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Where To Send 1040x

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Where To Send 1040x

Where to send 1040x 1. Where to send 1040x   Rental Income and Expenses (If No Personal Use of Dwelling) Table of Contents Rental IncomeWhen To Report Types of Income Rental ExpensesWhen To Deduct Types of Expenses This chapter discusses the various types of rental income and expenses for a residential rental activity with no personal use of the dwelling. Where to send 1040x Generally, each year you will report all income and deduct all out-of-pocket expenses in full. Where to send 1040x The deduction to recover the cost of your rental property—depreciation—is taken over a prescribed number of years, and is discussed in chapter 2, Depreciation of Rental Property. Where to send 1040x If your rental income is from property you also use personally or rent to someone at less than a fair rental price, first read the information in chapter 5 , Personal Use of Dwelling Unit (Including Vacation Home). Where to send 1040x Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Where to send 1040x Rental income is any payment you receive for the use or occupation of property. Where to send 1040x In addition to amounts you receive as normal rental payments, there are other amounts that may be rental income. Where to send 1040x When To Report When you report rental income on your tax return generally depends on whether you are a cash basis taxpayer or use an accrual method. Where to send 1040x Most individual taxpayers use the cash method. Where to send 1040x Cash method. Where to send 1040x   You are a cash basis taxpayer if you report income on your return in the year you actually or constructively receive it, regardless of when it was earned. Where to send 1040x You constructively receive income when it is made available to you, for example, by being credited to your bank account. Where to send 1040x Accrual method. Where to send 1040x    If you are an accrual basis taxpayer, you generally report income when you earn it, rather than when you receive it. Where to send 1040x You generally deduct your expenses when you incur them, rather than when you pay them. Where to send 1040x More information. Where to send 1040x   See Publication 538, Accounting Periods and Methods, for more information about when you constructively receive income and accrual methods of accounting. Where to send 1040x Types of Income The following are common types of rental income. Where to send 1040x Advance rent. Where to send 1040x   Advance rent is any amount you receive before the period that it covers. Where to send 1040x Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Where to send 1040x Example. Where to send 1040x On March 18, 2013, you signed a 10-year lease to rent your property. Where to send 1040x During 2013, you received $9,600 for the first year's rent and $9,600 as rent for the last year of the lease. Where to send 1040x You must include $19,200 in your rental income in the first year. Where to send 1040x Canceling a lease. Where to send 1040x   If your tenant pays you to cancel a lease, the amount you receive is rent. Where to send 1040x Include the payment in your income in the year you receive it regardless of your method of accounting. Where to send 1040x Expenses paid by tenant. Where to send 1040x   If your tenant pays any of your expenses, those payments are rental income. Where to send 1040x Because you must include this amount in income, you can also deduct the expenses if they are deductible rental expenses. Where to send 1040x For more information, see Rental Expenses , later. Where to send 1040x Example 1. Where to send 1040x Your tenant pays the water and sewage bill for your rental property and deducts the amount from the normal rent payment. Where to send 1040x Under the terms of the lease, your tenant does not have to pay this bill. Where to send 1040x Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income. Where to send 1040x You can deduct the utility payment made by your tenant as a rental expense. Where to send 1040x Example 2. Where to send 1040x While you are out of town, the furnace in your rental property stops working. Where to send 1040x Your tenant pays for the necessary repairs and deducts the repair bill from the rent payment. Where to send 1040x Include the repair bill paid by the tenant and any amount received as a rent payment in your rental income. Where to send 1040x You can deduct the repair payment made by your tenant as a rental expense. Where to send 1040x Property or services. Where to send 1040x   If you receive property or services as rent, instead of money, include the fair market value of the property or services in your rental income. Where to send 1040x   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Where to send 1040x Example. Where to send 1040x Your tenant is a house painter. Where to send 1040x He offers to paint your rental property instead of paying 2 months rent. Where to send 1040x You accept his offer. Where to send 1040x Include in your rental income the amount the tenant would have paid for 2 months rent. Where to send 1040x You can deduct that same amount as a rental expense for painting your property. Where to send 1040x Security deposits. Where to send 1040x   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Where to send 1040x But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Where to send 1040x    If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Where to send 1040x Include it in your income when you receive it. Where to send 1040x Other Sources of Rental Income Lease with option to buy. Where to send 1040x   If the rental agreement gives your tenant the right to buy your rental property, the payments you receive under the agreement are generally rental income. Where to send 1040x If your tenant exercises the right to buy the property, the payments you receive for the period after the date of sale are considered part of the selling price. Where to send 1040x Part interest. Where to send 1040x   If you own a part interest in rental property, you must report your part of the rental income from the property. Where to send 1040x Rental of property also used as your home. Where to send 1040x   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Where to send 1040x However, you can deduct on Schedule A (Form 1040), Itemized Deductions, the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Where to send 1040x See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Where to send 1040x Rental Expenses In most cases, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income. Where to send 1040x Personal use of rental property. Where to send 1040x   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Where to send 1040x Also, your rental expense deductions may be limited. Where to send 1040x See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Where to send 1040x Part interest. Where to send 1040x   If you own a part interest in rental property, you can deduct expenses you paid according to your percentage of ownership. Where to send 1040x Example. Where to send 1040x Roger owns a one-half undivided interest in a rental house. Where to send 1040x Last year he paid $968 for necessary repairs on the property. Where to send 1040x Roger can deduct $484 (50% × $968) as a rental expense. Where to send 1040x He is entitled to reimbursement for the remaining half from the co-owner. Where to send 1040x When To Deduct You generally deduct your rental expenses in the year you pay them. Where to send 1040x If you use the accrual method, see Publication 538 for more information. Where to send 1040x Types of Expenses Listed below are the most common rental expenses. Where to send 1040x Advertising. Where to send 1040x Auto and travel expenses. Where to send 1040x Cleaning and maintenance. Where to send 1040x Commissions. Where to send 1040x Depreciation. Where to send 1040x Insurance. Where to send 1040x Interest (other). Where to send 1040x Legal and other professional fees. Where to send 1040x Local transportation expenses. Where to send 1040x Management fees. Where to send 1040x Mortgage interest paid to banks, etc. Where to send 1040x Points. Where to send 1040x Rental payments. Where to send 1040x Repairs. Where to send 1040x Taxes. Where to send 1040x Utilities. Where to send 1040x Some of these expenses, as well as other less common ones, are discussed below. Where to send 1040x Depreciation. Where to send 1040x   Depreciation is a capital expense. Where to send 1040x It is the mechanism for recovering your cost in an income producing property and must be taken over the expected life of the property. Where to send 1040x   You can begin to depreciate rental property when it is ready and available for rent. Where to send 1040x See Placed in Service under When Does Depreciation Begin and End in chapter 2. Where to send 1040x Insurance premiums paid in advance. Where to send 1040x   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Where to send 1040x You cannot deduct the total premium in the year you pay it. Where to send 1040x See chapter 6 of Publication 535 for information on deductible premiums. Where to send 1040x Interest expense. Where to send 1040x   You can deduct mortgage interest you pay on your rental property. Where to send 1040x When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Where to send 1040x Chapter 4 of Publication 535 explains mortgage interest in detail. Where to send 1040x Expenses paid to obtain a mortgage. Where to send 1040x   Certain expenses you pay to obtain a mortgage on your rental property cannot be deducted as interest. Where to send 1040x These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses that are part of your basis in the property. Where to send 1040x Form 1098, Mortgage Interest Statement. Where to send 1040x   If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098 or similar statement showing the interest you paid for the year. Where to send 1040x If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on, the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Where to send 1040x Attach a statement to your return showing the name and address of the other person. Where to send 1040x On the dotted line next to line 13, enter “See attached. Where to send 1040x ” Legal and other professional fees. Where to send 1040x   You can deduct, as a rental expense, legal and other professional expenses such as tax return preparation fees you paid to prepare Schedule E, Part I. Where to send 1040x For example, on your 2013 Schedule E you can deduct fees paid in 2013 to prepare Part I of your 2012 Schedule E. Where to send 1040x You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Where to send 1040x Local benefit taxes. Where to send 1040x   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Where to send 1040x These charges are nondepreciable capital expenditures and must be added to the basis of your property. Where to send 1040x However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Where to send 1040x Local transportation expenses. Where to send 1040x   You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Where to send 1040x However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Where to send 1040x See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Where to send 1040x   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Where to send 1040x For 2013, the standard mileage rate for business use is 56. Where to send 1040x 5 cents per mile. Where to send 1040x For more information, see chapter 4 of Publication 463. Where to send 1040x    To deduct car expenses under either method, you must keep records that follow the rules in chapter 5 of Publication 463. Where to send 1040x In addition, you must complete Form 4562, Part V, and attach it to your tax return. Where to send 1040x Pre-rental expenses. Where to send 1040x   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Where to send 1040x Rental of equipment. Where to send 1040x   You can deduct the rent you pay for equipment that you use for rental purposes. Where to send 1040x However, in some cases, lease contracts are actually purchase contracts. Where to send 1040x If so, you cannot deduct these payments. Where to send 1040x You can recover the cost of purchased equipment through depreciation. Where to send 1040x Rental of property. Where to send 1040x   You can deduct the rent you pay for property that you use for rental purposes. Where to send 1040x If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Where to send 1040x Travel expenses. Where to send 1040x   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Where to send 1040x You must properly allocate your expenses between rental and nonrental activities. Where to send 1040x You cannot deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. Where to send 1040x The cost of improvements is recovered by taking depreciation. Where to send 1040x For information on travel expenses, see chapter 1 of Publication 463. Where to send 1040x    To deduct travel expenses, you must keep records that follow the rules in chapter 5 of Publication 463. Where to send 1040x Uncollected rent. Where to send 1040x   If you are a cash basis taxpayer, do not deduct uncollected rent. Where to send 1040x Because you have not included it in your income, it is not deductible. Where to send 1040x   If you use an accrual method, report income when you earn it. Where to send 1040x If you are unable to collect the rent, you may be able to deduct it as a business bad debt. Where to send 1040x See chapter 10 of Publication 535 for more information about business bad debts. Where to send 1040x Vacant rental property. Where to send 1040x   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Where to send 1040x However, you cannot deduct any loss of rental income for the period the property is vacant. Where to send 1040x Vacant while listed for sale. Where to send 1040x   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Where to send 1040x If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Where to send 1040x Points The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. Where to send 1040x These charges are also called loan origination fees, maximum loan charges, or premium charges. Where to send 1040x Any of these charges (points) that are solely for the use of money are interest. Where to send 1040x Because points are prepaid interest, you generally cannot deduct the full amount in the year paid, but must deduct the interest over the term of the loan. Where to send 1040x The method used to figure the amount of points you can deduct each year follows the original issue discount (OID) rules. Where to send 1040x In this case, points are equivalent to OID, which is the difference between: The amount borrowed (redemption price at maturity, or principal) and The proceeds (issue price). Where to send 1040x The first step is to determine whether your total OID (which you may have on bonds or other investments in addition to the mortgage loan), including the OID resulting from the points, is insignificant or de minimis. Where to send 1040x If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct. Where to send 1040x De minimis OID. Where to send 1040x   The OID is de minimis if it is less than one-fourth of 1% (. Where to send 1040x 0025) of the stated redemption price at maturity (principal amount of the loan) multiplied by the number of full years from the date of original issue to maturity (term of the loan). Where to send 1040x   If the OID is de minimis, you can choose one of the following ways to figure the amount of points you can deduct each year. Where to send 1040x On a constant-yield basis over the term of the loan. Where to send 1040x On a straight line basis over the term of the loan. Where to send 1040x In proportion to stated interest payments. Where to send 1040x In its entirety at maturity of the loan. Where to send 1040x You make this choice by deducting the OID (points) in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Where to send 1040x Example. Where to send 1040x Carol Madison took out a $100,000 mortgage loan on January 1, 2013, to buy a house she will use as a rental during 2013. Where to send 1040x The loan is to be repaid over 30 years. Where to send 1040x During 2013, Carol paid $10,000 of mortgage interest (stated interest) to the lender. Where to send 1040x When the loan was made, she paid $1,500 in points to the lender. Where to send 1040x The points reduced the principal amount of the loan from $100,000 to $98,500, resulting in $1,500 of OID. Where to send 1040x Carol determines that the points (OID) she paid are de minimis based on the following computation. Where to send 1040x Redemption price at maturity (principal amount of the loan) $100,000 Multiplied by: The term of the  loan in complete years ×30 Multiplied by ×. Where to send 1040x 0025 De minimis amount $7,500 The points (OID) she paid ($1,500) are less than the de minimis amount ($7,500). Where to send 1040x Therefore, Carol has de minimis OID and she can choose one of the four ways discussed earlier to figure the amount she can deduct each year. Where to send 1040x Under the straight line method, she can deduct $50 each year for 30 years. Where to send 1040x Constant-yield method. Where to send 1040x   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Where to send 1040x   You figure your deduction for the first year in the following manner. Where to send 1040x Determine the issue price of the loan. Where to send 1040x If you paid points on the loan, the issue price generally is the difference between the principal and the points. Where to send 1040x Multiply the result in (1) by the yield to maturity (defined later). Where to send 1040x Subtract any qualified stated interest payments (defined later) from the result in (2). Where to send 1040x This is the OID you can deduct in the first year. Where to send 1040x Yield to maturity (YTM). Where to send 1040x   This rate is generally shown in the literature you receive from your lender. Where to send 1040x If you do not have this information, consult your lender or tax advisor. Where to send 1040x In general, the YTM is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Where to send 1040x Qualified stated interest (QSI). Where to send 1040x   In general, this is the stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a fixed rate. Where to send 1040x Example—Year 1. Where to send 1040x The facts are the same as in the previous example. Where to send 1040x The yield to maturity on Carol's loan is 10. Where to send 1040x 2467%, compounded annually. Where to send 1040x She figured the amount of points (OID) she could deduct in 2013 as follows. Where to send 1040x Principal amount of the loan $100,000 Minus: Points (OID) –1,500 Issue price of the loan $98,500 Multiplied by: YTM × . Where to send 1040x 102467 Total 10,093 Minus: QSI –10,000 Points (OID) deductible in 2013 $93 To figure your deduction in any subsequent year, you start with the adjusted issue price. Where to send 1040x To get the adjusted issue price, add to the issue price figured in Year 1 any OID previously deducted. Where to send 1040x Then follow steps (2) and (3), earlier. Where to send 1040x Example—Year 2. Where to send 1040x Carol figured the deduction for 2014 as follows. Where to send 1040x Issue price $98,500 Plus: Points (OID) deducted  in 2013 +93 Adjusted issue price $98,593 Multiplied by: YTM × . Where to send 1040x 102467 Total 10,103 Minus: QSI –10,000 Points (OID) deductible in 2014 $103 Loan or mortgage ends. Where to send 1040x    If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. Where to send 1040x A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Where to send 1040x However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. Where to send 1040x Points when loan refinance is more than the previous outstanding balance. Where to send 1040x   When you refinance a rental property for more than the previous outstanding balance, the portion of the points allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Where to send 1040x For example, if an individual refinanced a loan with a balance of $100,000, the amount of the new loan was $120,000, and the taxpayer used $20,000 to purchase a car, points allocable to the $20,000 would be treated as nondeductible personal interest. Where to send 1040x Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Where to send 1040x Improvements. Where to send 1040x   You must capitalize any expense you pay to improve your rental property. Where to send 1040x An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Where to send 1040x Betterments. Where to send 1040x   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Where to send 1040x Restoration. Where to send 1040x   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Where to send 1040x Adaptation. Where to send 1040x   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Where to send 1040x Separate the costs of repairs and improvements, and keep accurate records. Where to send 1040x You will need to know the cost of improvements when you sell or depreciate your property. Where to send 1040x The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Where to send 1040x Table 1-1. Where to send 1040x Examples of Improvements Additions Bedroom Bathroom Deck Garage Porch Patio  Lawn & Grounds Landscaping Driveway Walkway Fence Retaining wall Sprinkler system Swimming pool Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system   Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances Kitchen modernization Flooring Wall-to-wall carpeting  Insulation Attic Walls, floor Pipes, duct work Prev  Up  Next   Home   More Online Publications
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The Where To Send 1040x

Where to send 1040x 17. Where to send 1040x   Individual Retirement Arrangements (IRAs) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Traditional IRAsWho Can Open a Traditional IRA? When and How Can a Traditional IRA Be Opened? How Much Can Be Contributed? When Can Contributions Be Made? How Much Can You Deduct? Nondeductible Contributions Inherited IRAs Can You Move Retirement Plan Assets? When Can You Withdraw or Use IRA Assets? When Must You Withdraw IRA Assets? (Required Minimum Distributions) Are Distributions Taxable? What Acts Result in Penalties or Additional Taxes? Roth IRAsWhat Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA? Can You Move Amounts Into a Roth IRA? Are Distributions Taxable? What's New Traditional IRA contribution and deduction limit. Where to send 1040x  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Where to send 1040x If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Where to send 1040x For more information, see How Much Can Be Contributed? later. Where to send 1040x Roth IRA contribution limit. Where to send 1040x  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Where to send 1040x If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Where to send 1040x However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Where to send 1040x For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? later. Where to send 1040x Modified AGI limit for traditional IRA contributions increased. Where to send 1040x  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Where to send 1040x If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Where to send 1040x If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Where to send 1040x See How Much Can You Deduct , later. Where to send 1040x Modified AGI limit for Roth IRA contributions increased. Where to send 1040x  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Where to send 1040x Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Where to send 1040x You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Where to send 1040x Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Where to send 1040x You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Where to send 1040x Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Where to send 1040x You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Where to send 1040x See Can You Contribute to a Roth IRA , later. Where to send 1040x Net Investment Income Tax. Where to send 1040x   For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan including IRAs (for example; 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Where to send 1040x However, these distributions are taken into account when determining the modified adjusted gross income threshold. Where to send 1040x Distributions from a nonqualified retirement plan are included in net investment income. Where to send 1040x See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Where to send 1040x Name change. Where to send 1040x  All spousal IRAs have been renamed Kay Bailey Hutchison Spousal IRAs. Where to send 1040x There are no changes to the rules regarding these IRAs. Where to send 1040x See Kay Bailey Hutchison Spousal IRA Limit , later, for more information. Where to send 1040x Reminders 2014 limits. Where to send 1040x   You can find information about the 2014 contribution and AGI limits in Publication 590. Where to send 1040x Contributions to both traditional and Roth IRAs. Where to send 1040x   For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in Roth IRAs, later. Where to send 1040x Statement of required minimum distribution. Where to send 1040x  If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. Where to send 1040x The report or offer must include the date by which the amount must be distributed. Where to send 1040x The report is due January 31 of the year in which the minimum distribution is required. Where to send 1040x It can be provided with the year-end fair market value statement that you normally get each year. Where to send 1040x No report is required for IRAs of owners who have died. Where to send 1040x IRA interest. Where to send 1040x  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Where to send 1040x Tax on your traditional IRA is generally deferred until you take a distribution. Where to send 1040x Do not report this interest on your tax return as tax-exempt interest. Where to send 1040x Form 8606. Where to send 1040x   To designate contributions as nondeductible, you must file Form 8606, Nondeductible IRAs. Where to send 1040x The term “50 or older” is used several times in this chapter. Where to send 1040x It refers to an IRA owner who is age 50 or older by the end of the tax year. Where to send 1040x Introduction An individual retirement arrangement (IRA) is a personal savings plan that gives you tax advantages for setting aside money for your retirement. Where to send 1040x This chapter discusses the following topics. Where to send 1040x The rules for a traditional IRA (any IRA that is not a Roth or SIMPLE IRA). Where to send 1040x The Roth IRA, which features nondeductible contributions and tax-free distributions. Where to send 1040x Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs) are not discussed in this chapter. Where to send 1040x For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Publications 560 and 590. Where to send 1040x For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Publication 590. Where to send 1040x Useful Items - You may want to see: Publication 560 Retirement Plans for Small Business 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts 8606 Nondeductible IRAs Traditional IRAs In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Where to send 1040x ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Where to send 1040x Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Where to send 1040x Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. Where to send 1040x What is compensation?   Generally, compensation is what you earn from working. Where to send 1040x Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. Where to send 1040x The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Where to send 1040x   Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. Where to send 1040x   Compensation also includes commissions and taxable alimony and separate maintenance payments. Where to send 1040x Self-employment income. Where to send 1040x   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deductible part of your self-employment tax. Where to send 1040x   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Where to send 1040x Nontaxable combat pay. Where to send 1040x   For IRA purposes, if you were a member of the U. Where to send 1040x S. Where to send 1040x Armed Forces, your compensation includes any nontaxable combat pay you receive. Where to send 1040x What is not compensation?   Compensation does not include any of the following items. Where to send 1040x Earnings and profits from property, such as rental income, interest income, and dividend income. Where to send 1040x Pension or annuity income. Where to send 1040x Deferred compensation received (compensation payments postponed from a past year). Where to send 1040x Income from a partnership for which you do not provide services that are a material income-producing factor. Where to send 1040x Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Where to send 1040x Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Where to send 1040x When and How Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Where to send 1040x However, the time for making contributions for any year is limited. Where to send 1040x See When Can Contributions Be Made , later. Where to send 1040x You can open different kinds of IRAs with a variety of organizations. Where to send 1040x You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Where to send 1040x You can also open an IRA through your stockbroker. Where to send 1040x Any IRA must meet Internal Revenue Code requirements. Where to send 1040x Kinds of traditional IRAs. Where to send 1040x   Your traditional IRA can be an individual retirement account or annuity. Where to send 1040x It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Where to send 1040x How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Where to send 1040x These limits and other rules are explained below. Where to send 1040x Community property laws. Where to send 1040x   Except as discussed later under Kay Bailey Hutchison Spousal IRA limit , each spouse figures his or her limit separately, using his or her own compensation. Where to send 1040x This is the rule even in states with community property laws. Where to send 1040x Brokers' commissions. Where to send 1040x   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Where to send 1040x Trustees' fees. Where to send 1040x   Trustees' administrative fees are not subject to the contribution limit. Where to send 1040x Qualified reservist repayments. Where to send 1040x   If you are (or were) a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions you received. Where to send 1040x You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. Where to send 1040x To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or similar arrangement. Where to send 1040x   For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1 of Publication 590. Where to send 1040x Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Where to send 1040x (See Roth IRAs, later. Where to send 1040x ) General limit. Where to send 1040x   For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts. Where to send 1040x $5,500 ($6,500 if you are 50 or older). Where to send 1040x Your taxable compensation (defined earlier) for the year. Where to send 1040x This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. Where to send 1040x (See Nondeductible Contributions , later. Where to send 1040x ) Qualified reservist repayments do not affect this limit. Where to send 1040x Example 1. Where to send 1040x Betty, who is 34 years old and single, earned $24,000 in 2013. Where to send 1040x Her IRA contributions for 2013 are limited to $5,500. Where to send 1040x Example 2. Where to send 1040x John, an unmarried college student working part time, earned $3,500 in 2013. Where to send 1040x His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Where to send 1040x Kay Bailey Hutchison Spousal IRA limit. Where to send 1040x   For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following amounts. Where to send 1040x $5,500 ($6,500 if you are 50 or older). Where to send 1040x The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Where to send 1040x Your spouse's IRA contribution for the year to a traditional IRA. Where to send 1040x Any contribution for the year to a Roth IRA on behalf of your spouse. Where to send 1040x This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is 50 or older, or $13,000 if both of you are 50 or older). Where to send 1040x When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Where to send 1040x Contributions must be in the form of money (cash, check, or money order). Where to send 1040x Property cannot be contributed. Where to send 1040x Contributions must be made by due date. Where to send 1040x   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Where to send 1040x Age 70½ rule. Where to send 1040x   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Where to send 1040x   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Where to send 1040x If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Where to send 1040x Designating year for which contribution is made. Where to send 1040x   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. Where to send 1040x If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). Where to send 1040x Filing before a contribution is made. Where to send 1040x   You can file your return claiming a traditional IRA contribution before the contribution is actually made. Where to send 1040x Generally, the contribution must be made by the due date of your return, not including extensions. Where to send 1040x Contributions not required. Where to send 1040x   You do not have to contribute to your traditional IRA for every tax year, even if you can. Where to send 1040x How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if it applies). Where to send 1040x However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Where to send 1040x See Limit If Covered by Employer Plan , later. Where to send 1040x You may be able to claim a credit for contributions to your traditional IRA. Where to send 1040x For more information, see chapter 37. Where to send 1040x Trustees' fees. Where to send 1040x   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Where to send 1040x However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Where to send 1040x See chapter 28. Where to send 1040x Brokers' commissions. Where to send 1040x   Brokers' commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Where to send 1040x Full deduction. Where to send 1040x   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older in 2013). Where to send 1040x 100% of your compensation. Where to send 1040x This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Where to send 1040x Kay Bailey Hutchison Spousal IRA. Where to send 1040x   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of the following amounts. Where to send 1040x $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older in 2013). Where to send 1040x The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Where to send 1040x The IRA deduction for the year of the spouse with the greater compensation. Where to send 1040x Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Where to send 1040x Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Where to send 1040x This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation. Where to send 1040x Note. Where to send 1040x If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. Where to send 1040x After a divorce or legal separation, you can deduct only contributions to your own IRA. Where to send 1040x Your deductions are subject to the rules for single individuals. Where to send 1040x Covered by an employer retirement plan. Where to send 1040x   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. Where to send 1040x This is discussed later under Limit If Covered by Employer Plan . Where to send 1040x Limits on the amount you can deduct do not affect the amount that can be contributed. Where to send 1040x See Nondeductible Contributions , later. Where to send 1040x Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. Where to send 1040x The “Retirement plan” box should be checked if you were covered. Where to send 1040x Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered by an Employer Plan , later. Where to send 1040x If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Where to send 1040x Federal judges. Where to send 1040x   For purposes of the IRA deduction, federal judges are covered by an employer retirement plan. Where to send 1040x For Which Year(s) Are You Covered by an Employer Plan? Special rules apply to determine the tax years for which you are covered by an employer plan. Where to send 1040x These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Where to send 1040x Tax year. Where to send 1040x   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Where to send 1040x For almost all people, the tax year is the calendar year. Where to send 1040x Defined contribution plan. Where to send 1040x   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. Where to send 1040x   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Where to send 1040x Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Where to send 1040x Defined benefit plan. Where to send 1040x   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. Where to send 1040x This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. Where to send 1040x   A defined benefit plan is any plan that is not a defined contribution plan. Where to send 1040x Defined benefit plans include pension plans and annuity plans. Where to send 1040x No vested interest. Where to send 1040x   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. Where to send 1040x Situations in Which You Are Not Covered by an Employer Plan Unless you are covered under another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Where to send 1040x Social security or railroad retirement. Where to send 1040x   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Where to send 1040x Benefits from a previous employer's plan. Where to send 1040x   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Where to send 1040x Reservists. Where to send 1040x   If the only reason you participate in a plan is because you are a member of a reserve unit of the armed forces, you may not be covered by the plan. Where to send 1040x You are not covered by the plan if both of the following conditions are met. Where to send 1040x The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Where to send 1040x You did not serve more than 90 days on active duty during the year (not counting duty for training). Where to send 1040x Volunteer firefighters. Where to send 1040x   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Where to send 1040x You are not covered by the plan if both of the following conditions are met. Where to send 1040x The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Where to send 1040x Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Where to send 1040x Limit If Covered by Employer Plan If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Where to send 1040x Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. Where to send 1040x These amounts vary depending on your filing status. Where to send 1040x To determine if your deduction is subject to phaseout, you must determine your modified adjusted gross income (AGI) and your filing status. Where to send 1040x See Filing status and Modified adjusted gross income (AGI) , later. Where to send 1040x Then use Table 17-1 or 17-2 to determine if the phaseout applies. Where to send 1040x Social security recipients. Where to send 1040x   Instead of using Table 17-1 or Table 17-2, use the worksheets in Appendix B of Publication 590 if, for the year, all of the following apply. Where to send 1040x You received social security benefits. Where to send 1040x You received taxable compensation. Where to send 1040x Contributions were made to your traditional IRA. Where to send 1040x You or your spouse was covered by an employer retirement plan. Where to send 1040x Use those worksheets to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Where to send 1040x Deduction phaseout. Where to send 1040x   If you were covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI as shown in Table 17-1. Where to send 1040x Table 17-1. Where to send 1040x Effect of Modified AGI1 on Deduction if You Are Covered by Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Where to send 1040x IF your filing status is. Where to send 1040x . Where to send 1040x . Where to send 1040x   AND your modified AGI is. Where to send 1040x . Where to send 1040x . Where to send 1040x   THEN you can take. Where to send 1040x . Where to send 1040x . Where to send 1040x single   or  head of household   $59,000 or less   a full deduction. Where to send 1040x   more than $59,000 but less than $69,000   a partial deduction. Where to send 1040x   $69,000 or more   no deduction. Where to send 1040x married filing jointly   or  qualifying widow(er)   $95,000 or less   a full deduction. Where to send 1040x   more than $95,000 but less than $115,000   a partial deduction. Where to send 1040x   $115,000 or more   no deduction. Where to send 1040x married filing separately2   less than $10,000   a partial deduction. Where to send 1040x   $10,000 or more   no deduction. Where to send 1040x 1Modified AGI (adjusted gross income). Where to send 1040x See Modified adjusted gross income (AGI) . Where to send 1040x 2If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” column). Where to send 1040x If your spouse is covered. Where to send 1040x   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 17-2. Where to send 1040x Filing status. Where to send 1040x   Your filing status depends primarily on your marital status. Where to send 1040x For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. Where to send 1040x If you need more information on filing status, see chapter 2. Where to send 1040x Lived apart from spouse. Where to send 1040x   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. Where to send 1040x Table 17-2. Where to send 1040x Effect of Modified AGI1 on Deduction if You Are NOT Covered by Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Where to send 1040x IF your filing status is. Where to send 1040x . Where to send 1040x . Where to send 1040x   AND your modified AGI is. Where to send 1040x . Where to send 1040x . Where to send 1040x   THEN you can take. Where to send 1040x . Where to send 1040x . Where to send 1040x single, head of household, or qualifying widow(er)   any amount   a full deduction. Where to send 1040x married filing jointly or separately with a spouse who is not covered by a plan at work   any amount   a full deduction. Where to send 1040x married filing jointly with a spouse who is covered by a plan at work   $178,000 or less   a full deduction. Where to send 1040x   more than $178,000 but less than $188,000   a partial deduction. Where to send 1040x   $188,000 or more   no deduction. Where to send 1040x married filing separately with a spouse who is covered by a plan at work2   less than $10,000   a partial deduction. Where to send 1040x   $10,000 or more   no deduction. Where to send 1040x 1Modified AGI (adjusted gross income). Where to send 1040x See Modified adjusted gross income (AGI) . Where to send 1040x 2You are entitled to the full deduction if you did not live with your spouse at any time during the year. Where to send 1040x Modified adjusted gross income (AGI). Where to send 1040x   How you figure your modified AGI depends on whether you are filing Form 1040 or Form 1040A. Where to send 1040x If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Publication 590. Where to send 1040x You may be able to use Worksheet 17-1 to figure your modified AGI. Where to send 1040x    Do not assume that your modified AGI is the same as your compensation. Where to send 1040x Your modified AGI may include income in addition to your compensation (discussed earlier), such as interest, dividends, and income from IRA distributions. Where to send 1040x Form 1040. Where to send 1040x   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following eight amounts. Where to send 1040x IRA deduction. Where to send 1040x Student loan interest deduction. Where to send 1040x Tuition and fees deduction. Where to send 1040x Domestic production activities deduction. Where to send 1040x Foreign earned income exclusion. Where to send 1040x Foreign housing exclusion or deduction. Where to send 1040x Exclusion of qualified savings bond interest shown on Form 8815, Exclusion of Interest From Series EE and I U. Where to send 1040x S. Where to send 1040x Savings Bonds Issued After 1989. Where to send 1040x Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses. Where to send 1040x This is your modified AGI. Where to send 1040x Form 1040A. Where to send 1040x   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Where to send 1040x IRA deduction. Where to send 1040x Student loan interest deduction. Where to send 1040x Tuition and fees deduction. Where to send 1040x Exclusion of qualified savings bond interest shown on Form 8815. Where to send 1040x This is your modified AGI. Where to send 1040x Both contributions for 2013 and distributions in 2013. Where to send 1040x   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Where to send 1040x You received distributions in 2013 from one or more traditional IRAs. Where to send 1040x You made contributions to a traditional IRA for 2013. Where to send 1040x Some of those contributions may be nondeductible contributions. Where to send 1040x If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Where to send 1040x To do this, you can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, in Publication 590. Where to send 1040x   If at least one of the above does not apply, figure your modified AGI using Worksheet 17-1, later. Where to send 1040x    How to figure your reduced IRA deduction. Where to send 1040x   You can figure your reduced IRA deduction for either Form 1040 or Form 1040A by using the worksheets in chapter 1 of Publication 590. Where to send 1040x Also, the instructions for Form 1040 and Form 1040A include similar worksheets that you may be able to use instead. Where to send 1040x Worksheet 17-1. Where to send 1040x Figuring Your Modified AGI Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes. Where to send 1040x 1. Where to send 1040x Enter your adjusted gross income (AGI) from Form 1040, line 38, or Form 1040A, line 22, figured without taking into account the amount from Form 1040, line 32, or Form 1040A, line 17 1. Where to send 1040x   2. Where to send 1040x Enter any student loan interest deduction from Form 1040, line 33, or Form 1040A, line 18 2. Where to send 1040x   3. Where to send 1040x Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Where to send 1040x   4. Where to send 1040x Enter any domestic production activities deduction from Form 1040, line 35 4. Where to send 1040x   5. Where to send 1040x Enter any foreign earned income and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Where to send 1040x   6. Where to send 1040x Enter any foreign housing deduction from Form 2555, line 50 6. Where to send 1040x   7. Where to send 1040x Enter any excludable savings bond interest from Form 8815, line 14 7. Where to send 1040x   8. Where to send 1040x Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Where to send 1040x   9. Where to send 1040x Add lines 1 through 8. Where to send 1040x This is your Modified AGI for traditional IRA purposes 9. Where to send 1040x   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Where to send 1040x If you file Form 1040A, enter your IRA deduction on line 17. Where to send 1040x You cannot deduct IRA contributions on Form 1040EZ. Where to send 1040x Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Where to send 1040x The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Where to send 1040x Example. Where to send 1040x Mike is 28 years old and single. Where to send 1040x In 2013, he was covered by a retirement plan at work. Where to send 1040x His salary was $57,312. Where to send 1040x His modified AGI was $70,000. Where to send 1040x Mike made a $5,500 IRA contribution for 2013. Where to send 1040x Because he was covered by a retirement plan and his modified AGI was over $69,000, he cannot deduct his $5,500 IRA contribution. Where to send 1040x He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. Where to send 1040x Form 8606. Where to send 1040x   To designate contributions as nondeductible, you must file Form 8606. Where to send 1040x   You do not have to designate a contribution as nondeductible until you file your tax return. Where to send 1040x When you file, you can even designate otherwise deductible contributions as nondeductible. Where to send 1040x   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Where to send 1040x A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. Where to send 1040x In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Where to send 1040x See Form 8606 under Distributions Fully or Partly Taxable, later. Where to send 1040x Failure to report nondeductible contributions. Where to send 1040x   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated as deductible contributions when withdrawn. Where to send 1040x All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Where to send 1040x Penalty for overstatement. Where to send 1040x   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. Where to send 1040x Penalty for failure to file Form 8606. Where to send 1040x   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. Where to send 1040x    Tax on earnings on nondeductible contributions. Where to send 1040x   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. Where to send 1040x See When Can You Withdraw or Use IRA Assets , later. Where to send 1040x Cost basis. Where to send 1040x   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Where to send 1040x Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Where to send 1040x Inherited IRAs If you inherit a traditional IRA, you are called a beneficiary. Where to send 1040x A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Where to send 1040x Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Where to send 1040x Inherited from spouse. Where to send 1040x   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Where to send 1040x You can: Treat it as your own IRA by designating yourself as the account owner. Where to send 1040x Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). Where to send 1040x Treat yourself as the beneficiary rather than treating the IRA as your own. Where to send 1040x Treating it as your own. Where to send 1040x   You will be considered to have chosen to treat the IRA as your own if: Contributions (including rollover contributions) are made to the inherited IRA, or You do not take the required minimum distribution for a year as a beneficiary of the IRA. Where to send 1040x You will only be considered to have chosen to treat the IRA as your own if: You are the sole beneficiary of the IRA, and You have an unlimited right to withdraw amounts from it. Where to send 1040x   However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. Where to send 1040x Inherited from someone other than spouse. Where to send 1040x   If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. Where to send 1040x This means that you cannot make any contributions to the IRA. Where to send 1040x It also means you cannot roll over any amounts into or out of the inherited IRA. Where to send 1040x However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. Where to send 1040x For more information, see the discussion of inherited IRAs under Rollover From One IRA Into Another, later. Where to send 1040x Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. Where to send 1040x You can make the following kinds of transfers. Where to send 1040x Transfers from one trustee to another. Where to send 1040x Rollovers. Where to send 1040x Transfers incident to a divorce. Where to send 1040x Transfers to Roth IRAs. Where to send 1040x   Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. Where to send 1040x You can also move assets from a qualified retirement plan to a Roth IRA. Where to send 1040x See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later. Where to send 1040x Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Where to send 1040x Because there is no distribution to you, the transfer is tax free. Where to send 1040x Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another . Where to send 1040x For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Publication 590. Where to send 1040x Rollovers Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. Where to send 1040x The contribution to the second retirement plan is called a “rollover contribution. Where to send 1040x ” Note. Where to send 1040x An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. Where to send 1040x Kinds of rollovers to a traditional IRA. Where to send 1040x   You can roll over amounts from the following plans into a traditional IRA: A traditional IRA, An employer's qualified retirement plan for its employees, A deferred compensation plan of a state or local government (section 457 plan), or A tax-sheltered annuity plan (section 403(b) plan). Where to send 1040x Treatment of rollovers. Where to send 1040x   You cannot deduct a rollover contribution, but you must report the rollover distribution on your tax return as discussed later under Reporting rollovers from IRAs and under Reporting rollovers from employer plans . Where to send 1040x Kinds of rollovers from a traditional IRA. Where to send 1040x   You may be able to roll over, tax free, a distribution from your traditional IRA into a qualified plan. Where to send 1040x These plans include the federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). Where to send 1040x The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Where to send 1040x Qualified plans may, but are not required to, accept such rollovers. Where to send 1040x Time limit for making a rollover contribution. Where to send 1040x   You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan. Where to send 1040x The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Where to send 1040x For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x Extension of rollover period. Where to send 1040x   If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, special rules extend the rollover period. Where to send 1040x For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x More information. Where to send 1040x   For more information on rollovers, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Where to send 1040x Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. Where to send 1040x Waiting period between rollovers. Where to send 1040x   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. Where to send 1040x You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. Where to send 1040x   The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. Where to send 1040x Example. Where to send 1040x You have two traditional IRAs, IRA-1 and IRA-2. Where to send 1040x You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). Where to send 1040x You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. Where to send 1040x However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. Where to send 1040x This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. Where to send 1040x Exception. Where to send 1040x   For an exception for distributions from failed financial institutions, see Rollover From One IRA Into Another under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x Partial rollovers. Where to send 1040x   If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. Where to send 1040x The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). Where to send 1040x The amount you keep may be subject to the 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Additional Taxes? . Where to send 1040x Required distributions. Where to send 1040x   Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. Where to send 1040x Inherited IRAs. Where to send 1040x   If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own. Where to send 1040x See Treating it as your own , earlier. Where to send 1040x Not inherited from spouse. Where to send 1040x   If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. Where to send 1040x You must withdraw the IRA assets within a certain period. Where to send 1040x For more information, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Where to send 1040x Reporting rollovers from IRAs. Where to send 1040x   Report any rollover from one traditional IRA to the same or another traditional IRA on lines 15a and 15b, Form 1040, or lines 11a and 11b, Form 1040A, as follows. Where to send 1040x   Enter the total amount of the distribution on Form 1040, line 15a, or Form 1040A, line 11a. Where to send 1040x If the total amount on Form 1040, line 15a, or Form 1040A, line 11a, was rolled over, enter zero on Form 1040, line 15b, or Form 1040A, line 11b. Where to send 1040x If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b, or Form 1040A, line 11b. Where to send 1040x Put “Rollover” next to Form 1040, line 15b, or Form 1040A, line 11b. Where to send 1040x See your tax return instructions. Where to send 1040x   If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2014, attach a statement explaining what you did. Where to send 1040x Rollover From Employer's Plan Into an IRA You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan; Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Where to send 1040x A qualified plan is one that meets the requirements of the Internal Revenue Code. Where to send 1040x Eligible rollover distribution. Where to send 1040x   Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. Where to send 1040x A required minimum distribution (explained later under When Must You Withdraw IRA Assets? (Required Minimum Distributions) ). Where to send 1040x A hardship distribution. Where to send 1040x Any of a series of substantially equal periodic distributions paid at least once a year over: Your lifetime or life expectancy, The lifetimes or life expectancies of you and your beneficiary, or A period of 10 years or more. Where to send 1040x Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. Where to send 1040x A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. Where to send 1040x Dividends on employer securities. Where to send 1040x The cost of life insurance coverage. Where to send 1040x Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Where to send 1040x To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Where to send 1040x See Form 8606 under Distributions Fully or Partly Taxable, later. Where to send 1040x Rollover by nonspouse beneficiary. Where to send 1040x   A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. Where to send 1040x The IRA is treated as an inherited IRA. Where to send 1040x For more information about inherited IRAs, see Inherited IRAs , earlier. Where to send 1040x Reporting rollovers from employer plans. Where to send 1040x    Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a, or Form 1040A, line 12a. Where to send 1040x This amount should be shown in box 1 of Form 1099-R. Where to send 1040x From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. Where to send 1040x From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. Where to send 1040x Enter the remaining amount, even if zero, on Form 1040, line 16b, or Form 1040A, line 12b. Where to send 1040x Also, enter "Rollover" next to Form 1040, line 16b, or Form 1040A, line 12b. Where to send 1040x Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. Where to send 1040x The transfer is tax free. Where to send 1040x For detailed information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x Converting From Any Traditional IRA to a Roth IRA Allowable conversions. Where to send 1040x   You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. Where to send 1040x The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. Where to send 1040x If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. Where to send 1040x However, a part or all of the conversion contribution from your traditional IRA is included in your gross income. Where to send 1040x Required distributions. Where to send 1040x   You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70½) under the required distribution rules (discussed later). Where to send 1040x Income. Where to send 1040x   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Where to send 1040x These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Where to send 1040x   You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later. Where to send 1040x   You must file Form 8606 to report 2013 conversions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2013 (unless you recharacterized the entire amount) and to figure the amount to include in income. Where to send 1040x   If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Where to send 1040x See chapter 4. Where to send 1040x Recharacterizations You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. Where to send 1040x This is called recharacterizing the contribution. Where to send 1040x See Can You Move Retirement Plan Assets? in chapter 1 of Publication 590 for more detailed information. Where to send 1040x How to recharacterize a contribution. Where to send 1040x   To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. Where to send 1040x If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. Where to send 1040x If you recharacterize your contribution, you must do all three of the following. Where to send 1040x Include in the transfer any net income allocable to the contribution. Where to send 1040x If there was a loss, the net income you must transfer may be a negative amount. Where to send 1040x Report the recharacterization on your tax return for the year during which the contribution was made. Where to send 1040x Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. Where to send 1040x No deduction allowed. Where to send 1040x   You cannot deduct the contribution to the first IRA. Where to send 1040x Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA. Where to send 1040x Required notifications. Where to send 1040x   To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. Where to send 1040x You must make the notifications by the date of the transfer. Where to send 1040x Only one notification is required if both IRAs are maintained by the same trustee. Where to send 1040x The notification(s) must include all of the following information. Where to send 1040x The type and amount of the contribution to the first IRA that is to be recharacterized. Where to send 1040x The date on which the contribution was made to the first IRA and the year for which it was made. Where to send 1040x A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. Where to send 1040x The name of the trustee of the first IRA and the name of the trustee of the second IRA. Where to send 1040x Any additional information needed to make the transfer. Where to send 1040x Reporting a recharacterization. Where to send 1040x   If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. Where to send 1040x You must treat the contribution as having been made to the second IRA. Where to send 1040x When Can You Withdraw or Use IRA Assets? There are rules limiting use of your IRA assets and distributions from it. Where to send 1040x Violation of the rules generally results in additional taxes in the year of violation. Where to send 1040x See What Acts Result in Penalties or Additional Taxes , later. Where to send 1040x Contributions returned before the due date of return. Where to send 1040x   If you made IRA contributions in 2013, you can withdraw them tax free by the due date of your return. Where to send 1040x If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. Where to send 1040x You can do this if, for each contribution you withdraw, both of the following conditions apply. Where to send 1040x You did not take a deduction for the contribution. Where to send 1040x You withdraw any interest or other income earned on the contribution. Where to send 1040x You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Where to send 1040x If there was a loss, the net income earned on the contribution may be a negative amount. Where to send 1040x Note. Where to send 1040x To calculate the amount you must withdraw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Publication 590. Where to send 1040x Earnings includible in income. Where to send 1040x   You must include in income any earnings on the contributions you withdraw. Where to send 1040x Include the earnings in income for the year in which you made the contributions, not in the year in which you withdraw them. Where to send 1040x Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. Where to send 1040x Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes?, later. Where to send 1040x    Early distributions tax. Where to send 1040x   The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. Where to send 1040x However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. Where to send 1040x When Must You Withdraw IRA Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. Where to send 1040x Eventually they must be distributed. Where to send 1040x If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. Where to send 1040x See Excess Accumulations (Insufficient Distributions) , later. Where to send 1040x The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the beneficiary of a decedent's IRA. Where to send 1040x Required minimum distribution. Where to send 1040x   The amount that must be distributed each year is referred to as the required minimum distribution. Where to send 1040x Required distributions not eligible for rollover. Where to send 1040x   Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. Where to send 1040x IRA owners. Where to send 1040x   If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Where to send 1040x April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. Where to send 1040x Distributions by the required beginning date. Where to send 1040x   You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). Where to send 1040x If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year. Where to send 1040x   If an IRA owner dies after reaching age 70½, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. Where to send 1040x Even if you begin receiving distributions before you attain age 70½, you must begin calculating and receiving required minimum distributions by your required beginning date. Where to send 1040x Distributions after the required beginning date. Where to send 1040x   The required minimum distribution for any year after the year you turn 70½ must be made by December 31 of that later year. Where to send 1040x    Beneficiaries. Where to send 1040x   If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions. Where to send 1040x More information. Where to send 1040x   For more information, including how to figure your minimum required distribution each year and how to figure your required distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Where to send 1040x Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. Where to send 1040x Exceptions. Where to send 1040x   Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: Rollovers, Qualified charitable distributions (QCD), discussed later, Tax-free withdrawals of contributions, discussed earlier, and The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable . Where to send 1040x    Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Where to send 1040x Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Where to send 1040x Qualified charitable distributions (QCD). Where to send 1040x   A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax-deductible contributions. Where to send 1040x Special rules apply if you made a qualified charitable distribution in January 2013 that you elected to treat as made in 2012. Where to send 1040x See Qualified Charitable Distributions in Publication 590 for more information. Where to send 1040x Ordinary income. Where to send 1040x   Distributions from traditional IRAs that you include in income are taxed as ordinary income. Where to send 1040x No special treatment. Where to send 1040x   In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. Where to send 1040x Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. Where to send 1040x Fully taxable. Where to send 1040x   If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Where to send 1040x Because you have no basis in your IRA, any distributions are fully taxable when received. Where to send 1040x See Reporting taxable distributions on your return , later. Where to send 1040x Partly taxable. Where to send 1040x    If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. Where to send 1040x These nondeductible contributions are not taxed when they are distributed to you. Where to send 1040x They are a return of your investment in your IRA. Where to send 1040x   Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. Where to send 1040x If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Where to send 1040x Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. Where to send 1040x Form 8606. Where to send 1040x   You must complete Form 8606 and attach it to your return if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Where to send 1040x Using the form, you will figure the nontaxable distributions for 2013 and your total IRA basis for 2013 and earlier years. Where to send 1040x Note. Where to send 1040x If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 8606. Where to send 1040x Send it to the IRS at the time and place you would otherwise file an income tax return. Where to send 1040x Distributions reported on Form 1099-R. Where to send 1040x   If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Where to send 1040x , or a similar statement. Where to send 1040x IRA distributions are shown in boxes 1 and 2a of Form 1099-R. Where to send 1040x A number or letter code in box 7 tells you what type of distribution you received from your IRA. Where to send 1040x Withholding. Where to send 1040x   Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. Where to send 1040x See chapter 4. Where to send 1040x IRA distributions delivered outside the United States. Where to send 1040x   In general, if you are a U. Where to send 1040x S. Where to send 1040x citizen or resident alien and your home address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. Where to send 1040x Reporting taxable distributions on your return. Where to send 1040x    Report fully taxable distributions, including early distributions on Form 1040, line 15b, or Form 1040A, line 11b (no entry is required on Form 1040, line 15a, or Form 1040A, line 11a). Where to send 1040x If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a, or Form 1040A, line 11a, and the taxable part on Form 1040, line 15b, or Form 1040A, line 11b. Where to send 1040x You cannot report distributions on Form 1040EZ. Where to send 1040x What Acts Result in Penalties or Additional Taxes? The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. Where to send 1040x There are additions to the regular tax for using your IRA funds in prohibited transactions. Where to send 1040x There are also additional taxes for the following activities. Where to send 1040x Investing in collectibles. Where to send 1040x Making excess contributions. Where to send 1040x Taking early distributions. Where to send 1040x Allowing excess amounts to accumulate (failing to take required distributions). Where to send 1040x There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required. Where to send 1040x Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. Where to send 1040x Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). Where to send 1040x The following are examples of prohibited transactions with a traditional IRA. Where to send 1040x Borrowing money from it. Where to send 1040x Selling property to it. Where to send 1040x Receiving unreasonable compensation for managing it. Where to send 1040x Using it as security for a loan. Where to send 1040x Buying property for personal use (present or future) with IRA funds. Where to send 1040x Effect on an IRA account. Where to send 1040x   Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. Where to send 1040x Effect on you or your beneficiary. Where to send 1040x   If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. Where to send 1040x If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. Where to send 1040x For information on figuring your gain and reporting it in income, see Are Distributions Taxable , earlier. Where to send 1040x The distribution may be subject to additional taxes or penalties. Where to send 1040x Taxes on prohibited transactions. Where to send 1040x   If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. Where to send 1040x In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction is not corrected. Where to send 1040x More information. Where to send 1040x   For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Publication 590. Where to send 1040x Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. Where to send 1040x You may have to pay the 10% additional tax on early distributions, discussed later. Where to send 1040x Collectibles. Where to send 1040x   These include: Artworks, Rugs, Antiques, Metals, Gems, Stamps, Coins, Alcoholic beverages, and Certain other tangible personal property. Where to send 1040x Exception. Where to send 1040x    Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U. Where to send 1040x S. Where to send 1040x gold coins, or one-ounce silver coins minted by the Treasury Department. Where to send 1040x It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. Where to send 1040x Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of: The maximum deductible amount for the year. Where to send 1040x For 2013, this is $5,500 ($6,500 if you are 50 or older), or Your taxable compensation for the year. Where to send 1040x Tax on excess contributions. Where to send 1040x   In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. Where to send 1040x You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. Where to send 1040x The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. Where to send 1040x Excess contributions withdrawn by due date of return. Where to send 1040x   You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribution. Where to send 1040x You must complete your withdrawal by the date your tax return for that year is due, including extensions. Where to send 1040x How to treat withdrawn contributions. Where to send 1040x   Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both the following conditions are met. Where to send 1040x No deduction was allowed for the excess contribution. Where to send 1040x You withdraw the interest or other income earned on the excess contribution. Where to send 1040x You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Where to send 1040x If there was a loss, the net income you must withdraw may be a negative amount. Where to send 1040x How to treat withdrawn interest or other income. Where to send 1040x   You must include in your gross income the interest or other income that was earned on the excess contribution. Where to send 1040x Report it on your return for the year in which the excess contribution was made. Where to send 1040x Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discus