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Turbotax 2011 Online

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Turbotax 2011 Online

Turbotax 2011 online Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. Turbotax 2011 online Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. Turbotax 2011 online Method 2. Turbotax 2011 online How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. Turbotax 2011 online In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Turbotax 2011 online You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. Turbotax 2011 online Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. Turbotax 2011 online 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. Turbotax 2011 online These wages must be included on line 7 of Form 1040. Turbotax 2011 online See Form 8919 for more information. Turbotax 2011 online Childcare providers. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online Babysitting. Turbotax 2011 online   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Turbotax 2011 online Bankruptcy. Turbotax 2011 online   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. Turbotax 2011 online Your W-2 will show your total wages and withheld income tax for the year. Turbotax 2011 online On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. Turbotax 2011 online Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. Turbotax 2011 online If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. Turbotax 2011 online   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. Turbotax 2011 online For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. Turbotax 2011 online   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. Turbotax 2011 online The statement must show the allocation and describe the method used to make the allocation. Turbotax 2011 online For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. Turbotax 2011 online R. Turbotax 2011 online B. Turbotax 2011 online 596, available at www. Turbotax 2011 online irs. Turbotax 2011 online gov/irb/2006-40_IRB/ar12. Turbotax 2011 online html. Turbotax 2011 online Miscellaneous Compensation This section discusses many types of employee compensation. Turbotax 2011 online The subjects are arranged in alphabetical order. Turbotax 2011 online Advance commissions and other earnings. Turbotax 2011 online   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. Turbotax 2011 online    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. Turbotax 2011 online If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. Turbotax 2011 online See Repayments , later. Turbotax 2011 online Allowances and reimbursements. Turbotax 2011 online    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Turbotax 2011 online If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Turbotax 2011 online Back pay awards. Turbotax 2011 online   Include in income amounts you are awarded in a settlement or judgment for back pay. Turbotax 2011 online These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Turbotax 2011 online They should be reported to you by your employer on Form W-2. Turbotax 2011 online Bonuses and awards. Turbotax 2011 online    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Turbotax 2011 online These include prizes such as vacation trips for meeting sales goals. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online Employee achievement award. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online Your employer can tell you whether your award is a qualified plan award. Turbotax 2011 online 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. Turbotax 2011 online   However, the exclusion does not apply to the following awards. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online Example. Turbotax 2011 online 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. Turbotax 2011 online Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Turbotax 2011 online 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. Turbotax 2011 online Differential wage payments. Turbotax 2011 online   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. Turbotax 2011 online These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Turbotax 2011 online The payments are reported as wages on Form W-2. Turbotax 2011 online Government cost-of-living allowances. Turbotax 2011 online   Most payments received by U. Turbotax 2011 online S. Turbotax 2011 online Government civilian employees for working abroad are taxable. Turbotax 2011 online However, certain cost-of-living allowances are tax free. Turbotax 2011 online Publication 516, U. Turbotax 2011 online S. Turbotax 2011 online Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Turbotax 2011 online Nonqualified deferred compensation plans. Turbotax 2011 online   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Turbotax 2011 online This amount is shown on Form W-2, box 12, using code Y. Turbotax 2011 online This amount is not included in your income. Turbotax 2011 online   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. Turbotax 2011 online This amount is included in your wages shown on Form W-2, box 1. Turbotax 2011 online It is also shown on Form W-2, box 12, using code Z. Turbotax 2011 online Nonqualified deferred compensation plans of nonqualified entities. Turbotax 2011 online   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Turbotax 2011 online For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. Turbotax 2011 online A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. Turbotax 2011 online Note received for services. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online Do not include that part again in your income. Turbotax 2011 online Include the rest of the payment in your income in the year of payment. Turbotax 2011 online   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. Turbotax 2011 online Severance pay. Turbotax 2011 online   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Turbotax 2011 online Accrued leave payment. Turbotax 2011 online   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. Turbotax 2011 online   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. Turbotax 2011 online You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Turbotax 2011 online Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. Turbotax 2011 online Outplacement services. Turbotax 2011 online   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. Turbotax 2011 online    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). Turbotax 2011 online Sick pay. Turbotax 2011 online   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Turbotax 2011 online In addition, you must include in your income sick pay benefits received from any of the following payers. Turbotax 2011 online A welfare fund. Turbotax 2011 online A state sickness or disability fund. Turbotax 2011 online An association of employers or employees. Turbotax 2011 online An insurance company, if your employer paid for the plan. Turbotax 2011 online However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Turbotax 2011 online For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Turbotax 2011 online Social security and Medicare taxes paid by employer. Turbotax 2011 online   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. Turbotax 2011 online The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Turbotax 2011 online However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Turbotax 2011 online Stock appreciation rights. Turbotax 2011 online   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Turbotax 2011 online 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. Turbotax 2011 online You include the cash payment in income in the year you use the right. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. Turbotax 2011 online Recipient of fringe benefit. Turbotax 2011 online   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. Turbotax 2011 online You are considered to be the recipient even if it is given to another person, such as a member of your family. Turbotax 2011 online An example is a car your employer gives to your spouse for services you perform. Turbotax 2011 online The car is considered to have been provided to you and not to your spouse. Turbotax 2011 online   You do not have to be an employee of the provider to be a recipient of a fringe benefit. Turbotax 2011 online If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. Turbotax 2011 online Provider of benefit. Turbotax 2011 online   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. Turbotax 2011 online The provider can be a client or customer of an independent contractor. Turbotax 2011 online Accounting period. Turbotax 2011 online   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Turbotax 2011 online Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Turbotax 2011 online The general rule: benefits are reported for a full calendar year (January 1–December 31). Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online   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). Turbotax 2011 online Form W-2. Turbotax 2011 online   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. Turbotax 2011 online Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Turbotax 2011 online 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). Turbotax 2011 online 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. Turbotax 2011 online Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . Turbotax 2011 online 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. Turbotax 2011 online Long-term care coverage. Turbotax 2011 online   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Turbotax 2011 online However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Turbotax 2011 online This amount will be reported as wages in box 1 of your Form W-2. Turbotax 2011 online Archer MSA contributions. Turbotax 2011 online    Contributions by your employer to your Archer MSA generally are not included in your income. Turbotax 2011 online Their total will be reported in box 12 of Form W-2, with code R. Turbotax 2011 online You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Turbotax 2011 online File the form with your return. Turbotax 2011 online Health flexible spending arrangement (health FSA). Turbotax 2011 online   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. Turbotax 2011 online   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Turbotax 2011 online The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Turbotax 2011 online For more information, see Notice 2012-40, 2012-26 I. Turbotax 2011 online R. Turbotax 2011 online B. Turbotax 2011 online 1046, available at www. Turbotax 2011 online irs. Turbotax 2011 online gov/irb/2012-26 IRB/ar09. Turbotax 2011 online html. Turbotax 2011 online Health reimbursement arrangement (HRA). Turbotax 2011 online   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. Turbotax 2011 online Health savings accounts (HSA). Turbotax 2011 online   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Turbotax 2011 online Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Turbotax 2011 online Contributions made by your employer are not included in your income. Turbotax 2011 online Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Turbotax 2011 online Distributions not used for qualified medical expenses are included in your income. Turbotax 2011 online See Publication 969 for the requirements of an HSA. Turbotax 2011 online   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Turbotax 2011 online The contributions are treated as a distribution of money and are not included in the partner's gross income. Turbotax 2011 online 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. Turbotax 2011 online In both situations, the partner can deduct the contribution made to the partner's HSA. Turbotax 2011 online   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. Turbotax 2011 online The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Turbotax 2011 online Qualified HSA funding distribution. Turbotax 2011 online   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. Turbotax 2011 online See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. Turbotax 2011 online Failure to maintain eligibility. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online This income is also subject to an additional 10% tax. Turbotax 2011 online 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. Turbotax 2011 online See Instructions for Form 8839, Qualified Adoption Expenses, for more information. Turbotax 2011 online Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Turbotax 2011 online They also are included as social security and Medicare wages in boxes 3 and 5. Turbotax 2011 online However, they are not included as wages in box 1. Turbotax 2011 online To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Turbotax 2011 online File the form with your return. Turbotax 2011 online Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. Turbotax 2011 online The gym must be used primarily by employees, their spouses, and their dependent children. Turbotax 2011 online If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online Also see Employee Discounts , later. Turbotax 2011 online Holiday gifts. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Turbotax 2011 online Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. Turbotax 2011 online The amount you can exclude is limited to the lesser of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Turbotax 2011 online Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. Turbotax 2011 online Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. Turbotax 2011 online To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Turbotax 2011 online See the Instructions for Form 2441 for more information. Turbotax 2011 online Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Turbotax 2011 online For more information, see Publication 970. Turbotax 2011 online Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. Turbotax 2011 online The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. Turbotax 2011 online However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). Turbotax 2011 online The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. Turbotax 2011 online For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. Turbotax 2011 online (Ask your employer for this percentage. Turbotax 2011 online ) For a discount on services, 20%. Turbotax 2011 online Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. Turbotax 2011 online If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). Turbotax 2011 online Qualified retirement planning services paid for you by your employer may be excluded from your income. Turbotax 2011 online For more information, see Retirement Planning Services , later. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. Turbotax 2011 online 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. Turbotax 2011 online Also, it is shown separately in box 12 with code C. Turbotax 2011 online Group-term life insurance. Turbotax 2011 online   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. Turbotax 2011 online Permanent benefits. Turbotax 2011 online   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. Turbotax 2011 online Your employer should be able to tell you the amount to include in your income. Turbotax 2011 online Accidental death benefits. Turbotax 2011 online   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. Turbotax 2011 online Former employer. Turbotax 2011 online   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. Turbotax 2011 online Also, it is shown separately in box 12 with code C. Turbotax 2011 online Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Turbotax 2011 online You must pay these taxes with your income tax return. Turbotax 2011 online Include them on line 60, Form 1040, and follow the instructions forline 60. Turbotax 2011 online For more information, see the Instructions for Form 1040. Turbotax 2011 online Two or more employers. Turbotax 2011 online   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. Turbotax 2011 online 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. Turbotax 2011 online You must figure how much to include in your income. Turbotax 2011 online 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. Turbotax 2011 online Figuring the taxable cost. Turbotax 2011 online    Use the following worksheet to figure the amount to include in your income. Turbotax 2011 online   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. Turbotax 2011 online However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . Turbotax 2011 online Worksheet 1. Turbotax 2011 online Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Turbotax 2011 online Enter the total amount of your insurance coverage from your employer(s) 1. Turbotax 2011 online   2. Turbotax 2011 online Limit on exclusion for employer-provided group-term life insurance coverage 2. Turbotax 2011 online 50,000 3. Turbotax 2011 online Subtract line 2 from line 1 3. Turbotax 2011 online   4. Turbotax 2011 online Divide line 3 by $1,000. Turbotax 2011 online Figure to the nearest tenth 4. Turbotax 2011 online   5. Turbotax 2011 online Go to Table 1. Turbotax 2011 online 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. Turbotax 2011 online   6. Turbotax 2011 online Multiply line 4 by line 5 6. Turbotax 2011 online     7. Turbotax 2011 online Enter the number of full months of coverage at this cost 7. Turbotax 2011 online   8. Turbotax 2011 online Multiply line 6 by line 7 8. Turbotax 2011 online   9. Turbotax 2011 online Enter the premiums you paid per month 9. Turbotax 2011 online       10. Turbotax 2011 online Enter the number of months you paid the  premiums 10. Turbotax 2011 online       11. Turbotax 2011 online Multiply line 9 by line 10. Turbotax 2011 online 11. Turbotax 2011 online   12. Turbotax 2011 online Subtract line 11 from line 8. Turbotax 2011 online Include this amount in your income as wages 12. Turbotax 2011 online   Table 1. Turbotax 2011 online Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . Turbotax 2011 online 05     25 through 29 . Turbotax 2011 online 06     30 through 34 . Turbotax 2011 online 08     35 through 39 . Turbotax 2011 online 09     40 through 44 . Turbotax 2011 online 10     45 through 49 . Turbotax 2011 online 15     50 through 54 . Turbotax 2011 online 23     55 through 59 . Turbotax 2011 online 43     60 through 64 . Turbotax 2011 online 66     65 through 69 1. Turbotax 2011 online 27     70 and older 2. Turbotax 2011 online 06   Example. Turbotax 2011 online You are 51 years old and work for employers A and B. Turbotax 2011 online Both employers provide group-term life insurance coverage for you for the entire year. Turbotax 2011 online Your coverage is $35,000 with employer A and $45,000 with employer B. Turbotax 2011 online You pay premiums of $4. Turbotax 2011 online 15 a month under the employer B group plan. Turbotax 2011 online You figure the amount to include in your income as follows. Turbotax 2011 online   Worksheet 1. Turbotax 2011 online Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. Turbotax 2011 online Enter the total amount of your insurance coverage from your employer(s) 1. Turbotax 2011 online 80,000 2. Turbotax 2011 online Limit on exclusion for employer-provided group-term life insurance coverage 2. Turbotax 2011 online 50,000 3. Turbotax 2011 online Subtract line 2 from line 1 3. Turbotax 2011 online 30,000 4. Turbotax 2011 online Divide line 3 by $1,000. Turbotax 2011 online Figure to the nearest tenth 4. Turbotax 2011 online 30. Turbotax 2011 online 0 5. Turbotax 2011 online Go to Table 1. Turbotax 2011 online 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. Turbotax 2011 online . Turbotax 2011 online 23 6. Turbotax 2011 online Multiply line 4 by line 5 6. Turbotax 2011 online 6. Turbotax 2011 online 90 7. Turbotax 2011 online Enter the number of full months of coverage at this cost. Turbotax 2011 online 7. Turbotax 2011 online 12 8. Turbotax 2011 online Multiply line 6 by line 7 8. Turbotax 2011 online 82. Turbotax 2011 online 80 9. Turbotax 2011 online Enter the premiums you paid per month 9. Turbotax 2011 online 4. Turbotax 2011 online 15     10. Turbotax 2011 online Enter the number of months you paid the premiums 10. Turbotax 2011 online 12     11. Turbotax 2011 online Multiply line 9 by line 10. Turbotax 2011 online 11. Turbotax 2011 online 49. Turbotax 2011 online 80 12. Turbotax 2011 online Subtract line 11 from line 8. Turbotax 2011 online Include this amount in your income as wages 12. Turbotax 2011 online 33. Turbotax 2011 online 00 The total amount to include in income for the cost of excess group-term life insurance is $33. Turbotax 2011 online Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. Turbotax 2011 online You must add it to the wages shown on your Forms W-2 and include the total on your return. Turbotax 2011 online Entire cost excluded. Turbotax 2011 online   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Turbotax 2011 online You are permanently and totally disabled and have ended your employment. Turbotax 2011 online Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Turbotax 2011 online A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Turbotax 2011 online (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Turbotax 2011 online ) 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. Turbotax 2011 online Entire cost taxed. Turbotax 2011 online   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. Turbotax 2011 online The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Turbotax 2011 online You are a key employee and your employer's plan discriminates in favor of key employees. Turbotax 2011 online Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Turbotax 2011 online The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. Turbotax 2011 online The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. Turbotax 2011 online (You must accept it in order to be able to properly perform your duties. Turbotax 2011 online ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. Turbotax 2011 online See De Minimis (Minimal) Benefits , earlier. Turbotax 2011 online Faculty lodging. Turbotax 2011 online   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. Turbotax 2011 online However, the lodging must be qualified campus lodging, and you must pay an adequate rent. Turbotax 2011 online Academic health center. Turbotax 2011 online   This is an organization that meets the following conditions. Turbotax 2011 online Its principal purpose or function is to provide medical or hospital care or medical education or research. Turbotax 2011 online It receives payments for graduate medical education under the Social Security Act. Turbotax 2011 online One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. Turbotax 2011 online Qualified campus lodging. Turbotax 2011 online   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. Turbotax 2011 online The lodging must be located on or near a campus of the educational institution or academic health center. Turbotax 2011 online Adequate rent. Turbotax 2011 online   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. Turbotax 2011 online If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. Turbotax 2011 online   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. Turbotax 2011 online Example. Turbotax 2011 online Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. Turbotax 2011 online The house is appraised at $200,000. Turbotax 2011 online The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. Turbotax 2011 online Carl pays an annual rent of $11,000. Turbotax 2011 online Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). Turbotax 2011 online If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). Turbotax 2011 online Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. Turbotax 2011 online See Publication 521 for more information. Turbotax 2011 online No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). Turbotax 2011 online In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. Turbotax 2011 online Example. Turbotax 2011 online You are employed as a flight attendant for a company that owns both an airline and a hotel chain. Turbotax 2011 online Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. Turbotax 2011 online The value of the personal flight is not included in your income. Turbotax 2011 online However, the value of the hotel room is included in your income because you do not work in the hotel business. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Turbotax 2011 online Also, see Financial Counseling Fees , earlier. Turbotax 2011 online Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Turbotax 2011 online 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. Turbotax 2011 online Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Turbotax 2011 online 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. Turbotax 2011 online Exclusion limit. Turbotax 2011 online   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Turbotax 2011 online   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Turbotax 2011 online   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Turbotax 2011 online   If the benefits have a value that is more than these limits, the excess must be included in your income. Turbotax 2011 online You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Turbotax 2011 online Commuter highway vehicle. Turbotax 2011 online   This is a highway vehicle that seats at least six adults (not including the driver). Turbotax 2011 online 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). Turbotax 2011 online Transit pass. Turbotax 2011 online   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. Turbotax 2011 online Qualified parking. Turbotax 2011 online   This is parking provided to an employee at or near the employer's place of business. Turbotax 2011 online 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. Turbotax 2011 online It does not include parking at or near the employee's home. Turbotax 2011 online Qualified bicycle commuting. Turbotax 2011 online   This is reimbursement based on the number of qualified bicycle commuting months for the year. Turbotax 2011 online 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. Turbotax 2011 online The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Turbotax 2011 online Tuition Reduction You can exclude a qualified tuition reduction from your income. Turbotax 2011 online This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. Turbotax 2011 online For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. Turbotax 2011 online Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. Turbotax 2011 online For more information, see Publication 970. Turbotax 2011 online Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. Turbotax 2011 online Example. Turbotax 2011 online You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. Turbotax 2011 online The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. Turbotax 2011 online Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. Turbotax 2011 online For an exception, see Group-Term Life Insurance , earlier. Turbotax 2011 online General valuation rule. Turbotax 2011 online   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. Turbotax 2011 online If you pay fair market value for a fringe benefit, no amount is included in your income. Turbotax 2011 online Fair market value. Turbotax 2011 online   The fair market value of a fringe benefit is determined by all the facts and circumstances. Turbotax 2011 online It is the amount you would have to pay a third party to buy or lease the benefit. Turbotax 2011 online This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. Turbotax 2011 online Employer-provided vehicles. Turbotax 2011 online   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. Turbotax 2011 online   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. Turbotax 2011 online An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. Turbotax 2011 online The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. Turbotax 2011 online Flights on employer-provided aircraft. Turbotax 2011 online   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. Turbotax 2011 online   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. Turbotax 2011 online The division must be based on all the facts, including which employee or employees control the use of the aircraft. Turbotax 2011 online Special valuation rules. Turbotax 2011 online   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. Turbotax 2011 online If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. Turbotax 2011 online You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. Turbotax 2011 online   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. Turbotax 2011 online The special valuation rules are the following. Turbotax 2011 online The automobile lease rule. Turbotax 2011 online The vehicle cents-per-mile rule. Turbotax 2011 online The commuting rule. Turbotax 2011 online The unsafe conditions commuting rule. Turbotax 2011 online The employer-operated eating-facility rule. Turbotax 2011 online   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Turbotax 2011 online    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. Turbotax 2011 online 61-21(g) and 1. Turbotax 2011 online 61-21(h) of the regulations. Turbotax 2011 online Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Turbotax 2011 online (Your employer can tell you whether your retirement plan is qualified. Turbotax 2011 online ) However, the cost of life insurance coverage included in the plan may have to be included. Turbotax 2011 online See Group-Term Life Insurance , earlier, under Fringe Benefits. Turbotax 2011 online 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. Turbotax 2011 online 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. Turbotax 2011 online For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. Turbotax 2011 online S. Turbotax 2011 online Civil Service Retirement Benefits, if you are a federal employee or retiree). Turbotax 2011 online Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Turbotax 2011 online The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Turbotax 2011 online An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Turbotax 2011 online However, it is included in wages subject to social security and Medicare taxes. Turbotax 2011 online Elective deferrals include elective contributions to the following retirement plans. Turbotax 2011 online Cash or deferred arrangements (section 401(k) plans). Turbotax 2011 online The Thrift Savings Plan for federal employees. Turbotax 2011 online Salary reduction simplified employee pension plans (SARSEP). Turbotax 2011 online Savings incentive match plans for employees (SIMPLE plans). Turbotax 2011 online Tax-sheltered annuity plans (403(b) plans). Turbotax 2011 online Section 501(c)(18)(D) plans. Turbotax 2011 online (But see Reporting by employer , later. Turbotax 2011 online ) Section 457 plans. Turbotax 2011 online Qualified automatic contribution arrangements. Turbotax 2011 online   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. Turbotax 2011 online You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Turbotax 2011 online 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. Turbotax 2011 online   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. Turbotax 2011 online Overall limit on deferrals. Turbotax 2011 online   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. Turbotax 2011 online The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. Turbotax 2011 online Amounts deferred under specific plan limits are part of the overall limit on deferrals. Turbotax 2011 online   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Turbotax 2011 online However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Turbotax 2011 online Catch-up contributions. Turbotax 2011 online   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. Turbotax 2011 online For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. Turbotax 2011 online   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. Turbotax 2011 online SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. Turbotax 2011 online Section 457 plans, see Limit for deferrals under section 457 plans , later. Turbotax 2011 online Limit for deferrals under SIMPLE plans. Turbotax 2011 online   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. Turbotax 2011 online Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. Turbotax 2011 online Limit for tax-sheltered annuities. Turbotax 2011 online   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. Turbotax 2011 online However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. Turbotax 2011 online $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Turbotax 2011 online   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. Turbotax 2011 online   For more information, see Publication 571. Turbotax 2011 online Limit for deferral under section 501(c)(18) plans. Turbotax 2011 online   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. Turbotax 2011 online Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. Turbotax 2011 online Limit for deferrals under section 457 plans. Turbotax 2011 online   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. Turbotax 2011 online However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. Turbotax 2011 online See Increased limit , later. Turbotax 2011 online Includible compensation. Turbotax 2011 online   This is the pay you received for the year from the employer who maintained the section 457 plan. Turbotax 2011 online In most cases, it includes all the following payments. Turbotax 2011 online Wages and salaries. Turbotax 2011 online Fees for professional services. Turbotax 2011 online The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. Turbotax 2011 online Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. Turbotax 2011 online Commissions and tips. Turbotax 2011 online Fringe benefits. Turbotax 2011 online Bonuses. Turbotax 2011 online Employer contributions (elective deferrals) to: The section 457 plan. Turbotax 2011 online Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. Turbotax 2011 online A salary reduction simplified employee pension (SARSEP). Turbotax 2011 online A tax-sheltered annuity (section 403(b) plan). Turbotax 2011 online A savings incentive match plan for employees (SIMPLE plan). Turbotax 2011 online A section 125 cafeteria plan. Turbotax 2011 online   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. Turbotax 2011 online Your wages as defined for income tax withholding purposes. Turbotax 2011 online Your wages as reported in box 1 of Form W-2. Turbotax 2011 online Your wages that are subject to social security withholding (including elective deferrals). Turbotax 2011 online Increased limit. Turbotax 2011 online   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). Turbotax 2011 online Catch-up contributions. Turbotax 2011 online   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. Turbotax 2011 online If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. Turbotax 2011 online However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. Turbotax 2011 online Designated Roth contributions. Turbotax 2011 online   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. Turbotax 2011 online Designated Roth contributions are treated as elective deferrals, except that they are included in income. Turbotax 2011 online Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. Turbotax 2011 online   Qualified distributions from a Roth plan are not included in income. Turbotax 2011 online In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. Turbotax 2011 online Reporting by employer. Turbotax 2011 online   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Turbotax 2011 online Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. Turbotax 2011 online Section 501(c)(18)(D) contributions. Turbotax 2011 online   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. Turbotax 2011 online The amount you contributed should be identified with code “H” in box 12. Turbotax 2011 online You may deduct the amount deferred subject to the limits that apply. Turbotax 2011 online Include your deduction in the total on Form 1040, line 36. Turbotax 2011 online Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. Turbotax 2011 online Designated Roth contributions. Turbotax 2011 online    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. Turbotax 2011 online Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. Turbotax 2011 online Excess deferrals. Turbotax 2011 online   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. Turbotax 2011 online If the plan permits, the excess amount will be distributed to you. Turbotax 2011 online If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. Turbotax 2011 online You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. Turbotax 2011 online The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. Turbotax 2011 online   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. Turbotax 2011 online File Form 1040 to add the excess deferral amount to your wages on line 7. Turbotax 2011 online Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. Turbotax 2011 online Excess not distributed. Turbotax 2011 online   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. Turbotax 2011 online Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. Turbotax 2011 online Excess distributed to you. Turbotax 2011 online   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. Turbotax 2011 online If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Turbotax 2011 online Any income on the excess deferral taken out is taxable in the tax year in which you take it out. Turbotax 2011 online If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. Turbotax 2011 online    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Turbotax 2011 online Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. Turbotax 2011 online If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. Turbotax 2011 online Add the excess deferral amount to your wages on your 2013 tax return. Turbotax 2011 online If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Turbotax 2011 online Do not add this amount to your wages on your 2013 return. Turbotax 2011 online If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. Turbotax 2011 online If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. Turbotax 2011 online S. Turbotax 2011 online Individual Income Tax Return. Turbotax 2011 online If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. Turbotax 2011 online If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. Turbotax 2011 online Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. Turbotax 2011 online Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Turbotax 2011 online Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. Turbotax 2011 online ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Turbotax 2011 online It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Turbotax 2011 online Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. Turbotax 2011 online If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. Turbotax 2011 online You must include the excess contributions in your income as wages on Form 1040, line 7. Turbotax 2011 online You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. Turbotax 2011 online If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. Turbotax 2011 online The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. Turbotax 2011 online You should receive a Form 1099-R for the year the excess contributions are distributed to you. Turbotax 2011 online Add the distribution to your wages for that year. Turbotax 2011 online Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Turbotax 2011 online It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Turbotax 2011 online Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. Turbotax 2011 online Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. Turbotax 2011 online A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. Turbotax 2011 online A corrective payment consisting of your after-tax contributions is not taxable. Turbotax 2011 online If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. Turbotax 2011 online Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. Turbotax 2011 online Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. Turbotax 2011 online Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Turbotax 2011 online It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Turbotax 2011 online Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. Turbotax 2011 online The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Turbotax 2011 online Your employer can tell you which kind of option you hold. Turbotax 2011 online Nonstatutory Stock Options Grant of option. Turbotax 2011 online   If you are granted a nonstatutory stock option, you may have income when you receive the option. Turbotax 2011 online The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. Turbotax 2011 online The fair market value of an option can be readily determined if it is actively traded on an established market. Turbotax 2011 online    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. Turbotax 2011 online You can transfer the option. Turbotax 2011 online You can exercise the option immediately in full. Turbotax 2011 online The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. Turbotax 2011 online The fair market value of the option privilege can be readily determined. Turbotax 2011 online The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. Turbotax 2011 online For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. Turbotax 2011 online The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Turbotax 2011 online If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. Turbotax 2011 online For more information on the excise tax, see Internal Revenue Code section 4985. Turbotax 2011 online Option with readily determinable value. Turbotax 2011 online   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Turbotax 2011 online See Restricted Property , later, for rules on how much income to include and when to include it. Turbotax 2011 online However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. Turbotax 2011 online Option without readily determinable value. Turbotax 2011 online   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Turbotax 2011 online    Exercise or transfer of option. Turbotax 2011 online   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. Turbotax 2011 online Option with readily determinable value. Turbotax 2011 online   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. Turbotax 2011 online Option without readily determinable value. Turbotax 2011 online   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope
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Contact My Local Office in Arizona

Face-to-face Tax Help

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

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

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

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

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

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

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

City Street Address Days/Hours of Service Telephone*
Bullhead City 2580 Hwy. 95
Bullhead City,
AZ 86442

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

 

Services Provided

(877) 647-0788
Flagstaff 1633 S. Plaza Way
Flagstaff, AZ 86001

This Office is Temporarily Closed

 

(928) 214-3303
Flagstaff/remote Taxpayer
Assistance available
at United Way of
Northern Arizona
1515 E. Cedar Ave.
Suite D-1
Flagstaff, AZ 86004

Monday-Friday - 9:00 a.m.-4:00 p.m.

 

Virtual Services Provided

(928) 214-3303
Glendale 7350 W Camino
San Xavier
Glendale AZ 85308 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(623) 643-0399 
Lake Havasu City  60 Acoma Blvd.
Lake Havasu City,
AZ 86403
**Effective 3/2/2012 - This office will be closed until further notice** (928) 453-2670 
Lake Havasu City/remote
Taxpayer Assistance
available at Lake Havasu
City Interagency Council
1940 Mesquite Ave.
Lake Havasu City,
AZ 86403

Monday-Friday - 9:30 a.m.-4:00 p.m.

 

Virtual Services Provided

(623) 453-2670
Mesa 1818 E. Southern Ave.Mesa, AZ 85204

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(480) 503-7355 
Phoenix   4041 N Central Ave.
Phoenix, AZ 85012  

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(602) 636-9199 
Prescott/
remote Taxpayer Assistance
available at Prescott
Catholic Charities
434 W. Gurley St.
Prescott, AZ 86301

Monday-Friday - 8:30 a.m.-4:00 p.m.

 

 Virtual Services Provided

(928) 445-5922
Tucson  300 W. Congress
Tucson, AZ 85701 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(520) 205-5008 
Yuma 

2285 S. 4th Ave.
Yuma, AZ 85364 

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

 

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

 

Services Provided

(928) 726-9530 

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

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

The Taxpayer Advocate Service: Call 602-636-9500 in the Phoenix metropolitan area or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see Tax Topic 104.

Partnerships

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

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

Internal Revenue Service
4041 N. Central Ave., MS 4040PHX
Phoenix, AZ 85012

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

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

Page Last Reviewed or Updated: 28-Mar-2014

The Turbotax 2011 Online

Turbotax 2011 online 5. Turbotax 2011 online   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. Turbotax 2011 online Shared equity financing agreement. Turbotax 2011 online Donation of use of the property. Turbotax 2011 online Examples. Turbotax 2011 online Days used for repairs and maintenance. Turbotax 2011 online Days used as a main home before or after renting. Turbotax 2011 online Reporting Income and DeductionsNot used as a home. Turbotax 2011 online Used as a home but rented less than 15 days. Turbotax 2011 online Used as a home and rented 15 days or more. Turbotax 2011 online If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Turbotax 2011 online In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Turbotax 2011 online Only your rental expenses may deducted on Schedule E (Form 1040). Turbotax 2011 online Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Turbotax 2011 online You must also determine if the dwelling unit is considered a home. Turbotax 2011 online The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Turbotax 2011 online Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Turbotax 2011 online There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Turbotax 2011 online Dwelling unit. Turbotax 2011 online   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Turbotax 2011 online It also includes all structures or other property belonging to the dwelling unit. Turbotax 2011 online A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Turbotax 2011 online   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Turbotax 2011 online Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Turbotax 2011 online Example. Turbotax 2011 online You rent a room in your home that is always available for short-term occupancy by paying customers. Turbotax 2011 online You do not use the room yourself and you allow only paying customers to use the room. Turbotax 2011 online This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Turbotax 2011 online Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Turbotax 2011 online When dividing your expenses, follow these rules. Turbotax 2011 online Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Turbotax 2011 online (This rule does not apply when determining whether you used the unit as a home. Turbotax 2011 online ) Any day that the unit is available for rent but not actually rented is not a day of rental use. Turbotax 2011 online Fair rental price. Turbotax 2011 online   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Turbotax 2011 online The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Turbotax 2011 online   Ask yourself the following questions when comparing another property with yours. Turbotax 2011 online Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. Turbotax 2011 online Example. Turbotax 2011 online Your beach cottage was available for rent from June 1 through August 31 (92 days). Turbotax 2011 online Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. Turbotax 2011 online The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Turbotax 2011 online Your family also used the cottage during the last 2 weeks of May (14 days). Turbotax 2011 online The cottage was not used at all before May 17 or after August 31. Turbotax 2011 online You figure the part of the cottage expenses to treat as rental expenses as follows. Turbotax 2011 online The cottage was used for rental a total of 85 days (92 − 7). Turbotax 2011 online The days it was available for rent but not rented (7 days) are not days of rental use. Turbotax 2011 online The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Turbotax 2011 online You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Turbotax 2011 online The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Turbotax 2011 online Your rental expenses are 85/99 (86%) of the cottage expenses. Turbotax 2011 online Note. Turbotax 2011 online When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Turbotax 2011 online Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Turbotax 2011 online Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Turbotax 2011 online If you have a net loss, you may not be able to deduct all of the rental expenses. Turbotax 2011 online See Dwelling Unit Used as a Home, next. Turbotax 2011 online Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Turbotax 2011 online You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Turbotax 2011 online See What is a day of personal use , later. Turbotax 2011 online If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. Turbotax 2011 online Instead, count it as a day of personal use in applying both (1) and (2) above. Turbotax 2011 online What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Turbotax 2011 online You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Turbotax 2011 online However, see Days used as a main home before or after renting , later. Turbotax 2011 online A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Turbotax 2011 online Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Turbotax 2011 online ), and lineal descendants (children, grandchildren, etc. Turbotax 2011 online ). Turbotax 2011 online Anyone under an arrangement that lets you use some other dwelling unit. Turbotax 2011 online Anyone at less than a fair rental price. Turbotax 2011 online Main home. Turbotax 2011 online   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Turbotax 2011 online Shared equity financing agreement. Turbotax 2011 online   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Turbotax 2011 online Donation of use of the property. Turbotax 2011 online   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Turbotax 2011 online Examples. Turbotax 2011 online   The following examples show how to determine if you have days of personal use. Turbotax 2011 online Example 1. Turbotax 2011 online You and your neighbor are co-owners of a condominium at the beach. Turbotax 2011 online Last year, you rented the unit to vacationers whenever possible. Turbotax 2011 online The unit was not used as a main home by anyone. Turbotax 2011 online Your neighbor used the unit for 2 weeks last year; you did not use it at all. Turbotax 2011 online Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Turbotax 2011 online Example 2. Turbotax 2011 online You and your neighbors are co-owners of a house under a shared equity financing agreement. Turbotax 2011 online Your neighbors live in the house and pay you a fair rental price. Turbotax 2011 online Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Turbotax 2011 online This is because your neighbors rent the house as their main home under a shared equity financing agreement. Turbotax 2011 online Example 3. Turbotax 2011 online You own a rental property that you rent to your son. Turbotax 2011 online Your son does not own any interest in this property. Turbotax 2011 online He uses it as his main home and pays you a fair rental price. Turbotax 2011 online Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Turbotax 2011 online Example 4. Turbotax 2011 online You rent your beach house to Rosa. Turbotax 2011 online Rosa rents her cabin in the mountains to you. Turbotax 2011 online You each pay a fair rental price. Turbotax 2011 online You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. Turbotax 2011 online Example 5. Turbotax 2011 online You rent an apartment to your mother at less than a fair rental price. Turbotax 2011 online You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. Turbotax 2011 online Days used for repairs and maintenance. Turbotax 2011 online   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Turbotax 2011 online Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Turbotax 2011 online Example. Turbotax 2011 online Corey owns a cabin in the mountains that he rents for most of the year. Turbotax 2011 online He spends a week at the cabin with family members. Turbotax 2011 online Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Turbotax 2011 online Corey's family members, however, work substantially full time on the cabin each day during the week. Turbotax 2011 online The main purpose of being at the cabin that week is to do maintenance work. Turbotax 2011 online Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. Turbotax 2011 online Days used as a main home before or after renting. Turbotax 2011 online   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Turbotax 2011 online Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Turbotax 2011 online You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Turbotax 2011 online However, this special rule does not apply when dividing expenses between rental and personal use. Turbotax 2011 online See Property Changed to Rental Use in chapter 4. Turbotax 2011 online Example 1. Turbotax 2011 online On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. Turbotax 2011 online You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). Turbotax 2011 online On June 1, 2013, you moved back into your old house. Turbotax 2011 online The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. Turbotax 2011 online Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. Turbotax 2011 online Example 2. Turbotax 2011 online On January 31, you moved out of the condominium where you had lived for 3 years. Turbotax 2011 online You offered it for rent at a fair rental price beginning on February 1. Turbotax 2011 online You were unable to rent it until April. Turbotax 2011 online On September 15, you sold the condominium. Turbotax 2011 online The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. Turbotax 2011 online Examples. Turbotax 2011 online   The following examples show how to determine whether you used your rental property as a home. Turbotax 2011 online Example 1. Turbotax 2011 online You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Turbotax 2011 online You rented the basement apartment at a fair rental price to college students during the regular school year. Turbotax 2011 online You rented to them on a 9-month lease (273 days). Turbotax 2011 online You figured 10% of the total days rented to others at a fair rental price is 27 days. Turbotax 2011 online During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Turbotax 2011 online Your basement apartment was used as a home because you used it for personal purposes for 30 days. Turbotax 2011 online Rent-free use by your brothers is considered personal use. Turbotax 2011 online Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Turbotax 2011 online Example 2. Turbotax 2011 online You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Turbotax 2011 online Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Turbotax 2011 online You figured 10% of the total days rented to others at a fair rental price is 3 days. Turbotax 2011 online The room was used as a home because you used it for personal purposes for 21 days. Turbotax 2011 online That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Turbotax 2011 online Example 3. Turbotax 2011 online You own a condominium apartment in a resort area. Turbotax 2011 online You rented it at a fair rental price for a total of 170 days during the year. Turbotax 2011 online For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Turbotax 2011 online Your family actually used the apartment for 10 of those days. Turbotax 2011 online Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. Turbotax 2011 online You figured 10% of the total days rented to others at a fair rental price is 16 days. Turbotax 2011 online Your family also used the apartment for 7 other days during the year. Turbotax 2011 online You used the apartment as a home because you used it for personal purposes for 17 days. Turbotax 2011 online That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Turbotax 2011 online Minimal rental use. Turbotax 2011 online   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Turbotax 2011 online See Used as a home but rented less than 15 days, later, for more information. Turbotax 2011 online Limit on deductions. Turbotax 2011 online   Renting a dwelling unit that is considered a home is not a passive activity. Turbotax 2011 online Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Turbotax 2011 online The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Turbotax 2011 online Any expenses carried forward to the next year will be subject to any limits that apply for that year. Turbotax 2011 online This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Turbotax 2011 online   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. Turbotax 2011 online Reporting Income and Deductions Property not used for personal purposes. Turbotax 2011 online   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. Turbotax 2011 online Property used for personal purposes. Turbotax 2011 online   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Turbotax 2011 online Not used as a home. Turbotax 2011 online   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Turbotax 2011 online Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Turbotax 2011 online The expenses for personal use are not deductible as rental expenses. Turbotax 2011 online   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. Turbotax 2011 online Used as a home but rented less than 15 days. Turbotax 2011 online   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Turbotax 2011 online You are not required to report the rental income and rental expenses from this activity. Turbotax 2011 online The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Turbotax 2011 online See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Turbotax 2011 online Used as a home and rented 15 days or more. Turbotax 2011 online   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Turbotax 2011 online Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Turbotax 2011 online The expenses for personal use are not deductible as rental expenses. Turbotax 2011 online   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Turbotax 2011 online You do not need to use Worksheet 5-1. Turbotax 2011 online   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Turbotax 2011 online To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. Turbotax 2011 online Worksheet 5-1. Turbotax 2011 online Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Turbotax 2011 online Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Turbotax 2011 online ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Turbotax 2011 online Rental Use Percentage A. Turbotax 2011 online Total days available for rent at fair rental price A. Turbotax 2011 online       B. Turbotax 2011 online Total days available for rent (line A) but not rented B. Turbotax 2011 online       C. Turbotax 2011 online Total days of rental use. Turbotax 2011 online Subtract line B from line A C. Turbotax 2011 online       D. Turbotax 2011 online Total days of personal use (including days rented at less than fair rental price) D. Turbotax 2011 online       E. Turbotax 2011 online Total days of rental and personal use. Turbotax 2011 online Add lines C and D E. Turbotax 2011 online       F. Turbotax 2011 online Percentage of expenses allowed for rental. Turbotax 2011 online Divide line C by line E     F. Turbotax 2011 online . Turbotax 2011 online PART II. Turbotax 2011 online Allowable Rental Expenses 1. Turbotax 2011 online Enter rents received 1. Turbotax 2011 online   2a. Turbotax 2011 online Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Turbotax 2011 online       b. Turbotax 2011 online Enter the rental portion of real estate taxes b. Turbotax 2011 online       c. Turbotax 2011 online Enter the rental portion of deductible casualty and theft losses (see instructions) c. Turbotax 2011 online       d. Turbotax 2011 online Enter direct rental expenses (see instructions) d. Turbotax 2011 online       e. Turbotax 2011 online Fully deductible rental expenses. Turbotax 2011 online Add lines 2a–2d. Turbotax 2011 online Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Turbotax 2011 online   3. Turbotax 2011 online Subtract line 2e from line 1. Turbotax 2011 online If zero or less, enter -0- 3. Turbotax 2011 online   4a. Turbotax 2011 online Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Turbotax 2011 online       b. Turbotax 2011 online Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Turbotax 2011 online       c. Turbotax 2011 online Carryover of operating expenses from 2012 worksheet c. Turbotax 2011 online       d. Turbotax 2011 online Add lines 4a–4c d. Turbotax 2011 online       e. Turbotax 2011 online Allowable expenses. Turbotax 2011 online Enter the smaller of line 3 or line 4d (see instructions) 4e. Turbotax 2011 online   5. Turbotax 2011 online Subtract line 4e from line 3. Turbotax 2011 online If zero or less, enter -0- 5. Turbotax 2011 online   6a. Turbotax 2011 online Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Turbotax 2011 online       b. Turbotax 2011 online Enter the rental portion of depreciation of the dwelling unit b. Turbotax 2011 online       c. Turbotax 2011 online Carryover of excess casualty losses and depreciation from 2012 worksheet c. Turbotax 2011 online       d. Turbotax 2011 online Add lines 6a–6c d. Turbotax 2011 online       e. Turbotax 2011 online Allowable excess casualty and theft losses and depreciation. Turbotax 2011 online Enter the smaller of  line 5 or line 6d (see instructions) 6e. Turbotax 2011 online   PART III. Turbotax 2011 online Carryover of Unallowed Expenses to Next Year 7a. Turbotax 2011 online Operating expenses to be carried over to next year. Turbotax 2011 online Subtract line 4e from line 4d 7a. Turbotax 2011 online   b. Turbotax 2011 online Excess casualty and theft losses and depreciation to be carried over to next year. Turbotax 2011 online  Subtract line 6e from line 6d b. Turbotax 2011 online   Worksheet 5-1 Instructions. Turbotax 2011 online Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Turbotax 2011 online Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Turbotax 2011 online Line 2a. Turbotax 2011 online Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Turbotax 2011 online Do not include interest on a loan that did not benefit the dwelling unit. Turbotax 2011 online For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Turbotax 2011 online Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Turbotax 2011 online Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Turbotax 2011 online   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Turbotax 2011 online See the Schedule A instructions. Turbotax 2011 online However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Turbotax 2011 online See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Turbotax 2011 online Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Turbotax 2011 online   Note. Turbotax 2011 online Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Turbotax 2011 online Instead, figure the personal portion on a separate Schedule A. Turbotax 2011 online If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Turbotax 2011 online           Line 2c. Turbotax 2011 online Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Turbotax 2011 online To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Turbotax 2011 online If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Turbotax 2011 online On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Turbotax 2011 online Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Turbotax 2011 online   Note. Turbotax 2011 online Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Turbotax 2011 online Instead, figure the personal portion on a separate Form 4684. Turbotax 2011 online           Line 2d. Turbotax 2011 online Enter the total of your rental expenses that are directly related only to the rental activity. Turbotax 2011 online These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Turbotax 2011 online Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Turbotax 2011 online           Line 2e. Turbotax 2011 online You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Turbotax 2011 online Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Turbotax 2011 online           Line 4b. Turbotax 2011 online On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Turbotax 2011 online If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Turbotax 2011 online Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). Turbotax 2011 online           Line 4e. Turbotax 2011 online You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Turbotax 2011 online *           Line 6a. Turbotax 2011 online To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Turbotax 2011 online   A. Turbotax 2011 online Enter the amount from Form 4684, line 10       B. Turbotax 2011 online Enter the rental portion of line A       C. Turbotax 2011 online Enter the amount from line 2c of this worksheet       D. Turbotax 2011 online Subtract line C from line B. Turbotax 2011 online Enter the result here and on line 6a of this worksheet               Line 6e. Turbotax 2011 online You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Turbotax 2011 online * *Allocating the limited deduction. Turbotax 2011 online If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Turbotax 2011 online Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Turbotax 2011 online Prev  Up  Next   Home   More Online Publications