state tax free Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Turbo state tax free ), and lineal descendants (children, grandchildren, etc. Turbo state tax free ). Turbo state tax free Related persons also include certain corporations, partnerships, trusts, and exempt organizations. Turbo state tax free Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. Turbo state tax free You recapture the benefit by increasing your federal income tax for the year of the sale. Turbo state tax free You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. Turbo state tax free Loans subject to recapture rules. Turbo state tax free   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. Turbo state tax free The recapture also applies to assumptions of these loans. Turbo state tax free When recapture applies. Turbo state tax free   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. Turbo state tax free You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. Turbo state tax free Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). Turbo state tax free When recapture does not apply. Turbo state tax free   Recapture does not apply in any of the following situations. Turbo state tax free Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. Turbo state tax free Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. Turbo state tax free For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. Turbo state tax free Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Turbo state tax free The home is disposed of as a result of your death. Turbo state tax free You dispose of the home more than 9 years after the date you closed your mortgage loan. Turbo state tax free You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. Turbo state tax free You dispose of the home at a loss. Turbo state tax free Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. Turbo state tax free The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. Turbo state tax free For more information, see Replacement Period in Publication 547. Turbo state tax free You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). Turbo state tax free Notice of amounts. Turbo state tax free   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. Turbo state tax free How to figure and report the recapture. Turbo state tax free    The recapture tax is figured on Form 8828. Turbo state tax free If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. Turbo state tax free Attach Form 8828 to your Form 1040. Turbo state tax free For more information, see Form 8828 and its instructions. Turbo state tax free Prev  Up  Next   Home   More Online Publications