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File An Amended Tax Return Online

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File An Amended Tax Return Online

File an amended tax return online 12. File an amended tax return online   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. File an amended tax return online Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. File an amended tax return online Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. File an amended tax return online Method 2. File an amended tax return online RoyaltiesDepletion. File an amended tax return online Coal and iron ore. File an amended tax return online Sale of property interest. File an amended tax return online Part of future production sold. File an amended tax return online Unemployment BenefitsTypes of unemployment compensation. File an amended tax return online Governmental program. File an amended tax return online Repayment of unemployment compensation. File an amended tax return online Tax withholding. File an amended tax return online Repayment of benefits. File an amended tax return online Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. File an amended tax return online Deduction for costs involved in unlawful discrimination suits. File an amended tax return online Energy conservation measure. File an amended tax return online Dwelling unit. File an amended tax return online Current income required to be distributed. File an amended tax return online Current income not required to be distributed. File an amended tax return online How to report. File an amended tax return online Losses. File an amended tax return online Grantor trust. File an amended tax return online Nonemployee compensation. File an amended tax return online Corporate director. File an amended tax return online Personal representatives. File an amended tax return online Manager of trade or business for bankruptcy estate. File an amended tax return online Notary public. File an amended tax return online Election precinct official. File an amended tax return online Difficulty-of-care payments. File an amended tax return online Maintaining space in home. File an amended tax return online Reporting taxable payments. File an amended tax return online Lotteries and raffles. File an amended tax return online Form W-2G. File an amended tax return online Reporting winnings and recordkeeping. File an amended tax return online Inherited pension or IRA. File an amended tax return online Employee awards or bonuses. File an amended tax return online Pulitzer, Nobel, and similar prizes. File an amended tax return online Payment for services. File an amended tax return online VA payments. File an amended tax return online Prizes. File an amended tax return online Strike and lockout benefits. File an amended tax return online Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. File an amended tax return online Some items, however, are only partly excluded from income. File an amended tax return online This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. File an amended tax return online Income that is taxable must be reported on your tax return and is subject to tax. File an amended tax return online Income that is nontaxable may have to be shown on your tax return but is not taxable. File an amended tax return online This chapter begins with discussions of the following income items. File an amended tax return online Bartering. File an amended tax return online Canceled debts. File an amended tax return online Sales parties at which you are the host or hostess. File an amended tax return online Life insurance proceeds. File an amended tax return online Partnership income. File an amended tax return online S Corporation income. File an amended tax return online Recoveries (including state income tax refunds). File an amended tax return online Rents from personal property. File an amended tax return online Repayments. File an amended tax return online Royalties. File an amended tax return online Unemployment benefits. File an amended tax return online Welfare and other public assistance benefits. File an amended tax return online These discussions are followed by brief discussions of other income items. File an amended tax return online Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. File an amended tax return online You must include in your income, at the time received, the fair market value of property or services you receive in bartering. File an amended tax return online If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. File an amended tax return online Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. File an amended tax return online However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. File an amended tax return online Example 1. File an amended tax return online You are a self-employed attorney who performs legal services for a client, a small corporation. File an amended tax return online The corporation gives you shares of its stock as payment for your services. File an amended tax return online You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. File an amended tax return online Example 2. File an amended tax return online You are self-employed and a member of a barter club. File an amended tax return online The club uses “credit units” as a means of exchange. File an amended tax return online It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. File an amended tax return online The club subtracts credit units from your account when you receive goods or services from other members. File an amended tax return online You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. File an amended tax return online Example 3. File an amended tax return online You own a small apartment building. File an amended tax return online In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. File an amended tax return online You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. File an amended tax return online Form 1099-B from barter exchange. File an amended tax return online   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. File an amended tax return online It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. File an amended tax return online The IRS also will receive a copy of Form 1099-B. File an amended tax return online Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. File an amended tax return online You have no income from the canceled debt if it is intended as a gift to you. File an amended tax return online A debt includes any indebtedness for which you are liable or which attaches to property you hold. File an amended tax return online If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. File an amended tax return online If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). File an amended tax return online Form 1099-C. File an amended tax return online   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. File an amended tax return online The amount of the canceled debt is shown in box 2. File an amended tax return online Interest included in canceled debt. File an amended tax return online   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. File an amended tax return online Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. File an amended tax return online See Deductible debt under Exceptions, later. File an amended tax return online   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. File an amended tax return online If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). File an amended tax return online Discounted mortgage loan. File an amended tax return online   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. File an amended tax return online You must include the canceled amount in your income. File an amended tax return online Mortgage relief upon sale or other disposition. File an amended tax return online   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. File an amended tax return online To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. File an amended tax return online Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. File an amended tax return online    You may be able to exclude part of the mortgage relief on your principal residence. File an amended tax return online See Excluded debt, later. File an amended tax return online   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. File an amended tax return online You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. File an amended tax return online Report any gain on nonbusiness property as a capital gain. File an amended tax return online   See Publication 4681 for more information. File an amended tax return online Stockholder debt. File an amended tax return online   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. File an amended tax return online For more information, see Publication 542, Corporations. File an amended tax return online   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. File an amended tax return online This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. File an amended tax return online Repayment of canceled debt. File an amended tax return online   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. File an amended tax return online You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. File an amended tax return online The statute of limitations generally does not end until 3 years after the due date of your original return. File an amended tax return online Exceptions There are several exceptions to the inclusion of canceled debt in income. File an amended tax return online These are explained next. File an amended tax return online Student loans. File an amended tax return online   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. File an amended tax return online   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. File an amended tax return online To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). File an amended tax return online   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. File an amended tax return online Education loan repayment assistance. File an amended tax return online   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. File an amended tax return online    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. File an amended tax return online If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. File an amended tax return online See Form 1040X and its instructions for details on filing. File an amended tax return online Deductible debt. File an amended tax return online   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. File an amended tax return online This exception applies only if you use the cash method of accounting. File an amended tax return online For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. File an amended tax return online Price reduced after purchase. File an amended tax return online   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. File an amended tax return online The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. File an amended tax return online Excluded debt. File an amended tax return online   Do not include a canceled debt in your gross income in the following situations. File an amended tax return online The debt is canceled in a bankruptcy case under title 11 of the U. File an amended tax return online S. File an amended tax return online Code. File an amended tax return online See Publication 908, Bankruptcy Tax Guide. File an amended tax return online The debt is canceled when you are insolvent. File an amended tax return online However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. File an amended tax return online See Publication 908. File an amended tax return online The debt is qualified farm debt and is canceled by a qualified person. File an amended tax return online See chapter 3 of Publication 225, Farmer's Tax Guide. File an amended tax return online The debt is qualified real property business debt. File an amended tax return online See chapter 5 of Publication 334. File an amended tax return online The cancellation is intended as a gift. File an amended tax return online The debt is qualified principal residence indebtedness. File an amended tax return online See Publication 525 for additional information. File an amended tax return online Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. File an amended tax return online You must report this item as income at its fair market value. File an amended tax return online Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. File an amended tax return online These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. File an amended tax return online For more information about the 50% limit for meal and entertainment expenses, see chapter 26. File an amended tax return online Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. File an amended tax return online This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. File an amended tax return online However, interest income received as a result of life insurance proceeds may be taxable. File an amended tax return online Proceeds not received in installments. File an amended tax return online   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. File an amended tax return online If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. File an amended tax return online Proceeds received in installments. File an amended tax return online   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. File an amended tax return online   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. File an amended tax return online Include anything over this excluded part in your income as interest. File an amended tax return online Surviving spouse. File an amended tax return online   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. File an amended tax return online If you remarry, you can continue to take the exclusion. File an amended tax return online Surrender of policy for cash. File an amended tax return online   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. File an amended tax return online In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. File an amended tax return online    You should receive a Form 1099-R showing the total proceeds and the taxable part. File an amended tax return online Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. File an amended tax return online More information. File an amended tax return online   For more information, see Life Insurance Proceeds in Publication 525. File an amended tax return online Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. File an amended tax return online Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. File an amended tax return online To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. File an amended tax return online Include the part of the lump sum payment that is more than your cost in your income. File an amended tax return online Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. File an amended tax return online Viatical settlement. File an amended tax return online   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. File an amended tax return online A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. File an amended tax return online Exclusion for terminal illness. File an amended tax return online    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. File an amended tax return online This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. File an amended tax return online Exclusion for chronic illness. File an amended tax return online    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. File an amended tax return online Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. File an amended tax return online This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. File an amended tax return online For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. File an amended tax return online Exception. File an amended tax return online   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. File an amended tax return online Form 8853. File an amended tax return online   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. File an amended tax return online You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. File an amended tax return online Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. File an amended tax return online For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. File an amended tax return online For more information, see Publication 559, Survivors, Executors, and Administrators. File an amended tax return online Partnership Income A partnership generally is not a taxable entity. File an amended tax return online The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. File an amended tax return online Schedule K-1 (Form 1065). File an amended tax return online    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. File an amended tax return online S. File an amended tax return online Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. File an amended tax return online In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. File an amended tax return online Keep Schedule K-1 (Form 1065) for your records. File an amended tax return online Do not attach it to your Form 1040, unless you are specifically required to do so. File an amended tax return online For more information on partnerships, see Publication 541, Partnerships. File an amended tax return online Qualified joint venture. File an amended tax return online   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. File an amended tax return online To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. File an amended tax return online For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. File an amended tax return online S Corporation Income In most cases, an S corporation does not pay tax on its income. File an amended tax return online Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. File an amended tax return online Schedule K-1 (Form 1120S). File an amended tax return online   An S corporation must file a return on Form 1120S, U. File an amended tax return online S. File an amended tax return online Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. File an amended tax return online In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. File an amended tax return online Keep Schedule K-1 (Form 1120S) for your records. File an amended tax return online Do not attach it to your Form 1040, unless you are specifically required to do so. File an amended tax return online For more information on S corporations and their shareholders, see the Instructions for Form 1120S. File an amended tax return online Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. File an amended tax return online The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). File an amended tax return online You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. File an amended tax return online Tax benefit rule. File an amended tax return online   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. File an amended tax return online For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. File an amended tax return online For more information, see Publication 525. File an amended tax return online Federal income tax refund. File an amended tax return online   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. File an amended tax return online State tax refund. File an amended tax return online   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. File an amended tax return online The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. File an amended tax return online The IRS also will receive a copy of the Form 1099-G. File an amended tax return online If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. File an amended tax return online See Publication 525 for when you must use another worksheet. File an amended tax return online   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. File an amended tax return online For examples, see Publication 525. File an amended tax return online Mortgage interest refund. File an amended tax return online    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. File an amended tax return online Do not subtract the refund amount from the interest you paid in 2013. File an amended tax return online You may have to include it in your income under the rules explained in the following discussions. File an amended tax return online Interest on recovery. File an amended tax return online   Interest on any of the amounts you recover must be reported as interest income in the year received. File an amended tax return online For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. File an amended tax return online Recovery and expense in same year. File an amended tax return online   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. File an amended tax return online Recovery for 2 or more years. File an amended tax return online   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. File an amended tax return online This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. File an amended tax return online For information on how to compute the allocation, see Recoveries in Publication 525. File an amended tax return online Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. File an amended tax return online Where to report. File an amended tax return online   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. File an amended tax return online You cannot use Form 1040A or Form 1040EZ. File an amended tax return online Standard deduction limit. File an amended tax return online   You generally are allowed to claim the standard deduction if you do not itemize your deductions. File an amended tax return online Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). File an amended tax return online If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. File an amended tax return online Example. File an amended tax return online For 2012, you filed a joint return. File an amended tax return online Your taxable income was $60,000 and you were not entitled to any tax credits. File an amended tax return online Your standard deduction was $11,900, and you had itemized deductions of $14,000. File an amended tax return online In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. File an amended tax return online The difference between the state and local income tax you deducted and your local general sales tax was more than $400. File an amended tax return online Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. File an amended tax return online Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. File an amended tax return online Standard deduction for earlier years. File an amended tax return online   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. File an amended tax return online Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. File an amended tax return online Example. File an amended tax return online You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. File an amended tax return online Your itemized deductions were $12,350. File an amended tax return online The standard deduction that you could have claimed was $11,900. File an amended tax return online In 2013, you recovered $2,100 of your 2012 itemized deductions. File an amended tax return online None of the recoveries were more than the actual deductions for 2012. File an amended tax return online Include $450 of the recoveries in your 2013 income. File an amended tax return online This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). File an amended tax return online Recovery limited to deduction. File an amended tax return online   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. File an amended tax return online The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. File an amended tax return online Example. File an amended tax return online During 2012 you paid $1,700 for medical expenses. File an amended tax return online From this amount you subtracted $1,500, which was 7. File an amended tax return online 5% of your adjusted gross income. File an amended tax return online Your actual medical expense deduction was $200. File an amended tax return online In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. File an amended tax return online The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. File an amended tax return online Other recoveries. File an amended tax return online   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. File an amended tax return online Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. File an amended tax return online In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. File an amended tax return online See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. File an amended tax return online Reporting business income and expenses. File an amended tax return online    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online The form instructions have information on how to complete them. File an amended tax return online Reporting nonbusiness income. File an amended tax return online   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. File an amended tax return online List the type and amount of the income on the dotted line next to line 21. File an amended tax return online Reporting nonbusiness expenses. File an amended tax return online   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. File an amended tax return online Also enter the amount and “PPR” on the dotted line next to line 36. File an amended tax return online   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. File an amended tax return online See Activity not for profit , under Other Income, later. File an amended tax return online Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. File an amended tax return online Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. File an amended tax return online Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. File an amended tax return online Type of deduction. File an amended tax return online   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. File an amended tax return online You generally deduct the repayment on the same form or schedule on which you previously reported it as income. File an amended tax return online For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). File an amended tax return online If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). File an amended tax return online If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). File an amended tax return online Repaid social security benefits. File an amended tax return online   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. File an amended tax return online Repayment of $3,000 or less. File an amended tax return online   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. File an amended tax return online If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. File an amended tax return online Repayment over $3,000. File an amended tax return online   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). File an amended tax return online However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. File an amended tax return online This means that at the time you included the income, it appeared that you had an unrestricted right to it. File an amended tax return online If you qualify for this choice, figure your tax under both methods and compare the results. File an amended tax return online Use the method (deduction or credit) that results in less tax. File an amended tax return online When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. File an amended tax return online Each instance of repayment is not considered separately. File an amended tax return online Method 1. File an amended tax return online   Figure your tax for 2013 claiming a deduction for the repaid amount. File an amended tax return online If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. File an amended tax return online Method 2. File an amended tax return online   Figure your tax for 2013 claiming a credit for the repaid amount. File an amended tax return online Follow these steps. File an amended tax return online Figure your tax for 2013 without deducting the repaid amount. File an amended tax return online Refigure your tax from the earlier year without including in income the amount you repaid in 2013. File an amended tax return online Subtract the tax in (2) from the tax shown on your return for the earlier year. File an amended tax return online This is the credit. File an amended tax return online Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). File an amended tax return online   If method 1 results in less tax, deduct the amount repaid. File an amended tax return online If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. File an amended tax return online R. File an amended tax return online C. File an amended tax return online 1341” in the column to the right of line 71. File an amended tax return online   An example of this computation can be found in Publication 525. File an amended tax return online Repaid wages subject to social security and Medicare taxes. File an amended tax return online   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. File an amended tax return online If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. File an amended tax return online File a claim for refund using Form 843, Claim for Refund and Request for Abatement. File an amended tax return online Repaid wages subject to Additional Medicare Tax. File an amended tax return online   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. File an amended tax return online If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. File an amended tax return online To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. File an amended tax return online S. File an amended tax return online Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. File an amended tax return online See the Instructions for Form 1040X. File an amended tax return online Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. File an amended tax return online In most cases you report royalties in Part I of Schedule E (Form 1040). File an amended tax return online However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. File an amended tax return online , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online Copyrights and patents. File an amended tax return online   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. File an amended tax return online Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. File an amended tax return online Oil, gas, and minerals. File an amended tax return online   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. File an amended tax return online The royalties are based on units, such as barrels, tons, etc. File an amended tax return online , and are paid to you by a person or company who leases the property from you. File an amended tax return online Depletion. File an amended tax return online   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. File an amended tax return online For information on this subject, see chapter 9 of Publication 535. File an amended tax return online Coal and iron ore. File an amended tax return online   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. File an amended tax return online For information about gain or loss from the sale of coal and iron ore, see Publication 544. File an amended tax return online Sale of property interest. File an amended tax return online   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. File an amended tax return online Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). File an amended tax return online For more information on selling section 1231 property, see chapter 3 of Publication 544. File an amended tax return online   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. File an amended tax return online Part of future production sold. File an amended tax return online   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. File an amended tax return online Do not include it in your income or take depletion based on it. File an amended tax return online   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. File an amended tax return online Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. File an amended tax return online Unemployment compensation. File an amended tax return online   You must include in income all unemployment compensation you receive. File an amended tax return online You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. File an amended tax return online In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. File an amended tax return online Types of unemployment compensation. File an amended tax return online   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. File an amended tax return online It includes the following benefits. File an amended tax return online Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. File an amended tax return online State unemployment insurance benefits. File an amended tax return online Railroad unemployment compensation benefits. File an amended tax return online Disability payments from a government program paid as a substitute for unemployment compensation. File an amended tax return online (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. File an amended tax return online See chapter 5 for more information. File an amended tax return online ) Trade readjustment allowances under the Trade Act of 1974. File an amended tax return online Unemployment assistance under the Disaster Relief and Emergency Assistance Act. File an amended tax return online Unemployment assistance under the Airline Deregulation Act of 1974 Program. File an amended tax return online Governmental program. File an amended tax return online   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. File an amended tax return online If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. File an amended tax return online Repayment of unemployment compensation. File an amended tax return online   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. File an amended tax return online On the dotted line next to your entry enter “Repaid” and the amount you repaid. File an amended tax return online If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. File an amended tax return online If the amount is more than $3,000, see Repayments , earlier. File an amended tax return online Tax withholding. File an amended tax return online   You can choose to have federal income tax withheld from your unemployment compensation. File an amended tax return online To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. File an amended tax return online Tax will be withheld at 10% of your payment. File an amended tax return online    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. File an amended tax return online If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. File an amended tax return online For more information on estimated tax, see chapter 4. File an amended tax return online Supplemental unemployment benefits. File an amended tax return online   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. File an amended tax return online They are taxable as wages and are subject to withholding for income tax. File an amended tax return online They may be subject to social security and Medicare taxes. File an amended tax return online For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. File an amended tax return online Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. File an amended tax return online Repayment of benefits. File an amended tax return online   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. File an amended tax return online If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. File an amended tax return online If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. File an amended tax return online   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. File an amended tax return online (You cannot use Form 1040A or Form 1040EZ. File an amended tax return online ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. File an amended tax return online If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. File an amended tax return online For more information on this, see Repayments , earlier. File an amended tax return online Private unemployment fund. File an amended tax return online   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. File an amended tax return online Report the taxable amount on Form 1040, line 21. File an amended tax return online Payments by a union. File an amended tax return online   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. File an amended tax return online However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. File an amended tax return online Guaranteed annual wage. File an amended tax return online   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. File an amended tax return online Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. File an amended tax return online State employees. File an amended tax return online   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. File an amended tax return online Although the payments are fully taxable, do not report them as unemployment compensation. File an amended tax return online Report these payments on Form 1040, line 21. File an amended tax return online Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. File an amended tax return online Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. File an amended tax return online Do not deduct medical expenses that are reimbursed by such a fund. File an amended tax return online You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. File an amended tax return online Reemployment Trade Adjustment Assistance (RTAA) payments. File an amended tax return online   RTAA payments received from a state must be included in your income. File an amended tax return online The state must send you Form 1099-G to advise you of the amount you should include in income. File an amended tax return online The amount should be reported on Form 1040, line 21. File an amended tax return online Persons with disabilities. File an amended tax return online   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. File an amended tax return online However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. File an amended tax return online Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. File an amended tax return online Disaster relief grants. File an amended tax return online    Do not include post-disaster grants received under the Robert T. File an amended tax return online Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. File an amended tax return online Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. File an amended tax return online If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. File an amended tax return online See Recoveries , earlier. File an amended tax return online Unemployment assistance payments under the Act are taxable unemployment compensation. File an amended tax return online See Unemployment compensation under Unemployment Benefits, earlier. File an amended tax return online Disaster relief payments. File an amended tax return online   You can exclude from income any amount you receive that is a qualified disaster relief payment. File an amended tax return online A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. File an amended tax return online You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. File an amended tax return online The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. File an amended tax return online   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. File an amended tax return online   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. File an amended tax return online Disaster mitigation payments. File an amended tax return online   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. File an amended tax return online Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. File an amended tax return online However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. File an amended tax return online They are paid to you through state and local governments based on the provisions of the Robert T. File an amended tax return online Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. File an amended tax return online   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. File an amended tax return online Home Affordable Modification Program (HAMP). File an amended tax return online   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. File an amended tax return online Mortgage assistance payments under section 235 of the National Housing Act. File an amended tax return online   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. File an amended tax return online Interest paid for the homeowner under the mortgage assistance program cannot be deducted. File an amended tax return online Medicare. File an amended tax return online   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. File an amended tax return online This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). File an amended tax return online Old-age, survivors, and disability insurance benefits (OASDI). File an amended tax return online   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. File an amended tax return online This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. File an amended tax return online Nutrition Program for the Elderly. File an amended tax return online    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. File an amended tax return online If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. File an amended tax return online Payments to reduce cost of winter energy. File an amended tax return online   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. File an amended tax return online Other Income The following brief discussions are arranged in alphabetical order. File an amended tax return online Other income items briefly discussed below are referenced to publications which provide more topical information. File an amended tax return online Activity not for profit. File an amended tax return online   You must include on your return income from an activity from which you do not expect to make a profit. File an amended tax return online An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. File an amended tax return online Enter this income on Form 1040, line 21. File an amended tax return online Deductions for expenses related to the activity are limited. File an amended tax return online They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). File an amended tax return online See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. File an amended tax return online Alaska Permanent Fund dividend. File an amended tax return online   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. File an amended tax return online The state of Alaska sends each recipient a document that shows the amount of the payment with the check. File an amended tax return online The amount also is reported to IRS. File an amended tax return online Alimony. File an amended tax return online   Include in your income on Form 1040, line 11, any alimony payments you receive. File an amended tax return online Amounts you receive for child support are not income to you. File an amended tax return online Alimony and child support payments are discussed in chapter 18. File an amended tax return online Bribes. File an amended tax return online   If you receive a bribe, include it in your income. File an amended tax return online Campaign contributions. File an amended tax return online   These contributions are not income to a candidate unless they are diverted to his or her personal use. File an amended tax return online To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. File an amended tax return online However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. File an amended tax return online S. File an amended tax return online Income Tax Return for Certain Political Organizations. File an amended tax return online Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. File an amended tax return online Car pools. File an amended tax return online   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. File an amended tax return online These amounts are considered reimbursement for your expenses. File an amended tax return online However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. File an amended tax return online Cash rebates. File an amended tax return online   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. File an amended tax return online Example. File an amended tax return online You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. File an amended tax return online The $2,000 is not income to you. File an amended tax return online Your basis in the car is $22,000. File an amended tax return online This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. File an amended tax return online Casualty insurance and other reimbursements. File an amended tax return online   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. File an amended tax return online See chapter 25 for more information. File an amended tax return online Child support payments. File an amended tax return online   You should not report these payments on your return. File an amended tax return online See chapter 18 for more information. File an amended tax return online Court awards and damages. File an amended tax return online   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. File an amended tax return online The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. File an amended tax return online Include the following as ordinary income. File an amended tax return online Interest on any award. File an amended tax return online Compensation for lost wages or lost profits in most cases. File an amended tax return online Punitive damages, in most cases. File an amended tax return online It does not matter if they relate to a physical injury or physical sickness. File an amended tax return online Amounts received in settlement of pension rights (if you did not contribute to the plan). File an amended tax return online Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. File an amended tax return online Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. File an amended tax return online Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. File an amended tax return online   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). File an amended tax return online Emotional distress. File an amended tax return online   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. File an amended tax return online Do not include them in your income. File an amended tax return online   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. File an amended tax return online Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. File an amended tax return online Deduction for costs involved in unlawful discrimination suits. File an amended tax return online   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. File an amended tax return online For more information, see Publication 525. File an amended tax return online Credit card insurance. File an amended tax return online   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. File an amended tax return online These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. File an amended tax return online Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. File an amended tax return online Down payment assistance. File an amended tax return online   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. File an amended tax return online If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. File an amended tax return online If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. File an amended tax return online Employment agency fees. File an amended tax return online   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. File an amended tax return online However, if you pay it and your employer reimburses you for it, it is includible in your income. File an amended tax return online Energy conservation subsidies. File an amended tax return online   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. File an amended tax return online Energy conservation measure. File an amended tax return online   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. File an amended tax return online Dwelling unit. File an amended tax return online   This includes a house, apartment, condominium, mobile home, boat, or similar property. File an amended tax return online If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. File an amended tax return online Estate and trust income. File an amended tax return online    An estate or trust, unlike a partnership, may have to pay federal income tax. File an amended tax return online If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. File an amended tax return online However, there is never a double tax. File an amended tax return online Estates and trusts file their returns on Form 1041, U. File an amended tax return online S. File an amended tax return online Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). File an amended tax return online Current income required to be distributed. File an amended tax return online   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. File an amended tax return online Current income not required to be distributed. File an amended tax return online    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. File an amended tax return online How to report. File an amended tax return online   Treat each item of income the same way that the estate or trust would treat it. File an amended tax return online For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. File an amended tax return online The same rule applies to distributions of tax-exempt interest and capital gains. File an amended tax return online   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. File an amended tax return online Losses. File an amended tax return online   Losses of estates and trusts generally are not deductible by the beneficiaries. File an amended tax return online Grantor trust. File an amended tax return online   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. File an amended tax return online (The grantor is the one who transferred property to the trust. File an amended tax return online ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. File an amended tax return online   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. File an amended tax return online Expenses paid by another. File an amended tax return online   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. File an amended tax return online But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. File an amended tax return online Fees for services. File an amended tax return online   Include all fees for your services in your income. File an amended tax return online Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. File an amended tax return online Nonemployee compensation. File an amended tax return online   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. File an amended tax return online You may need to report your fees as self-employment income. File an amended tax return online See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. File an amended tax return online Corporate director. File an amended tax return online   Corporate director fees are self-employment income. File an amended tax return online Report these payments on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online Personal representatives. File an amended tax return online   All personal representatives must include in their gross income fees paid to them from an estate. File an amended tax return online If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. File an amended tax return online If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online The fee is not includible in income if it is waived. File an amended tax return online Manager of trade or business for bankruptcy estate. File an amended tax return online   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. File an amended tax return online Report this income on Form 1040, line 21. File an amended tax return online Notary public. File an amended tax return online    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online These payments are not subject to self-employment tax. File an amended tax return online See the separate instructions for Schedule SE (Form 1040) for details. File an amended tax return online Election precinct official. File an amended tax return online    You should receive a Form W-2 showing payments for services performed as an election official or election worker. File an amended tax return online Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. File an amended tax return online Foster care providers. File an amended tax return online   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. File an amended tax return online However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. File an amended tax return online   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. File an amended tax return online Difficulty-of-care payments. File an amended tax return online   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. File an amended tax return online A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. File an amended tax return online   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. File an amended tax return online Maintaining space in home. File an amended tax return online   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. File an amended tax return online Reporting taxable payments. File an amended tax return online    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. File an amended tax return online Report the payments on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. File an amended tax return online Found property. File an amended tax return online   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. File an amended tax return online Free tour. File an amended tax return online   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. File an amended tax return online Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. File an amended tax return online You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. File an amended tax return online If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). File an amended tax return online Gambling winnings. File an amended tax return online   You must include your gambling winnings in income on Form 1040, line 21. File an amended tax return online If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. File an amended tax return online Lotteries and raffles. File an amended tax return online   Winnings from lotteries and raffles are gambling winnings. File an amended tax return online In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. File an amended tax return online    If you win a state lottery prize payable in installments, see Publication 525 for more information. File an amended tax return online Form W-2G. File an amended tax return online   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. File an amended tax return online Include the amount from box 1 on Form 1040, line 21. File an amended tax return online Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. File an amended tax return online Reporting winnings and recordkeeping. File an amended tax return online   For more information on reporting gam
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Affordable Care Act Tax Provisions for Employers

The Affordable Care Act, or health care law, contains benefits and responsibilities for employers. The size and structure of your workforce – small, large, or part of a group – helps determine what applies to you. However, if you have no employees, the following information does not apply to you.

 Small Employers
 
Large Employers
 
Small employers, generally those with fewer than 50 full-time employees, may be eligible for credits and other benefits.
 
  > More…
 
A large employer has 50 or more full-time employees or equivalents.
 
  > More…

 

How do I know if I am a small or large employer? Why does it matter?

An employer’s size is determined by the number of its employees. Employer benefits, opportunities and requirements are dependent upon the employer’s size and the applicable rules. Generally, an employer with 50 or more full-time employees or equivalents will be considered a large employer.

Employers with:

  • Fewer than 25 full-time equivalent employees may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.
  • Generally 50 or fewer employees may be eligible to buy coverage through the Small Business Health Options Program (SHOP). Learn more at HealthCare.gov
  • 50 or more full-time equivalent employees will need to file an annual return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions.

Certain affiliated employers with common ownership or part of a controlled group must aggregate their employees to determine their workforce size. Proposed regulations (pdf) and FAQs provide more information about determining the size of your workforce.

Page Last Reviewed or Updated: 28-Jan-2014

The File An Amended Tax Return Online

File an amended tax return online 3. File an amended tax return online   Limit on Annual Additions Table of Contents Ministers and church employees. File an amended tax return online Includible Compensation for Your Most Recent Year of ServiceMost Recent Year of Service Includible Compensation The first component of MAC is the limit on annual additions. File an amended tax return online This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. File an amended tax return online The limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or 100% of your includible compensation for your most recent year of service. File an amended tax return online More than one 403(b) account. File an amended tax return online If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts on your behalf by your employer. File an amended tax return online Ministers and church employees. File an amended tax return online   If you are a minister or a church employee, you may be able to increase your limit on annual additions or use different rules when figuring your limit on annual additions. File an amended tax return online For more information, see chapter 5. File an amended tax return online Participation in a qualified plan. File an amended tax return online If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. File an amended tax return online You can use Part I of Worksheet 1 in chapter 9 to figure your limit on annual additions. File an amended tax return online Includible Compensation for Your Most Recent Year of Service Definition. File an amended tax return online   Generally, includible compensation for your most recent year of service is the amount of taxable wages and benefits you received from the employer that maintained a 403(b) account for your benefit during your most recent year of service. File an amended tax return online When figuring your includible compensation for your most recent year of service, keep in mind that your most recent year of service may not be the same as your employer's most recent annual work period. File an amended tax return online This can happen if your tax year is not the same as your employer's annual work period. File an amended tax return online When figuring includible compensation for your most recent year of service, do not mix compensation or service of one employer with compensation or service of another employer. File an amended tax return online Most Recent Year of Service Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf. File an amended tax return online Tax year different from employer's annual work period. File an amended tax return online   If your tax year is not the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods. File an amended tax return online Example. File an amended tax return online A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). File an amended tax return online To figure her includible compensation for 2013, the professor's most recent year of service is her service from January through May 2013 and from October through December 2013. File an amended tax return online Figuring Your Most Recent Year of Service To figure your most recent year of service, begin by determining what is a full year of service for your position. File an amended tax return online A full year of service is equal to full-time employment for your employer's annual work period. File an amended tax return online After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year. File an amended tax return online Part-time or employed only part of the year. File an amended tax return online   If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. File an amended tax return online To determine your most recent year of service, add the following periods of service: Your service during the year for which you are figuring the limit on annual additions, and Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer. File an amended tax return online Example. File an amended tax return online You were employed on a full-time basis from July through December 2011 (1/2 year of service), July through December 2012 (1/2 year of service), and October through December 2013 (1/4 year of service). File an amended tax return online Your most recent year of service for computing your limit on annual additions for 2013 is the total of your service during 2013 (1/4 year of service), your service during 2012 (1/2 year of service), and your service during the months October through December 2011 (1/4 year of service). File an amended tax return online Not yet employed for 1 year. File an amended tax return online   If, at the close of the year, you have not yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service. File an amended tax return online Includible Compensation After identifying your most recent year of service, the next step is to identify the includible compensation associated with that full year of service. File an amended tax return online Includible compensation is not the same as income included on your tax return. File an amended tax return online Compensation is a combination of income and benefits received in exchange for services provided to your employer. File an amended tax return online Generally, includible compensation is the amount of income and benefits: Received from the employer who maintains your 403(b) account, and Must be included in your income. File an amended tax return online Includible compensation includes the following amounts. File an amended tax return online Elective deferrals (employer's contributions made on your behalf under a salary reduction agreement). File an amended tax return online Amounts contributed or deferred by your employer under a section 125 cafeteria plan. File an amended tax return online Amounts contributed or deferred, at the election of the employee, under an eligible section 457 nonqualified deferred compensation plan (state or local government or tax-exempt organization plan). File an amended tax return online  Note. File an amended tax return online For information about treating elective deferrals under section 457 plans as Roth contributions, see Publication 575. File an amended tax return online Wages, salaries, and fees for personal services earned with the employer maintaining your 403(b) account. File an amended tax return online Income otherwise excluded under the foreign earned income exclusion. File an amended tax return online Pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan. File an amended tax return online Includible compensation does not include the following items. File an amended tax return online Your employer's contributions to your 403(b) account. File an amended tax return online Compensation earned while your employer was not an eligible employer. File an amended tax return online Your employer's contributions to a qualified plan that: Are on your behalf, and Are excludable from income. File an amended tax return online The cost of incidental life insurance. File an amended tax return online See Cost of Incidental Life Insurance, later. File an amended tax return online If you are a church employee or a foreign missionary, figure includible compensation using the rules explained in chapter 5. File an amended tax return online Contributions after retirement. File an amended tax return online   Nonelective contributions may be made for an employee for up to 5 years after retirement. File an amended tax return online These contributions would be based on includible compensation for the last year of service before retirement. File an amended tax return online Cost of Incidental Life Insurance Includible compensation does not include the cost of incidental life insurance. File an amended tax return online If all of your 403(b) accounts invest only in mutual funds, then you have no incidental life insurance. File an amended tax return online If you have an annuity contract, a portion of the cost of that contract may be for incidental life insurance. File an amended tax return online If so, the cost of the insurance is taxable to you in the year contributed and is considered part of your basis when distributed. File an amended tax return online Your employer will include the cost of your insurance as taxable wages in box 1 of Form W-2. File an amended tax return online Not all annuity contracts include life insurance. File an amended tax return online Contact your plan administrator to determine if your contract includes incidental life insurance. File an amended tax return online If it does, you will need to figure the cost of life insurance each year the policy is in effect. File an amended tax return online Figuring the cost of incidental life insurance. File an amended tax return online If you have determined that part of the cost of your annuity contract is for an incidental life insurance premium, you will need to determine the amount of the premium and subtract it from your includible compensation. File an amended tax return online To determine the amount of the life insurance premiums, you will need to know the following information. File an amended tax return online The value of your life insurance contract, which is the amount payable upon your death. File an amended tax return online The cash value of your life insurance contract at the end of the tax year. File an amended tax return online Your age on your birthday nearest the beginning of the policy year. File an amended tax return online Your current life insurance protection under an ordinary retirement income life insurance policy, which is the amount payable upon your death minus the cash value of the contract at the end of the year. File an amended tax return online You can use Worksheet A, in chapter 9, to determine the cost of your incidental life insurance. File an amended tax return online Example. File an amended tax return online Your new contract provides that your beneficiary will receive $10,000 if you should die before retirement. File an amended tax return online Your cash value in the contract at the end of the first year is zero. File an amended tax return online Your current life insurance protection for the first year is $10,000 ($10,000 − 0). File an amended tax return online The cash value in the contract at the end of year two is $1,000, and the current life insurance protection for the second year is $9,000 ($10,000 – $1,000). File an amended tax return online The 1-year cost of the protection can be calculated by using Figure 3-1, Table of One-Year Term Premiums for $1,000 Life Insurance Protection . File an amended tax return online The premium rate is determined based on your age on your birthday nearest the beginning of the policy year. File an amended tax return online Figure 3-1. File an amended tax return online Table of One-Year Term Premiums for $1,000 Life Insurance Protection Age Cost   Age Cost   Age Cost 0 $0. File an amended tax return online 70   35 $0. File an amended tax return online 99   70 $20. File an amended tax return online 62 1 0. File an amended tax return online 41   36 1. File an amended tax return online 01   71 22. File an amended tax return online 72 2 0. File an amended tax return online 27   37 1. File an amended tax return online 04   72 25. File an amended tax return online 07 3 0. File an amended tax return online 19   38 1. File an amended tax return online 06   73 27. File an amended tax return online 57 4 0. File an amended tax return online 13   39 1. File an amended tax return online 07   74 30. File an amended tax return online 18 5 0. File an amended tax return online 13   40 1. File an amended tax return online 10   75 33. File an amended tax return online 05 6 0. File an amended tax return online 14   41 1. File an amended tax return online 13   76 36. File an amended tax return online 33 7 0. File an amended tax return online 15   42 1. File an amended tax return online 20   77 40. File an amended tax return online 17 8 0. File an amended tax return online 16   43 1. File an amended tax return online 29   78 44. File an amended tax return online 33 9 0. File an amended tax return online 16   44 1. File an amended tax return online 40   79 49. File an amended tax return online 23 10 0. File an amended tax return online 16   45 1. File an amended tax return online 53   80 54. File an amended tax return online 56 11 0. File an amended tax return online 19   46 1. File an amended tax return online 67   81 60. File an amended tax return online 51 12 0. File an amended tax return online 24   47 1. File an amended tax return online 83   82 66. File an amended tax return online 74 13 0. File an amended tax return online 28   48 1. File an amended tax return online 98   83 73. File an amended tax return online 07 14 0. File an amended tax return online 33   49 2. File an amended tax return online 13   84 80. File an amended tax return online 35 15 0. File an amended tax return online 38   50 2. File an amended tax return online 30   85 88. File an amended tax return online 76 16 0. File an amended tax return online 52   51 2. File an amended tax return online 52   86 99. File an amended tax return online 16 17 0. File an amended tax return online 57   52 2. File an amended tax return online 81   87 110. File an amended tax return online 40 18 0. File an amended tax return online 59   53 3. File an amended tax return online 20   88 121. File an amended tax return online 85 19 0. File an amended tax return online 61   54 3. File an amended tax return online 65   89 133. File an amended tax return online 40 20 0. File an amended tax return online 62   55 4. File an amended tax return online 15   90 144. File an amended tax return online 30 21 0. File an amended tax return online 62   56 4. File an amended tax return online 68   91 155. File an amended tax return online 80 22 0. File an amended tax return online 64   57 5. File an amended tax return online 20   92 168. File an amended tax return online 75 23 0. File an amended tax return online 66   58 5. File an amended tax return online 66   93 186. File an amended tax return online 44 24 0. File an amended tax return online 68   59 6. File an amended tax return online 06   94 206. File an amended tax return online 70 25 0. File an amended tax return online 71   60 6. File an amended tax return online 51   95 228. File an amended tax return online 35 26 0. File an amended tax return online 73   61 7. File an amended tax return online 11   96 250. File an amended tax return online 01 27 0. File an amended tax return online 76   62 7. File an amended tax return online 96   97 265. File an amended tax return online 09 28 0. File an amended tax return online 80   63 9. File an amended tax return online 08   98 270. File an amended tax return online 11 29 0. File an amended tax return online 83   64 10. File an amended tax return online 41   99 281. File an amended tax return online 05 30 0. File an amended tax return online 87   65 11. File an amended tax return online 90       31 0. File an amended tax return online 90   66 13. File an amended tax return online 51       32 0. File an amended tax return online 93   67 15. File an amended tax return online 20       33 0. File an amended tax return online 96   68 16. File an amended tax return online 92       34 0. File an amended tax return online 98   69 18. File an amended tax return online 70                       If the current published premium rates per $1,000 of insurance protection charged by an insurer for individual 1-year term life insurance premiums available to all standard risks are lower than those in the preceding table, you can use the lower rates for figuring the cost of insurance in connection with individual policies issued by the same insurer. File an amended tax return online Example 1. File an amended tax return online Lynne Green, age 44, and her employer enter into a 403(b) plan that will provide her with a $500 a month annuity upon retirement at age 65. File an amended tax return online The agreement also provides that if she should die before retirement, her beneficiary will receive the greater of $20,000 or the cash surrender value in the life insurance contract. File an amended tax return online Using the facts presented we can determine the cost of Lynne's life insurance protection as shown in Table 3-1. File an amended tax return online Lynne's employer has included $28 for the cost of the life insurance protection in her current year's income. File an amended tax return online When figuring her includible compensation for this year, Lynne will subtract $28. File an amended tax return online Table 3-1. File an amended tax return online Worksheet A. File an amended tax return online Cost of Incidental Life Insurance Note. File an amended tax return online Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. File an amended tax return online This amount will be used to figure includible compensation for your most recent year of service. File an amended tax return online 1. File an amended tax return online Enter the value of the contract (amount payable upon your death) 1. File an amended tax return online $20,000. File an amended tax return online 00 2. File an amended tax return online Enter the cash value in the contract at the end of the year 2. File an amended tax return online 0. File an amended tax return online 00 3. File an amended tax return online Subtract line 2 from line 1. File an amended tax return online This is the value of your current life insurance protection 3. File an amended tax return online $20,000. File an amended tax return online 00 4. File an amended tax return online Enter your age on your birthday nearest the beginning of the policy year 4. File an amended tax return online 44 5. File an amended tax return online Enter the 1-year term premium for $1,000 of life insurance based on your age. File an amended tax return online (From Figure 3-1) 5. File an amended tax return online $1. File an amended tax return online 40 6. File an amended tax return online Divide line 3 by $1,000 6. File an amended tax return online 20 7. File an amended tax return online Multiply line 6 by line 5. File an amended tax return online This is the cost of your incidental life insurance 7. File an amended tax return online $28. File an amended tax return online 00 Example 2. File an amended tax return online Lynne's cash value in the contract at the end of the second year is $1,000. File an amended tax return online In year two, the cost of Lynne's life insurance is calculated as shown in Table 3-2. File an amended tax return online In year two, Lynne's employer will include $29. File an amended tax return online 07 in her current year's income. File an amended tax return online Lynne will subtract this amount when figuring her includible compensation. File an amended tax return online Table 3-2. File an amended tax return online Worksheet A. File an amended tax return online Cost of Incidental Life Insurance Note. File an amended tax return online Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. File an amended tax return online This amount will be used to figure includible compensation for your most recent year of service. File an amended tax return online 1. File an amended tax return online Enter the value of the contract (amount payable upon your death) 1. File an amended tax return online $20,000. File an amended tax return online 00 2. File an amended tax return online Enter the cash value in the contract at the end of the year 2. File an amended tax return online $1,000. File an amended tax return online 00 3. File an amended tax return online Subtract line 2 from line 1. File an amended tax return online This is the value of your current life insurance protection 3. File an amended tax return online $19,000. File an amended tax return online 00 4. File an amended tax return online Enter your age on your birthday nearest the beginning of the policy year 4. File an amended tax return online 45 5. File an amended tax return online Enter the 1-year term premium for $1,000 of life insurance based on your age. File an amended tax return online (From Figure 3-1) 5. File an amended tax return online $1. File an amended tax return online 53 6. File an amended tax return online Divide line 3 by $1,000 6. File an amended tax return online 19 7. File an amended tax return online Multiply line 6 by line 5. File an amended tax return online This is the cost of your incidental life insurance 7. File an amended tax return online $29. File an amended tax return online 07 Figuring Includible Compensation for Your Most Recent Year of Service You can use Worksheet B in chapter 9 to determine your includible compensation for your most recent year of service. File an amended tax return online Example. File an amended tax return online Floyd has been periodically working full-time for a local hospital since September 2011. File an amended tax return online He needs to figure his limit on annual additions for 2014. File an amended tax return online The hospital's normal annual work period for employees in Floyd's general type of work runs from January to December. File an amended tax return online During the periods that Floyd was employed with the hospital, the hospital has always been eligible to provide a 403(b) plan to employees. File an amended tax return online Additionally, the hospital has never provided the employees with a 457 deferred compensation plan, a transportation fringe benefit plan, or a cafeteria plan. File an amended tax return online Floyd has never worked abroad and there is no life insurance provided under the plan. File an amended tax return online Table 3-3 shows the service Floyd provided to his employer, his compensation for the periods worked, his elective deferrals, and his taxable wages. File an amended tax return online Table 3-3. File an amended tax return online Floyd's Compensation Note. File an amended tax return online This table shows information Floyd will use to figure includible compensation for his most recent year of service. File an amended tax return online   Year Years of Service Taxable Wages Elective Deferrals 2014 6/12 of  a year $42,000 $2,000 2013 4/12 of  a year $16,000 $1,650 2012 4/12 of  a year $16,000 $1,650 Before Floyd can figure his limit on annual additions, he must figure includible compensation for his most recent year of service. File an amended tax return online Because Floyd is not planning to work the entire 2014 year, his most recent year of service will include the time he is planning to work in 2014 plus time he worked in the preceding 3 years until the time he worked for the hospital totals 1 year. File an amended tax return online If the total time he worked is less than 1 year, Floyd will treat it as if it were 1 year. File an amended tax return online He figures his most recent year of service shown in the following list. File an amended tax return online Time he will work in 2014 is 6/12 of a year. File an amended tax return online Time worked in 2013 is 4/12 of a year. File an amended tax return online All of this time will be used to determine Floyd's most recent year of service. File an amended tax return online Time worked in 2012 is 4/12 of a year. File an amended tax return online Floyd only needs 2 months of the 4 months he worked in 2012 to have enough time to total 1 full year. File an amended tax return online Because he needs only one-half of the actual time he worked, Floyd will use only one-half of his income earned during that period to calculate wages that will be used in figuring his includible compensation. File an amended tax return online Using the information provided in Table 3-3, wages for Floyd's most recent year of service are $66,000 ($42,000 + $16,000 + $8,000). File an amended tax return online His includible compensation for his most recent year of service is figured as shown in Table 3-4. File an amended tax return online After figuring his includible compensation, Floyd determines his limit on annual additions for 2014 to be $52,000, the lesser of his includible compensation, $70,475 (Table 3-4), and the maximum amount of $52,000. File an amended tax return online Table 3-4. File an amended tax return online Worksheet B. File an amended tax return online Includible Compensation for Your Most Recent Year of Service1 Note. File an amended tax return online Use this worksheet to figure includible compensation for your most recent year of service. File an amended tax return online 1. File an amended tax return online Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. File an amended tax return online $66,000 2. File an amended tax return online Enter elective deferrals excluded from your gross income for your most recent year of service2 2. File an amended tax return online 4,4753 3. File an amended tax return online Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. File an amended tax return online -0- 4. File an amended tax return online Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government, or of a tax-exempt organization) for your most recent year of service 4. File an amended tax return online -0- 5. File an amended tax return online Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. File an amended tax return online -0- 6. File an amended tax return online Enter your foreign earned income exclusion for your most recent year of service 6. File an amended tax return online -0- 7. File an amended tax return online Add lines 1, 2, 3, 4, 5, and 6 7. File an amended tax return online 70,475 8. File an amended tax return online Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. File an amended tax return online -0- 9. File an amended tax return online Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. File an amended tax return online -0- 10. File an amended tax return online Add lines 8 and 9 10. File an amended tax return online -0- 11. File an amended tax return online Subtract line 10 from line 7. File an amended tax return online This is your includible compensation for your most recent year of service 11. File an amended tax return online 70,475 1Use estimated amounts if figuring includible compensation before the end of the year. File an amended tax return online 2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. File an amended tax return online  3$4,475 ($2,000 + $1,650 + $825). File an amended tax return online Prev  Up  Next   Home   More Online Publications