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Federal 1040x

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Federal 1040x

Federal 1040x 11. Federal 1040x   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. Federal 1040x S. Federal 1040x Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. Federal 1040x This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Federal 1040x You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Federal 1040x These forms are discussed in this chapter. Federal 1040x To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . Federal 1040x If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. Federal 1040x Read Aliens Required To Obtain Sailing or Departure Permits . Federal 1040x Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. Federal 1040x Useful Items - You may want to see: Form (and Instructions) 1040-C U. Federal 1040x S. Federal 1040x Departing Alien Income Tax Return 2063 U. Federal 1040x S. Federal 1040x Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. Federal 1040x Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. Federal 1040x If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. Federal 1040x Category 1. Federal 1040x   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. Federal 1040x Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. Federal 1040x However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. Federal 1040x   The statement must be presented to an IRS office. Federal 1040x Category 2. Federal 1040x    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. Federal 1040x S. Federal 1040x tax under U. Federal 1040x S. Federal 1040x tax laws (described in chapter 10), and Who receive no other income from U. Federal 1040x S. Federal 1040x sources. Federal 1040x If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. Federal 1040x This is true even if your income is exempt from U. Federal 1040x S. Federal 1040x tax because of an income tax treaty, consular agreement, or international agreement. Federal 1040x Category 3. Federal 1040x   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. Federal 1040x S. Federal 1040x sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. Federal 1040x S. Federal 1040x Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. Federal 1040x S. Federal 1040x trade or business. Federal 1040x (See Interest Income in chapter 3. Federal 1040x ) Category 4. Federal 1040x   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. Federal 1040x S. Federal 1040x sources while in the United States under those visas, other than: Income from employment authorized by the U. Federal 1040x S. Federal 1040x Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. Federal 1040x S. Federal 1040x trade or business. Federal 1040x (See Interest Income in chapter 3. Federal 1040x ) Category 5. Federal 1040x   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. Federal 1040x If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Federal 1040x Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. Federal 1040x S. Federal 1040x possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. Federal 1040x S. Federal 1040x possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. Federal 1040x Category 6. Federal 1040x   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. Federal 1040x S. Federal 1040x tax. Federal 1040x Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. Federal 1040x To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. Federal 1040x See Forms To File , later. Federal 1040x You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. Federal 1040x See Paying Taxes and Obtaining Refunds , later. Federal 1040x Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. Federal 1040x Where to get a sailing or departure permit. Federal 1040x   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. Federal 1040x When to get a sailing or departure permit. Federal 1040x   You should get your sailing or departure permit at least 2 weeks before you plan to leave. Federal 1040x You cannot apply earlier than 30 days before your planned departure date. Federal 1040x Do not wait until the last minute in case there are unexpected problems. Federal 1040x Papers to submit. Federal 1040x   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. Federal 1040x Bring the following records with you if they apply. Federal 1040x Your passport and alien registration card or visa. Federal 1040x Copies of your U. Federal 1040x S. Federal 1040x income tax returns filed for the past 2 years. Federal 1040x If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. Federal 1040x Receipts for income taxes paid on these returns. Federal 1040x Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. Federal 1040x A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. Federal 1040x If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. Federal 1040x Proof of estimated tax payments for the past year and this year. Federal 1040x Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. Federal 1040x Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. Federal 1040x Copies of the application for, and approval of, the grant. Federal 1040x A statement of the amount paid, and your duties and obligations under the grant. Federal 1040x A list of any previous grants. Federal 1040x Documents indicating you qualify for any special tax treaty benefits claimed. Federal 1040x Document verifying your date of departure from the United States, such as an airline ticket. Federal 1040x Document verifying your U. Federal 1040x S. Federal 1040x taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). Federal 1040x Note. Federal 1040x   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. Federal 1040x This applies whether or not your spouse requires a permit. Federal 1040x Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Federal 1040x Employees in the IRS office can assist in filing these forms. Federal 1040x Both forms have a “certificate of compliance” section. Federal 1040x When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. Federal 1040x S. Federal 1040x tax obligations have been satisfied according to available information. Federal 1040x Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. Federal 1040x Form 2063 This is a short form that asks for certain information but does not include a tax computation. Federal 1040x The following departing aliens can get their sailing or departure permits by filing Form 2063. Federal 1040x Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. Federal 1040x Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. Federal 1040x However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. Federal 1040x Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. Federal 1040x The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. Federal 1040x However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. Federal 1040x Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Federal 1040x Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. Federal 1040x When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. Federal 1040x However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. Federal 1040x See Bond To Ensure Payment , discussed later. Federal 1040x The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. Federal 1040x Returning to the United States. Federal 1040x   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. Federal 1040x You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Federal 1040x   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. Federal 1040x The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. Federal 1040x However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. Federal 1040x Joint return on Form 1040-C. Federal 1040x   Departing husbands and wives who are nonresident aliens cannot file joint returns. Federal 1040x However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. Federal 1040x Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. Federal 1040x You must also pay any taxes due for past years. Federal 1040x If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. Federal 1040x However, the IRS cannot provide a refund at the time of departure. Federal 1040x If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. Federal 1040x Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. Federal 1040x However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. Federal 1040x The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Federal 1040x Information about the form of bond and security on it can be obtained from your IRS office. Federal 1040x Filing Annual U. Federal 1040x S. Federal 1040x Income Tax Returns Form 1040-C is not an annual U. Federal 1040x S. Federal 1040x income tax return. Federal 1040x If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Federal 1040x Chapters 5 and 7 discuss filing an annual U. Federal 1040x S. Federal 1040x income tax return. Federal 1040x The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. Federal 1040x S. Federal 1040x income tax return. Federal 1040x Prev  Up  Next   Home   More Online Publications
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Government Jobs

Search and apply for federal, state, and local government jobs.

People get jobs in the federal government in the same way that they get most jobs in the private industry: by finding job openings and submitting a resume or job application. You can research and apply for government jobs online with a resume. However, while the process is now very similar to that in private industry, there are still significant differences due to the many laws, executive orders, and regulations that govern federal and state employment.

USAJOBS.gov can help you find out how federal jobs are filled; learn more about the hiring reform; find tips for your resume, application, and interview; and how to apply for federal jobs. Most federal jobs are listed on USAJOBS; however, some excepted service agencies, such U. S. Department of State for Foreign Service Officers, post jobs independently on their own website or elsewhere. If you’d like to work for a specific agency, do a targeted search of their job sections and employment information pages.

Federal Government Jobs

  • USAJOBS.gov: Official Federal Job Site
    USAJOBS is the official job site for the U.S. federal government, and is operated by the U.S. Office of Personnel Management. Most federal civilian jobs—with the exception of jobs in the federal judiciary—are posted on USAJOBS.
  • Search for Jobs
    The federal government has thousands of job openings at any given time. Use Advanced Search to narrow your search by job title, agency, location, and other criteria.
  • Apply for Jobs
    Each vacancy announcement has unique application requirements. If you've determined that you qualify for a position, review the "How to Apply" section of the job announcement. Some positions seek electronic applications while others accept applications by mail.
  • Citizenship
    U.S. citizenship is required for most federal jobs. Some agencies hire non-citizens through special hiring procedures. Contact agencies directly to inquire about positions for non-citizens.
  • Security Clearance
    Some jobs with the federal government require a security clearance; however, the government will not request or pay for a background investigation until you are offered a position that requires a clearance.
  • FAQs, Tutorials, and Other Help
    Find answers to questions about the federal pay scale, the meaning of terms like "series," "grade," "status candidate," and more.

State Job Banks

  • State Job Banks
    Search the state job banks on CareerOneStop, a U.S. Department of Labor-sponsored site for job seekers.

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The Federal 1040x

Federal 1040x 1. Federal 1040x   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. Federal 1040x When repayment contributions can be made. Federal 1040x No deduction. Federal 1040x Reserve component. Federal 1040x Figuring your IRA deduction. Federal 1040x Reporting the repayment. Federal 1040x Example. Federal 1040x General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. Federal 1040x Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. Federal 1040x Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. Federal 1040x Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. Federal 1040x 2013 Reporting. Federal 1040x Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. Federal 1040x One-time transfer. Federal 1040x Testing period rules apply. Federal 1040x More information. Federal 1040x Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. Federal 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. Federal 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. Federal 1040x For more information, see How Much Can Be Contributed? in this chapter. Federal 1040x Modified AGI limit for traditional IRA contributions increased. Federal 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. Federal 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. Federal 1040x If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Federal 1040x See How Much Can You Deduct? in this chapter. Federal 1040x Net Investment Income Tax. Federal 1040x  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Federal 1040x However, these distributions are taken into account when determining the modified adjusted gross income threshold. Federal 1040x Distributions from a nonqualified retirement plan are included in net investment income. Federal 1040x See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Federal 1040x What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Federal 1040x  For 2014, if you are 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 $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Federal 1040x If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Federal 1040x If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Federal 1040x Introduction This chapter discusses the original IRA. Federal 1040x In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Federal 1040x ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Federal 1040x The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. Federal 1040x Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Federal 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. Federal 1040x You can have a traditional IRA whether or not you are covered by any other retirement plan. Federal 1040x However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. Federal 1040x See How Much Can You Deduct , later. Federal 1040x Both spouses have compensation. Federal 1040x   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. Federal 1040x You cannot both participate in the same IRA. Federal 1040x If you file a joint return, only one of you needs to have compensation. Federal 1040x What Is Compensation? Generally, compensation is what you earn from working. Federal 1040x For a summary of what compensation does and does not include, see Table 1-1. Federal 1040x Compensation includes all of the items discussed next (even if you have more than one type). Federal 1040x Wages, salaries, etc. Federal 1040x   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. Federal 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). Federal 1040x Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. Federal 1040x Commissions. Federal 1040x   An amount you receive that is a percentage of profits or sales price is compensation. Federal 1040x Self-employment income. Federal 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 deduction allowed for the deductible part of your self-employment taxes. Federal 1040x   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Federal 1040x Self-employment loss. Federal 1040x   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. Federal 1040x Alimony and separate maintenance. Federal 1040x   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. Federal 1040x Nontaxable combat pay. Federal 1040x   If you were a member of the U. Federal 1040x S. Federal 1040x Armed Forces, compensation includes any nontaxable combat pay you received. Federal 1040x This amount should be reported in box 12 of your 2013 Form W-2 with code Q. Federal 1040x Table 1-1. Federal 1040x Compensation for Purposes of an IRA Includes . Federal 1040x . Federal 1040x . Federal 1040x Does not include . Federal 1040x . Federal 1040x . Federal 1040x   earnings and profits from property. Federal 1040x wages, salaries, etc. Federal 1040x     interest and dividend income. Federal 1040x commissions. Federal 1040x     pension or annuity income. Federal 1040x self-employment income. Federal 1040x     deferred compensation. Federal 1040x alimony and separate maintenance. Federal 1040x     income from certain  partnerships. Federal 1040x nontaxable combat pay. Federal 1040x     any amounts you exclude from income. Federal 1040x     What Is Not Compensation? Compensation does not include any of the following items. Federal 1040x Earnings and profits from property, such as rental income, interest income, and dividend income. Federal 1040x Pension or annuity income. Federal 1040x Deferred compensation received (compensation payments postponed from a past year). Federal 1040x Income from a partnership for which you do not provide services that are a material income-producing factor. Federal 1040x Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Federal 1040x Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Federal 1040x When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Federal 1040x However, the time for making contributions for any year is limited. Federal 1040x See When Can Contributions Be Made , later. Federal 1040x How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. Federal 1040x You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Federal 1040x You can also open an IRA through your stockbroker. Federal 1040x Any IRA must meet Internal Revenue Code requirements. Federal 1040x The requirements for the various arrangements are discussed below. Federal 1040x Kinds of traditional IRAs. Federal 1040x   Your traditional IRA can be an individual retirement account or annuity. Federal 1040x It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Federal 1040x Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. Federal 1040x The account is created by a written document. Federal 1040x The document must show that the account meets all of the following requirements. Federal 1040x The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. Federal 1040x The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. Federal 1040x However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. Federal 1040x Contributions, except for rollover contributions, must be in cash. Federal 1040x See Rollovers , later. Federal 1040x You must have a nonforfeitable right to the amount at all times. Federal 1040x Money in your account cannot be used to buy a life insurance policy. Federal 1040x Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. Federal 1040x You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. Federal 1040x See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Federal 1040x Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. Federal 1040x An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. Federal 1040x An individual retirement annuity must meet all the following requirements. Federal 1040x Your entire interest in the contract must be nonforfeitable. Federal 1040x The contract must provide that you cannot transfer any portion of it to any person other than the issuer. Federal 1040x There must be flexible premiums so that if your compensation changes, your payment can also change. Federal 1040x This provision applies to contracts issued after November 6, 1978. Federal 1040x The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. Federal 1040x Distributions must begin by April 1 of the year following the year in which you reach age 70½. Federal 1040x See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Federal 1040x Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. Federal 1040x The bonds have the following features. Federal 1040x They stop earning interest when you reach age 70½. Federal 1040x If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. Federal 1040x You cannot transfer the bonds. Federal 1040x If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. Federal 1040x See Age 59½ Rule under Early Distributions, later. Federal 1040x You can roll over redemption proceeds into IRAs. Federal 1040x Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. Federal 1040x Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. Federal 1040x See Publication 560 for more information about SEPs. Federal 1040x Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. Federal 1040x The requirements for individual retirement accounts apply to these traditional IRAs. Federal 1040x Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. Federal 1040x However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. Federal 1040x The disclosure statement must explain certain items in plain language. Federal 1040x For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. Federal 1040x This explanation must appear at the beginning of the disclosure statement. Federal 1040x If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. Federal 1040x The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. Federal 1040x These requirements apply to all sponsors. Federal 1040x How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Federal 1040x These limits and rules are explained below. Federal 1040x Community property laws. Federal 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. Federal 1040x This is the rule even in states with community property laws. Federal 1040x Brokers' commissions. Federal 1040x   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Federal 1040x For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. Federal 1040x Trustees' fees. Federal 1040x   Trustees' administrative fees are not subject to the contribution limit. Federal 1040x For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. Federal 1040x Qualified reservist repayments. Federal 1040x   If you 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 (defined later under Early Distributions) you received. Federal 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. Federal 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 a similar arrangement. Federal 1040x Limit. Federal 1040x   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. Federal 1040x When repayment contributions can be made. Federal 1040x   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. Federal 1040x No deduction. Federal 1040x   You cannot deduct qualified reservist repayments. Federal 1040x Reserve component. Federal 1040x   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. Federal 1040x Figuring your IRA deduction. Federal 1040x   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. Federal 1040x Reporting the repayment. Federal 1040x   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. Federal 1040x Example. Federal 1040x   In 2013, your IRA contribution limit is $5,500. Federal 1040x However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. Federal 1040x You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). Federal 1040x In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. Federal 1040x   For 2013, you can contribute a total of $8,500 to your IRA. Federal 1040x This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. Federal 1040x You contribute the maximum allowable for the year. Federal 1040x Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. Federal 1040x The qualified reservist repayment is not deductible. Federal 1040x Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Federal 1040x See chapter 2 for information about Roth IRAs. Federal 1040x General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. Federal 1040x Note. Federal 1040x This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). Federal 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. Federal 1040x (See Nondeductible Contributions , later. Federal 1040x ) Qualified reservist repayments do not affect this limit. Federal 1040x Examples. Federal 1040x George, who is 34 years old and single, earns $24,000 in 2013. Federal 1040x His IRA contributions for 2013 are limited to $5,500. Federal 1040x Danny, an unmarried college student working part time, earns $3,500 in 2013. Federal 1040x His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Federal 1040x More than one IRA. Federal 1040x   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. Federal 1040x Annuity or endowment contracts. Federal 1040x   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. Federal 1040x If more than this amount is contributed, the annuity or endowment contract is disqualified. Federal 1040x Kay Bailey Hutchison Spousal IRA Limit 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 two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Federal 1040x Your spouse's IRA contribution for the year to a traditional IRA. Federal 1040x Any contributions for the year to a Roth IRA on behalf of your spouse. Federal 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 age 50 or older or $13,000 if both of you are age 50 or older). Federal 1040x Note. Federal 1040x This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). Federal 1040x Example. Federal 1040x Kristin, a full-time student with no taxable compensation, marries Carl during the year. Federal 1040x Neither of them was age 50 by the end of 2013. Federal 1040x For the year, Carl has taxable compensation of $30,000. Federal 1040x He plans to contribute (and deduct) $5,500 to a traditional IRA. Federal 1040x If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. Federal 1040x This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. Federal 1040x In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). Federal 1040x Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. Federal 1040x However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. Federal 1040x See How Much Can You Deduct , later. Federal 1040x Example. Federal 1040x Tom and Darcy are married and both are 53. Federal 1040x They both work and each has a traditional IRA. Federal 1040x Tom earned $3,800 and Darcy earned $48,000 in 2013. Federal 1040x Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. Federal 1040x They can contribute up to $6,500 to Darcy's IRA. Federal 1040x If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. Federal 1040x Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. Federal 1040x Example. Federal 1040x Rafael, who is 40, earns $30,000 in 2013. Federal 1040x Although he can contribute up to $5,500 for 2013, he contributes only $3,000. Federal 1040x After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). Federal 1040x He cannot contribute $2,500 more than the limit for any later year. Federal 1040x More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. Federal 1040x However, a penalty or additional tax may apply. Federal 1040x See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. Federal 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). Federal 1040x Contributions must be in the form of money (cash, check, or money order). Federal 1040x Property cannot be contributed. Federal 1040x Although property cannot be contributed, your IRA may invest in certain property. Federal 1040x For example, your IRA may purchase shares of stock. Federal 1040x For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. Federal 1040x You may be able to transfer or roll over certain property from one retirement plan to another. Federal 1040x See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . Federal 1040x You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. Federal 1040x For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). Federal 1040x Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. Federal 1040x For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. Federal 1040x See Who Can Open a Traditional IRA , earlier. Federal 1040x Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. Federal 1040x Contributions can resume for any years that you qualify. Federal 1040x Contributions must be made by due date. Federal 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. Federal 1040x For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. Federal 1040x Age 70½ rule. Federal 1040x   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Federal 1040x   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Federal 1040x If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Federal 1040x Designating year for which contribution is made. Federal 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. Federal 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). Federal 1040x Filing before a contribution is made. Federal 1040x    You can file your return claiming a traditional IRA contribution before the contribution is actually made. Federal 1040x Generally, the contribution must be made by the due date of your return, not including extensions. Federal 1040x Contributions not required. Federal 1040x   You do not have to contribute to your traditional IRA for every tax year, even if you can. Federal 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 applicable) explained earlier under How Much Can Be Contributed . Federal 1040x However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Federal 1040x See Limit if Covered by Employer Plan , later. Federal 1040x You may be able to claim a credit for contributions to your traditional IRA. Federal 1040x For more information, see chapter 4. Federal 1040x Trustees' fees. Federal 1040x   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Federal 1040x However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Federal 1040x For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. Federal 1040x Brokers' commissions. Federal 1040x   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Federal 1040x Full deduction. Federal 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 of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. Federal 1040x   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Federal 1040x Kay Bailey Hutchison Spousal IRA. Federal 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: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Federal 1040x The IRA deduction for the year of the spouse with the greater compensation. Federal 1040x Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Federal 1040x Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Federal 1040x   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. Federal 1040x Note. Federal 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. Federal 1040x After a divorce or legal separation, you can deduct only the contributions to your own IRA. Federal 1040x Your deductions are subject to the rules for single individuals. Federal 1040x Covered by an employer retirement plan. Federal 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. Federal 1040x This is discussed later under Limit if Covered by Employer Plan . Federal 1040x Limits on the amount you can deduct do not affect the amount that can be contributed. Federal 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. Federal 1040x The “Retirement Plan” box should be checked if you were covered. Federal 1040x Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. Federal 1040x If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Federal 1040x Federal judges. Federal 1040x   For purposes of the IRA deduction, federal judges are covered by an employer plan. Federal 1040x For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. Federal 1040x These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Federal 1040x Tax year. Federal 1040x   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Federal 1040x For almost all people, the tax year is the calendar year. Federal 1040x Defined contribution plan. Federal 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. Federal 1040x However, also see Situations in Which You Are Not Covered , later. Federal 1040x   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Federal 1040x In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. Federal 1040x The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. Federal 1040x Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Federal 1040x Example. Federal 1040x Company A has a money purchase pension plan. Federal 1040x Its plan year is from July 1 to June 30. Federal 1040x The plan provides that contributions must be allocated as of June 30. Federal 1040x Bob, an employee, leaves Company A on December 31, 2012. Federal 1040x The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. Federal 1040x Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. Federal 1040x   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. Federal 1040x If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. Federal 1040x If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. Federal 1040x Example. Federal 1040x Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. Federal 1040x The plan year runs from July 1 to June 30. Federal 1040x Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. Federal 1040x Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. Federal 1040x As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. Federal 1040x In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. Federal 1040x On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. Federal 1040x That contribution was made on February 15, 2014. Federal 1040x Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. Federal 1040x No vested interest. Federal 1040x   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. Federal 1040x Defined benefit plan. Federal 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. Federal 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. Federal 1040x   A defined benefit plan is any plan that is not a defined contribution plan. Federal 1040x In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. Federal 1040x The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. Federal 1040x Defined benefit plans include pension plans and annuity plans. Federal 1040x Example. Federal 1040x Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. Federal 1040x Nick leaves Company B on December 31, 2012. Federal 1040x Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. Federal 1040x No vested interest. Federal 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. Federal 1040x Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Federal 1040x Social security or railroad retirement. Federal 1040x   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Federal 1040x Benefits from previous employer's plan. Federal 1040x   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Federal 1040x Reservists. Federal 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. Federal 1040x You are not covered by the plan if both of the following conditions are met. Federal 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. Federal 1040x You did not serve more than 90 days on active duty during the year (not counting duty for training). Federal 1040x Volunteer firefighters. Federal 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. Federal 1040x You are not covered by the plan if both of the following conditions are met. Federal 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. Federal 1040x Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Federal 1040x Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Federal 1040x Your deduction is also affected by how much income you had and by your filing status. Federal 1040x Your deduction may also be affected by social security benefits you received. Federal 1040x Reduced or no deduction. Federal 1040x   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. Federal 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. Federal 1040x These amounts vary depending on your filing status. Federal 1040x   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . Federal 1040x Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. Federal 1040x Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. Federal 1040x You received social security benefits. Federal 1040x You received taxable compensation. Federal 1040x Contributions were made to your traditional IRA. Federal 1040x You or your spouse was covered by an employer retirement plan. Federal 1040x Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Federal 1040x Appendix B includes an example with filled-in worksheets to assist you. Federal 1040x Table 1-2. Federal 1040x Effect of Modified AGI1 on Deduction if You Are Covered by a 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. Federal 1040x IF your filing status is . Federal 1040x . Federal 1040x . Federal 1040x AND your modified adjusted gross income (modified AGI) is . Federal 1040x . Federal 1040x . Federal 1040x THEN you can take . Federal 1040x . Federal 1040x . Federal 1040x single or head of household $59,000 or less a full deduction. Federal 1040x more than $59,000 but less than $69,000 a partial deduction. Federal 1040x $69,000 or more no deduction. Federal 1040x married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. Federal 1040x more than $95,000 but less than $115,000 a partial deduction. Federal 1040x $115,000 or more no deduction. Federal 1040x married filing separately2 less than $10,000 a partial deduction. Federal 1040x $10,000 or more no deduction. Federal 1040x 1 Modified AGI (adjusted gross income). Federal 1040x See Modified adjusted gross income (AGI) , later. Federal 1040x  2 If 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” filing status). Federal 1040x Table 1-3. Federal 1040x Effect of Modified AGI1 on Deduction if You Are NOT Covered by a 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. Federal 1040x IF your filing status is . Federal 1040x . Federal 1040x . Federal 1040x AND your modified adjusted gross income (modified AGI) is . Federal 1040x . Federal 1040x . Federal 1040x THEN you can take . Federal 1040x . Federal 1040x . Federal 1040x single, head of household, or qualifying widow(er) any amount a full deduction. Federal 1040x married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. Federal 1040x married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. Federal 1040x more than $178,000 but less than $188,000 a partial deduction. Federal 1040x $188,000 or more no deduction. Federal 1040x married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. Federal 1040x $10,000 or more no deduction. Federal 1040x 1 Modified AGI (adjusted gross income). Federal 1040x See Modified adjusted gross income (AGI) , later. Federal 1040x  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. Federal 1040x For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Federal 1040x If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. Federal 1040x Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. Federal 1040x Covered by a retirement plan. Federal 1040x   If you are 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 1-2. Federal 1040x For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. Federal 1040x If your spouse is covered. Federal 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 1-3. Federal 1040x Filing status. Federal 1040x   Your filing status depends primarily on your marital status. Federal 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. Federal 1040x If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Federal 1040x Lived apart from spouse. Federal 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. Federal 1040x Modified adjusted gross income (AGI). Federal 1040x   You can use Worksheet 1-1 to figure your modified AGI. Federal 1040x If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. Federal 1040x    Do not assume that your modified AGI is the same as your compensation. Federal 1040x Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. Federal 1040x Form 1040. Federal 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 amounts. Federal 1040x IRA deduction. Federal 1040x Student loan interest deduction. Federal 1040x Tuition and fees deduction. Federal 1040x Domestic production activities deduction. Federal 1040x Foreign earned income exclusion. Federal 1040x Foreign housing exclusion or deduction. Federal 1040x Exclusion of qualified savings bond interest shown on Form 8815. Federal 1040x Exclusion of employer-provided adoption benefits shown on Form 8839. Federal 1040x This is your modified AGI. Federal 1040x Form 1040A. Federal 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. Federal 1040x IRA deduction. Federal 1040x Student loan interest deduction. Federal 1040x Tuition and fees deduction. Federal 1040x Exclusion of qualified savings bond interest shown on Form 8815. Federal 1040x This is your modified AGI. Federal 1040x Form 1040NR. Federal 1040x   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Federal 1040x IRA deduction. Federal 1040x Student loan interest deduction. Federal 1040x Domestic production activities deduction. Federal 1040x Exclusion of qualified savings bond interest shown on Form 8815. Federal 1040x Exclusion of employer-provided adoption benefits shown on Form 8839. Federal 1040x This is your modified AGI. Federal 1040x Income from IRA distributions. Federal 1040x   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. Federal 1040x Both contributions for 2013 and distributions in 2013. Federal 1040x   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Federal 1040x You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. Federal 1040x (See Nondeductible Contributions and Worksheet 1-2, later. Federal 1040x ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Federal 1040x To do this, you can use Worksheet 1-5, later. Federal 1040x   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. Federal 1040x How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013. Federal 1040x The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. Federal 1040x If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. Federal 1040x Note. Federal 1040x If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Federal 1040x Worksheet 1-1. Federal 1040x Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. Federal 1040x 1. Federal 1040x Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. Federal 1040x   2. Federal 1040x Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. Federal 1040x   3. Federal 1040x Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Federal 1040x   4. Federal 1040x Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. Federal 1040x   5. Federal 1040x Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Federal 1040x   6. Federal 1040x Enter any foreign housing deduction from Form 2555, line 50 6. Federal 1040x   7. Federal 1040x Enter any excludable savings bond interest from Form 8815, line 14 7. Federal 1040x   8. Federal 1040x Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Federal 1040x   9. Federal 1040x Add lines 1 through 8. Federal 1040x This is your Modified AGI for traditional IRA purposes 9. Federal 1040x   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Federal 1040x If you file Form 1040A, enter your IRA deduction on line 17 of that form. Federal 1040x If you file Form 1040NR, enter your IRA deduction on line 32 of that form. Federal 1040x You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. Federal 1040x Self-employed. Federal 1040x   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. Federal 1040x If you file Form 1040NR, enter your deduction on line 28 of that form. Federal 1040x Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Federal 1040x The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Federal 1040x Example. Federal 1040x Tony is 29 years old and single. Federal 1040x In 2013, he was covered by a retirement plan at work. Federal 1040x His salary is $62,000. Federal 1040x His modified AGI is $70,000. Federal 1040x Tony makes a $5,500 IRA contribution for 2013. Federal 1040x Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. Federal 1040x He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. Federal 1040x Repayment of reservist distributions. Federal 1040x   Nondeductible contributions may include repayments of qualified reservist distributions. Federal 1040x For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. Federal 1040x Form 8606. Federal 1040x   To designate contributions as nondeductible, you must file Form 8606. Federal 1040x (See the filled-in Forms 8606 in this chapter. Federal 1040x )   You do not have to designate a contribution as nondeductible until you file your tax return. Federal 1040x When you file, you can even designate otherwise deductible contributions as nondeductible contributions. Federal 1040x   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Federal 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. Federal 1040x In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Federal 1040x See Form 8606 under Distributions Fully or Partly Taxable, later. Federal 1040x Failure to report nondeductible contributions. Federal 1040x   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. Federal 1040x All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Federal 1040x Penalty for overstatement. Federal 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. Federal 1040x Penalty for failure to file Form 8606. Federal 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. Federal 1040x Tax on earnings on nondeductible contributions. Federal 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. Federal 1040x Cost basis. Federal 1040x   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Federal 1040x Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Federal 1040x    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. Federal 1040x See Are Distributions Taxable, later, for more information. Federal 1040x Recordkeeping. Federal 1040x There is a recordkeeping worksheet, Appendix A. Federal 1040x Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. Federal 1040x Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. Federal 1040x Example 1. Federal 1040x For 2013, Tom and Betty file a joint return on Form 1040. Federal 1040x They are both 39 years old. Federal 1040x They are both employed and Tom is covered by his employer's retirement plan. Federal 1040x Tom's salary is $59,000 and Betty's is $32,555. Federal 1040x They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. Federal 1040x Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . Federal 1040x For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. Federal 1040x Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. Federal 1040x Tom can take a deduction of only $5,080. Federal 1040x He can choose to treat the $5,080 as either deductible or nondeductible contributions. Federal 1040x He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Federal 1040x He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. Federal 1040x Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. Federal 1040x Betty figures her IRA deduction as follows. Federal 1040x Betty can treat all or part of her contributions as either deductible or nondeductible. Federal 1040x This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . Federal 1040x She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. Federal 1040x Betty decides to treat her $5,500 IRA contributions as deductible. Federal 1040x The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. Federal 1040x Example 2. Federal 1040x For 2013, Ed and Sue file a joint return on Form 1040. Federal 1040x They are both 39 years old. Federal 1040x Ed is covered by his employer's retirement plan. Federal 1040x Ed's salary is $45,000. Federal 1040x Sue had no compensation for the year and did not contribute to an IRA. Federal 1040x Sue is not covered by an employer plan. Federal 1040x Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). Federal 1040x Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. Federal 1040x Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. Federal 1040x He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Federal 1040x Sue figures her IRA deduction as shown on Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. Federal 1040x Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Federal 1040x ) Note. Federal 1040x If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Federal 1040x IF you . Federal 1040x . Federal 1040x . Federal 1040x AND your  filing status is . Federal 1040x . Federal 1040x . Federal 1040x AND your modified AGI is over . Federal 1040x . Federal 1040x . Federal 1040x THEN enter on  line 1 below . Federal 1040x . Federal 1040x . Federal 1040x       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Federal 1040x Enter applicable amount from table above 1. Federal 1040x   2. Federal 1040x Enter your modified AGI (that of both spouses, if married filing jointly) 2. Federal 1040x     Note. Federal 1040x If line 2 is equal to or more than the amount on line 1, stop here. Federal 1040x  Your IRA contributions are not deductible. Federal 1040x See Nondeductible Contributions , earlier. Federal 1040x     3. Federal 1040x Subtract line 2 from line 1. Federal 1040x If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Federal 1040x You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Federal 1040x   4. Federal 1040x Multiply line 3 by the percentage below that applies to you. Federal 1040x If the result is not a multiple of $10, round it to the next highest multiple of $10. Federal 1040x (For example, $611. Federal 1040x 40 is rounded to $620. Federal 1040x ) However, if the result is less than $200, enter $200. Federal 1040x         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Federal 1040x 5% (. Federal 1040x 275) (by 32. Federal 1040x 5% (. Federal 1040x 325) if you are age 50 or older). Federal 1040x All others, multiply line 3 by 55% (. Federal 1040x 55) (by 65% (. Federal 1040x 65) if you are age 50 or older). Federal 1040x 4. Federal 1040x   5. Federal 1040x Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Federal 1040x If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Federal 1040x If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Federal 1040x   6. Federal 1040x Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Federal 1040x If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Federal 1040x 6. Federal 1040x   7. Federal 1040x IRA deduction. Federal 1040x Compare lines 4, 5, and 6. Federal 1040x Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Federal 1040x If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Federal 1040x   8. Federal 1040x Nondeductible contribution. Federal 1040x Subtract line 7 from line 5 or 6, whichever is smaller. Federal 1040x  Enter the result here and on line 1 of your Form 8606 8. Federal 1040x   Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Federal 1040x ) Note. Federal 1040x If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Federal 1040x IF you . Federal 1040x . Federal 1040x . Federal 1040x AND your  filing status is . Federal 1040x . Federal 1040x . Federal 1040x AND your modified AGI is over . Federal 1040x . Federal 1040x . Federal 1040x THEN enter on  line 1 below . Federal 1040x . Federal 1040x . Federal 1040x       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Federal 1040x Enter applicable amount from table above 1. Federal 1040x 115,000 2. Federal 1040x Enter your modified AGI (that of both spouses, if married filing jointly) 2. Federal 1040x 96,555   Note. Federal 1040x If line 2 is equal to or more than the amount on line 1, stop here. Federal 1040x  Your IRA contributions are not deductible. Federal 1040x See Nondeductible Contributions , earlier. Federal 1040x     3. Federal 1040x Subtract line 2 from line 1. Federal 1040x If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Federal 1040x You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Federal 1040x 18,445 4. Federal 1040x Multiply line 3 by the percentage below that applies to you. Federal 1040x If the result is not a multiple of $10, round it to the next highest multiple of $10. Federal 1040x (For example, $611. Federal 1040x 40 is rounded to $620. Federal 1040x ) However, if the result is less than $200, enter $200. Federal 1040x         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Federal 1040x 5% (. Federal 1040x 275) (by 32. Federal 1040x 5% (. Federal 1040x 325) if you are age 50 or older). Federal 1040x All others, multiply line 3 by 55% (. Federal 1040x 55) (by 65% (. Federal 1040x 65) if you are age 50 or older). Federal 1040x 4. Federal 1040x 5,080 5. Federal 1040x Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Federal 1040x If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Federal 1040x If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Federal 1040x 59,000 6. Federal 1040x Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Federal 1040x If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Federal 1040x 6. Federal 1040x 5,500 7. Federal 1040x IRA deduction. Federal 1040x Compare lines 4, 5, and 6. Federal 1040x Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Federal 1040x If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Federal 1040x 5,080 8. Federal 1040x Nondeductible contribution. Federal 1040x Subtract line 7 from line 5 or 6, whichever is smaller. Federal 1040x  Enter the result here and on line 1 of your Form 8606 8. Federal 1040x 420 Worksheet 1-2. Federal 1040x Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Federal 1040x ) Note. Federal 1040x If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Federal 1040x IF you . Federal 1040x . Federal 1040x . Federal 1040x AND your  filing status is . Federal 1040x . Federal 1040x . Federal 1040x AND your modified AGI is over . Federal 1040x . Federal 1040x . Federal 1040x THEN enter on  line 1 below . Federal 1040x . Federal 1040x . Federal 1040x       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Federal 1040x Enter applicable amount from table above 1. Federal 1040x 188,000 2. Federal 1040x Enter your modified AGI (that of both spouses, if married filing jointly) 2. Federal 1040x 180,555   Note. Federal 1040x If line 2 is equal to or more than the amount on line 1, stop here. Federal 1040x  Your IRA contributions are not deductible. Federal 1040x See Nondeductible Contributions , earlier. Federal 1040x     3. Federal 1040x Subtract line 2 from line 1. Federal 1040x If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Federal 1040x You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Federal 1040x 7,445 4. Federal 1040x Multiply line 3 by the percentage below that applies to you. Federal 1040x If the result is not a multiple of $10, round it to the next highest multiple of $10. Federal 1040x (For example, $611. Federal 1040x 40 is rounded to $620. Federal 1040x ) However, if the result is less than $200, enter $200. Federal 1040x         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Federal 1040x 5% (. Federal 1040x 275) (by 32. Federal 1040x 5% (. Federal 1040x 325) if you are age 50 or older). Federal 1040x All others, multiply line 3 by 55% (. Federal 1040x 55) (by 65% (. Federal 1040x 65) if you are age 50 or older). Federal 1040x 4. Federal 1040x 4,100 5. Federal 1040x Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Federal 1040x If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Federal 1040x If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Federal 1040x 39,500 6. Federal 1040x Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Federal 1040x If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Federal 1040x 6. Federal 1040x 5,500 7. Federal 1040x IRA deduction. Federal 1040x Compare lines 4, 5, and 6. Federal 1040x Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Federal 1040x If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Federal 1040x 4,100 8. Federal 1040x Nondeductible contribution. Federal 1040x Subtract line 7 from line 5 or 6, whichever is smaller. Federal 1040x  Enter the result here and on line 1 of your Form 8606 8. Federal 1040x 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. Federal 1040x A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Federal 1040x Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Federal 1040x Inherited from spouse. Federal 1040x   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Federal 1040x You can: Treat it as your own IRA by designating yourself as the account owner. Federal 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 (s