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Free 2011 Taxes Online

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Free 2011 Taxes Online

Free 2011 taxes online 5. Free 2011 taxes online   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Free 2011 taxes online Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Reminder Foreign income. Free 2011 taxes online   If you are a U. Free 2011 taxes online S. Free 2011 taxes online citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U. Free 2011 taxes online S. Free 2011 taxes online law. Free 2011 taxes online This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. Free 2011 taxes online This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). Free 2011 taxes online If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. Free 2011 taxes online For details, see Publication 54, Tax Guide for U. Free 2011 taxes online S. Free 2011 taxes online Citizens and Resident Aliens Abroad. Free 2011 taxes online Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. Free 2011 taxes online The following topics are included. Free 2011 taxes online Bonuses and awards. Free 2011 taxes online Special rules for certain employees. Free 2011 taxes online Sickness and injury benefits. Free 2011 taxes online The chapter explains what income is included in the employee's gross income and what is not included. Free 2011 taxes online Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income Employee Compensation This section discusses various types of employee compensation including fringe benefits, retirement plan contributions, stock options, and restricted property. Free 2011 taxes online Form W-2. Free 2011 taxes online    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. Free 2011 taxes online Include your pay on line 7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ, even if you do not receive a Form W-2. Free 2011 taxes online   If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Free 2011 taxes online These wages must be included on line 7 of Form 1040. Free 2011 taxes online See Form 8919 for more information. Free 2011 taxes online Childcare providers. Free 2011 taxes online    If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Free 2011 taxes online If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Free 2011 taxes online You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Free 2011 taxes online Babysitting. Free 2011 taxes online   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Free 2011 taxes online Miscellaneous Compensation This section discusses different types of employee compensation. Free 2011 taxes online Advance commissions and other earnings. Free 2011 taxes online   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Free 2011 taxes online    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Free 2011 taxes online If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), or you may be able to take a credit for that year. Free 2011 taxes online See Repayments in chapter 12. Free 2011 taxes online Allowances and reimbursements. Free 2011 taxes online    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. Free 2011 taxes online If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Free 2011 taxes online Back pay awards. Free 2011 taxes online    Include in income amounts you are awarded in a settlement or judgment for back pay. Free 2011 taxes online These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Free 2011 taxes online They should be reported to you by your employer on Form W-2. Free 2011 taxes online Bonuses and awards. Free 2011 taxes online   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Free 2011 taxes online These include prizes such as vacation trips for meeting sales goals. Free 2011 taxes online If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Free 2011 taxes online However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Free 2011 taxes online Employee achievement award. Free 2011 taxes online   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Free 2011 taxes online However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Free 2011 taxes online Your employer can tell you whether your award is a qualified plan award. Free 2011 taxes online Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Free 2011 taxes online   However, the exclusion does not apply to the following awards: A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Free 2011 taxes online A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Free 2011 taxes online Example. Free 2011 taxes online Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Free 2011 taxes online Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Free 2011 taxes online However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income. Free 2011 taxes online Differential wage payments. Free 2011 taxes online   This is any payment made to you by an employer for any period during which you are, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages you would have received from the employer during that period. Free 2011 taxes online These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Free 2011 taxes online The payments are reported as wages on Form W-2. Free 2011 taxes online Government cost-of-living allowances. Free 2011 taxes online   Most payments received by U. Free 2011 taxes online S. Free 2011 taxes online Government civilian employees for working abroad are taxable. Free 2011 taxes online However, certain cost-of-living allowances are tax free. Free 2011 taxes online Publication 516, U. Free 2011 taxes online S. Free 2011 taxes online Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Free 2011 taxes online Nonqualified deferred compensation plans. Free 2011 taxes online   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Free 2011 taxes online This amount is shown on Form W-2, box 12, using code Y. Free 2011 taxes online This amount is not included in your income. Free 2011 taxes online   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Free 2011 taxes online This amount is included in your wages shown on Form W-2, box 1. Free 2011 taxes online It is also shown on Form W-2, box 12, using code Z. Free 2011 taxes online Note received for services. Free 2011 taxes online    If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Free 2011 taxes online When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Free 2011 taxes online Do not include that part again in your income. Free 2011 taxes online Include the rest of the payment in your income in the year of payment. Free 2011 taxes online   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Free 2011 taxes online Severance pay. Free 2011 taxes online   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Free 2011 taxes online Accrued leave payment. Free 2011 taxes online    If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Free 2011 taxes online   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Free 2011 taxes online You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Free 2011 taxes online Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on the return and the wages on your Forms W-2. Free 2011 taxes online Outplacement services. Free 2011 taxes online   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Free 2011 taxes online    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Free 2011 taxes online Sick pay. Free 2011 taxes online   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Free 2011 taxes online In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. Free 2011 taxes online A state sickness or disability fund. Free 2011 taxes online An association of employers or employees. Free 2011 taxes online An insurance company, if your employer paid for the plan. Free 2011 taxes online However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Free 2011 taxes online For more information, see Publication 525. Free 2011 taxes online Social security and Medicare taxes paid by employer. Free 2011 taxes online   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Free 2011 taxes online The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Free 2011 taxes online However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Free 2011 taxes online Stock appreciation rights. Free 2011 taxes online   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Free 2011 taxes online When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Free 2011 taxes online You include the cash payment in your income in the year you use the right. Free 2011 taxes online Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Free 2011 taxes online Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Free 2011 taxes online Accounting period. Free 2011 taxes online   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Free 2011 taxes online Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Free 2011 taxes online The general rule: benefits are reported for a full calendar year (January 1–December 31). Free 2011 taxes online The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Free 2011 taxes online For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Free 2011 taxes online  Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Free 2011 taxes online   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Free 2011 taxes online Form W-2. Free 2011 taxes online   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Free 2011 taxes online Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Free 2011 taxes online However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Free 2011 taxes online Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Free 2011 taxes online Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . Free 2011 taxes online For information on the items covered in this section, other than Long-term care coverage, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Free 2011 taxes online Long-term care coverage. Free 2011 taxes online    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Free 2011 taxes online However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Free 2011 taxes online This amount will be reported as wages in box 1 of your Form W-2. Free 2011 taxes online   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. Free 2011 taxes online Archer MSA contributions. Free 2011 taxes online    Contributions by your employer to your Archer MSA generally are not included in your income. Free 2011 taxes online Their total will be reported in box 12 of Form W-2 with code R. Free 2011 taxes online You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Free 2011 taxes online File the form with your return. Free 2011 taxes online Health flexible spending arrangement (health FSA). Free 2011 taxes online   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Free 2011 taxes online Note. Free 2011 taxes online Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Free 2011 taxes online The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Free 2011 taxes online For more information, see Notice 2012-40, 2012-26 I. Free 2011 taxes online R. Free 2011 taxes online B. Free 2011 taxes online 1046, available at www. Free 2011 taxes online irs. Free 2011 taxes online gov/irb/2012-26 IRB/ar09. Free 2011 taxes online html. Free 2011 taxes online Health reimbursement arrangement (HRA). Free 2011 taxes online   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Free 2011 taxes online Health savings accounts (HSA). Free 2011 taxes online   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Free 2011 taxes online Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Free 2011 taxes online Contributions made by your employer are not included in your income. Free 2011 taxes online Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Free 2011 taxes online Distributions not used for qualified medical expenses are included in your income. Free 2011 taxes online See Publication 969 for the requirements of an HSA. Free 2011 taxes online   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Free 2011 taxes online The contributions are treated as a distribution of money and are not included in the partner's gross income. Free 2011 taxes online Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Free 2011 taxes online In both situations, the partner can deduct the contribution made to the partner's HSA. Free 2011 taxes online   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Free 2011 taxes online The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Free 2011 taxes online Qualified HSA funding distribution. Free 2011 taxes online   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Free 2011 taxes online See Publication 590 for the requirements for these qualified HSA funding distributions. Free 2011 taxes online Failure to maintain eligibility. Free 2011 taxes online   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Free 2011 taxes online If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Free 2011 taxes online This income is also subject to an additional 10% tax. Free 2011 taxes online Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Free 2011 taxes online See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Free 2011 taxes online Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Free 2011 taxes online They also are included as social security and Medicare wages in boxes 3 and 5. Free 2011 taxes online However, they are not included as wages in box 1. Free 2011 taxes online To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Free 2011 taxes online File the form with your return. Free 2011 taxes online De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Free 2011 taxes online In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Free 2011 taxes online Holiday gifts. Free 2011 taxes online   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Free 2011 taxes online However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Free 2011 taxes online Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Free 2011 taxes online For more information, see Publication 970, Tax Benefits for Education. Free 2011 taxes online Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Free 2011 taxes online However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Free 2011 taxes online For exceptions, see Entire cost excluded , and Entire cost taxed , later. Free 2011 taxes online If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Free 2011 taxes online Also, it is shown separately in box 12 with code C. Free 2011 taxes online Group-term life insurance. Free 2011 taxes online   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Free 2011 taxes online Permanent benefits. Free 2011 taxes online   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Free 2011 taxes online Your employer should be able to tell you the amount to include in your income. Free 2011 taxes online Accidental death benefits. Free 2011 taxes online   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Free 2011 taxes online Former employer. Free 2011 taxes online   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Free 2011 taxes online Also, it is shown separately in box 12 with code C. Free 2011 taxes online Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Free 2011 taxes online You must pay these taxes with your income tax return. Free 2011 taxes online Include them on line 60, Form 1040, and follow the instructions for line 60. Free 2011 taxes online For more information, see the Instructions for Form 1040. Free 2011 taxes online Two or more employers. Free 2011 taxes online   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Free 2011 taxes online If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Free 2011 taxes online You must figure how much to include in your income. Free 2011 taxes online Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Free 2011 taxes online Figuring the taxable cost. Free 2011 taxes online   Use the following worksheet to figure the amount to include in your income. Free 2011 taxes online     Worksheet 5-1. Free 2011 taxes online Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Free 2011 taxes online Enter the total amount of your insurance coverage from your employer(s) 1. Free 2011 taxes online   2. Free 2011 taxes online Limit on exclusion for employer-provided group-term life insurance coverage 2. Free 2011 taxes online 50,000 3. Free 2011 taxes online Subtract line 2 from line 1 3. Free 2011 taxes online   4. Free 2011 taxes online Divide line 3 by $1,000. Free 2011 taxes online Figure to the nearest tenth 4. Free 2011 taxes online   5. Free 2011 taxes online Go to Table 5-1. Free 2011 taxes online Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Free 2011 taxes online   6. Free 2011 taxes online Multiply line 4 by line 5 6. Free 2011 taxes online   7. Free 2011 taxes online Enter the number of full months of coverage at this cost. Free 2011 taxes online 7. Free 2011 taxes online   8. Free 2011 taxes online Multiply line 6 by line 7 8. Free 2011 taxes online   9. Free 2011 taxes online Enter the premiums you paid per month 9. Free 2011 taxes online       10. Free 2011 taxes online Enter the number of months you paid the premiums 10. Free 2011 taxes online       11. Free 2011 taxes online Multiply line 9 by line 10. Free 2011 taxes online 11. Free 2011 taxes online   12. Free 2011 taxes online Subtract line 11 from line 8. Free 2011 taxes online Include this amount in your income as wages 12. Free 2011 taxes online      Table 5-1. Free 2011 taxes online Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. Free 2011 taxes online 05 25 through 29 . Free 2011 taxes online 06 30 through 34 . Free 2011 taxes online 08 35 through 39 . Free 2011 taxes online 09 40 through 44 . Free 2011 taxes online 10 45 through 49 . Free 2011 taxes online 15 50 through 54 . Free 2011 taxes online 23 55 through 59 . Free 2011 taxes online 43 60 through 64 . Free 2011 taxes online 66 65 through 69 1. Free 2011 taxes online 27 70 and older 2. Free 2011 taxes online 06 Example. Free 2011 taxes online You are 51 years old and work for employers A and B. Free 2011 taxes online Both employers provide group-term life insurance coverage for you for the entire year. Free 2011 taxes online Your coverage is $35,000 with employer A and $45,000 with employer B. Free 2011 taxes online You pay premiums of $4. Free 2011 taxes online 15 a month under the employer B group plan. Free 2011 taxes online You figure the amount to include in your income as shown in Worksheet 5-1. Free 2011 taxes online Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. Free 2011 taxes online Worksheet 5-1. Free 2011 taxes online Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. Free 2011 taxes online Enter the total amount of your insurance coverage from your employer(s) 1. Free 2011 taxes online 80,000 2. Free 2011 taxes online Limit on exclusion for employer-provided group-term life insurance coverage 2. Free 2011 taxes online 50,000 3. Free 2011 taxes online Subtract line 2 from line 1 3. Free 2011 taxes online 30,000 4. Free 2011 taxes online Divide line 3 by $1,000. Free 2011 taxes online Figure to the nearest tenth 4. Free 2011 taxes online 30. Free 2011 taxes online 0 5. Free 2011 taxes online Go to Table 5-1. Free 2011 taxes online Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Free 2011 taxes online . Free 2011 taxes online 23 6. Free 2011 taxes online Multiply line 4 by line 5 6. Free 2011 taxes online 6. Free 2011 taxes online 90 7. Free 2011 taxes online Enter the number of full months of coverage at this cost. Free 2011 taxes online 7. Free 2011 taxes online 12 8. Free 2011 taxes online Multiply line 6 by line 7 8. Free 2011 taxes online 82. Free 2011 taxes online 80 9. Free 2011 taxes online Enter the premiums you paid per month 9. Free 2011 taxes online 4. Free 2011 taxes online 15     10. Free 2011 taxes online Enter the number of months you paid the premiums 10. Free 2011 taxes online 12     11. Free 2011 taxes online Multiply line 9 by line 10. Free 2011 taxes online 11. Free 2011 taxes online 49. Free 2011 taxes online 80 12. Free 2011 taxes online Subtract line 11 from line 8. Free 2011 taxes online Include this amount in your income as wages 12. Free 2011 taxes online 33. Free 2011 taxes online 00 Entire cost excluded. Free 2011 taxes online   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Free 2011 taxes online You are permanently and totally disabled and have ended your employment. Free 2011 taxes online Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Free 2011 taxes online A charitable organization (defined in chapter 24) to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Free 2011 taxes online (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Free 2011 taxes online ) The plan existed on January 1, 1984, and You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Free 2011 taxes online Entire cost taxed. Free 2011 taxes online   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply: The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Free 2011 taxes online You are a key employee and your employer's plan discriminates in favor of key employees. Free 2011 taxes online Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Free 2011 taxes online Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Free 2011 taxes online You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Free 2011 taxes online Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Free 2011 taxes online A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Free 2011 taxes online Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Free 2011 taxes online However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Free 2011 taxes online Exclusion limit. Free 2011 taxes online   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Free 2011 taxes online   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Free 2011 taxes online   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Free 2011 taxes online   If the benefits have a value that is more than these limits, the excess must be included in your income. Free 2011 taxes online You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Free 2011 taxes online Commuter highway vehicle. Free 2011 taxes online   This is a highway vehicle that seats at least six adults (not including the driver). Free 2011 taxes online At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Free 2011 taxes online Transit pass. Free 2011 taxes online   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Free 2011 taxes online Qualified parking. Free 2011 taxes online   This is parking provided to an employee at or near the employer's place of business. Free 2011 taxes online It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Free 2011 taxes online It does not include parking at or near the employee's home. Free 2011 taxes online Qualified bicycle commuting. Free 2011 taxes online   This is reimbursement based on the number of qualified bicycle commuting months for the year. Free 2011 taxes online A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Free 2011 taxes online The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Free 2011 taxes online Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Free 2011 taxes online (Your employer can tell you whether your retirement plan is qualified. Free 2011 taxes online ) However, the cost of life insurance coverage included in the plan may have to be included. Free 2011 taxes online See Group-Term Life Insurance , earlier, under Fringe Benefits. Free 2011 taxes online If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Free 2011 taxes online However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Free 2011 taxes online For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. Free 2011 taxes online S. Free 2011 taxes online Civil Service Retirement Benefits, if you are a federal employee or retiree). Free 2011 taxes online Elective deferrals. Free 2011 taxes online   If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Free 2011 taxes online The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Free 2011 taxes online An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Free 2011 taxes online However, it is included in wages subject to social security and Medicare taxes. Free 2011 taxes online   Elective deferrals include elective contributions to the following retirement plans. Free 2011 taxes online Cash or deferred arrangements (section 401(k) plans). Free 2011 taxes online The Thrift Savings Plan for federal employees. Free 2011 taxes online Salary reduction simplified employee pension plans (SARSEP). Free 2011 taxes online Savings incentive match plans for employees (SIMPLE plans). Free 2011 taxes online Tax-sheltered annuity plans (403(b) plans). Free 2011 taxes online Section 501(c)(18)(D) plans. Free 2011 taxes online Section 457 plans. Free 2011 taxes online Qualified automatic contribution arrangements. Free 2011 taxes online   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Free 2011 taxes online You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Free 2011 taxes online The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Free 2011 taxes online   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Free 2011 taxes online Overall limit on deferrals. Free 2011 taxes online   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3) and (5) above. Free 2011 taxes online The limit for SIMPLE plans is $12,000. Free 2011 taxes online The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. Free 2011 taxes online The limit for section 457 plans is the lesser of your includible compensation or $17,500. Free 2011 taxes online Amounts deferred under specific plan limits are part of the overall limit on deferrals. Free 2011 taxes online Designated Roth contributions. Free 2011 taxes online   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Free 2011 taxes online Designated Roth contributions are treated as elective deferrals, except that they are included in income. Free 2011 taxes online Excess deferrals. Free 2011 taxes online   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Free 2011 taxes online However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Free 2011 taxes online   If you set aside more than the limit, the excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution. Free 2011 taxes online See Publication 525 for a discussion of the tax treatment of excess deferrals. Free 2011 taxes online Catch-up contributions. Free 2011 taxes online   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. Free 2011 taxes online Stock Options If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you usually will have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. Free 2011 taxes online However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. Free 2011 taxes online Your employer can tell you which kind of option you hold. Free 2011 taxes online For more information, see Publication 525. Free 2011 taxes online Restricted Property In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. Free 2011 taxes online However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. Free 2011 taxes online (You can choose to include the value of the property in your income in the year it is transferred to you. Free 2011 taxes online ) For more information, see Restricted Property in Publication 525. Free 2011 taxes online Dividends received on restricted stock. Free 2011 taxes online   Dividends you receive on restricted stock are treated as compensation and not as dividend income. Free 2011 taxes online Your employer should include these payments on your Form W-2. Free 2011 taxes online Stock you chose to include in income. Free 2011 taxes online   Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. Free 2011 taxes online Report them on your return as dividends. Free 2011 taxes online For a discussion of dividends, see chapter 8. Free 2011 taxes online    For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525. Free 2011 taxes online Special Rules for Certain Employees This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers. Free 2011 taxes online Clergy Generally, if you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Free 2011 taxes online , in addition to your salary. Free 2011 taxes online If the offering is made to the religious institution, it is not taxable to you. Free 2011 taxes online If you are a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. Free 2011 taxes online However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Free 2011 taxes online See chapter 24. Free 2011 taxes online Pension. Free 2011 taxes online    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. Free 2011 taxes online It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Free 2011 taxes online Housing. Free 2011 taxes online    Special rules for housing apply to members of the clergy. Free 2011 taxes online Under these rules, you do not include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. Free 2011 taxes online However, the exclusion cannot be more than the reasonable pay for your service. Free 2011 taxes online If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. Free 2011 taxes online The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. Free 2011 taxes online However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you are subject to the self-employment tax. Free 2011 taxes online For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free 2011 taxes online Members of Religious Orders If you are a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order. Free 2011 taxes online Services performed for the order. Free 2011 taxes online   If you are performing the services as an agent of the order in the exercise of duties required by the order, do not include in your income the amounts turned over to the order. Free 2011 taxes online   If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. Free 2011 taxes online Any wages you earn as an agent of an order that you turn over to the order are not included in your income. Free 2011 taxes online Example. Free 2011 taxes online You are a member of a church order and have taken a vow of poverty. Free 2011 taxes online You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. Free 2011 taxes online You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. Free 2011 taxes online However, you remain under the general direction and control of the order. Free 2011 taxes online You are considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order are not included in your income. Free 2011 taxes online Services performed outside the order. Free 2011 taxes online   If you are directed to work outside the order, your services are not an exercise of duties required by the order unless they meet both of the following requirements: They are the kind of services that are ordinarily the duties of members of the order. Free 2011 taxes online They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. Free 2011 taxes online If you are an employee of a third party, the services you perform for the third party will not be considered directed or required of you by the order. Free 2011 taxes online Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. Free 2011 taxes online Example. Free 2011 taxes online Mark Brown is a member of a religious order and has taken a vow of poverty. Free 2011 taxes online He renounces all claims to his earnings and turns over his earnings to the order. Free 2011 taxes online Mark is a schoolteacher. Free 2011 taxes online He was instructed by the superiors of the order to get a job with a private tax-exempt school. Free 2011 taxes online Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. Free 2011 taxes online Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. Free 2011 taxes online The wages Mark earns working for the school are included in his income. Free 2011 taxes online Foreign Employer Special rules apply if you work for a foreign employer. Free 2011 taxes online U. Free 2011 taxes online S. Free 2011 taxes online citizen. Free 2011 taxes online   If you are a U. Free 2011 taxes online S. Free 2011 taxes online citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income. Free 2011 taxes online Social security and Medicare taxes. Free 2011 taxes online   You are exempt from social security and Medicare employee taxes if you are employed in the United States by an international organization or a foreign government. Free 2011 taxes online However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. Free 2011 taxes online This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. Free 2011 taxes online Employees of international organizations or foreign governments. Free 2011 taxes online   Your compensation for official services to an international organization is exempt from federal income tax if you are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Free 2011 taxes online   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. Free 2011 taxes online You are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). Free 2011 taxes online Your work is like the work done by employees of the United States in foreign countries. Free 2011 taxes online The foreign government gives an equal exemption to employees of the United States in its country. Free 2011 taxes online Waiver of alien status. Free 2011 taxes online   If you are an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. Free 2011 taxes online See Foreign Employer in Publication 525. Free 2011 taxes online Employment abroad. Free 2011 taxes online   For information on the tax treatment of income earned abroad, see Publication 54. Free 2011 taxes online Military Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. Free 2011 taxes online Allowances generally are not taxed. Free 2011 taxes online For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. Free 2011 taxes online Differential wage payments. Free 2011 taxes online   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. Free 2011 taxes online These wages are subject to income tax withholding and are reported on a Form W-2. Free 2011 taxes online See the discussion under Miscellaneous Compensation , earlier. Free 2011 taxes online Military retirement pay. Free 2011 taxes online   If your retirement pay is based on age or length of service, it is taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Free 2011 taxes online Do not include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan. Free 2011 taxes online   For more detailed discussion of survivor annuities, see chapter 10. Free 2011 taxes online Disability. Free 2011 taxes online   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. Free 2011 taxes online Veterans' benefits. Free 2011 taxes online   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). Free 2011 taxes online The following amounts paid to veterans or their families are not taxable. Free 2011 taxes online Education, training, and subsistence allowances. Free 2011 taxes online Disability compensation and pension payments for disabilities paid either to veterans or their families. Free 2011 taxes online Grants for homes designed for wheelchair living. Free 2011 taxes online Grants for motor vehicles for veterans who lost their sight or the use of their limbs. Free 2011 taxes online Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. Free 2011 taxes online Interest on insurance dividends you leave on deposit with the VA. Free 2011 taxes online Benefits under a dependent-care assistance program. Free 2011 taxes online The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. Free 2011 taxes online Payments made under the compensated work therapy program. Free 2011 taxes online Any bonus payment by a state or political subdivision because of service in a combat zone. Free 2011 taxes online Volunteers The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions. Free 2011 taxes online Peace Corps. Free 2011 taxes online   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. Free 2011 taxes online Taxable allowances. Free 2011 taxes online   The following allowances must be included in your income and reported as wages: Allowances paid to your spouse and minor children while you are a volunteer leader training in the United States. Free 2011 taxes online Living allowances designated by the Director of the Peace Corps as basic compensation. Free 2011 taxes online These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Free 2011 taxes online Leave allowances. Free 2011 taxes online Readjustment allowances or termination payments. Free 2011 taxes online These are considered received by you when credited to your account. Free 2011 taxes online Example. Free 2011 taxes online Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Free 2011 taxes online Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Free 2011 taxes online Volunteers in Service to America (VISTA). Free 2011 taxes online   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. Free 2011 taxes online National Senior Services Corps programs. Free 2011 taxes online   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. Free 2011 taxes online Retired Senior Volunteer Program (RSVP). Free 2011 taxes online Foster Grandparent Program. Free 2011 taxes online Senior Companion Program. Free 2011 taxes online Service Corps of Retired Executives (SCORE). Free 2011 taxes online   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. Free 2011 taxes online Volunteer tax counseling. Free 2011 taxes online   Do not include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE). Free 2011 taxes online   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. Free 2011 taxes online See chapter 24. Free 2011 taxes online Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. Free 2011 taxes online In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Free 2011 taxes online If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Free 2011 taxes online However, certain payments may not be taxable to you. Free 2011 taxes online Your employer should be able to give you specific details about your pension plan and tell you the amount you paid for your disability pension. Free 2011 taxes online In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. Free 2011 taxes online Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. Free 2011 taxes online Cost paid by you. Free 2011 taxes online   If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Free 2011 taxes online If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Free 2011 taxes online See Reimbursement in a later year in chapter 21. Free 2011 taxes online Cafeteria plans. Free 2011 taxes online   In most cases, if you are covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums was not included in your income, you are not considered to have paid the premiums and you must include any benefits you receive in your income. Free 2011 taxes online If the amount of the premiums was included in your income, you are considered to have paid the premiums, and any benefits you receive are not taxable. Free 2011 taxes online Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Free 2011 taxes online You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. Free 2011 taxes online Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Free 2011 taxes online You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Free 2011 taxes online For information on this credit and the definition of permanent and total disability, see chapter 33. Free 2011 taxes online Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Free 2011 taxes online Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Free 2011 taxes online The rules for reporting pensions are explained in How To Report in chapter 10. Free 2011 taxes online For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. Free 2011 taxes online Retirement and profit-sharing plans. Free 2011 taxes online   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Free 2011 taxes online The payments must be reported as a pension or annuity. Free 2011 taxes online For more information on pensions, see chapter 10. Free 2011 taxes online Accrued leave payment. Free 2011 taxes online   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Free 2011 taxes online The payment is not a disability payment. Free 2011 taxes online Include it in your income in the tax year you receive it. Free 2011 taxes online Military and Government Disability Pensions Certain military and government disability pensions are not taxable. Free 2011 taxes online Service-connected disability. Free 2011 taxes online   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services. Free 2011 taxes online The armed forces of any country. Free 2011 taxes online The National Oceanic and Atmospheric Administration. Free 2011 taxes online The Public Health Service. Free 2011 taxes online The Foreign Service. Free 2011 taxes online Conditions for exclusion. Free 2011 taxes online   Do not include the disability payments in your income if any of the following conditions apply. Free 2011 taxes online You were entitled to receive a disability payment before September 25, 1975. Free 2011 taxes online You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975. Free 2011 taxes online You receive the disability payments for a combat-related injury. Free 2011 taxes online This is a personal injury or sickness that Results directly from armed conflict, Takes place while you are engaged in extra-hazardous service, Takes place under conditions simulating war, including training exercises such as maneuvers, or Is caused by an instrumentality of war. Free 2011 taxes online You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Free 2011 taxes online Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. Free 2011 taxes online Pension based on years of service. Free 2011 taxes online   If you receive a disability pension based on years of service, in most cases you must include it in your income. Free 2011 taxes online However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. Free 2011 taxes online You must include the rest of your pension in your income. Free 2011 taxes online Retroactive VA determination. Free 2011 taxes online   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. Free 2011 taxes online You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. Free 2011 taxes online You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. Free 2011 taxes online The letter must show the amount withheld and the effective date of the benefit. Free 2011 taxes online   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. Free 2011 taxes online However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA. Free 2011 taxes online Special statute of limitations. Free 2011 taxes online   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. Free 2011 taxes online However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. Free 2011 taxes online This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination. Free 2011 taxes online Example. Free 2011 taxes online You retired in 2007 and receive a pension based on your years of service. Free 2011 taxes online On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. Free 2011 taxes online Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. Free 2011 taxes online However, under the special limitation period, you can also file a claim for 2009 as long as you file the claim by August 1, 2014. Free 2011 taxes online You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. Free 2011 taxes online Terrorist attack or military action. Free 2011 taxes online   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. Free 2011 taxes online Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Free 2011 taxes online Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. Free 2011 taxes online To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. Free 2011 taxes online A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. Free 2011 taxes online The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits, and In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Free 2011 taxes online Qualified long-term care services. Free 2011 taxes online   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance and personal care services, and Required by a chronically ill individual and provided pursuant to a plan of care as prescribed by a licensed health care practitioner. Free 2011 taxes online Chronically ill individual. Free 2011 taxes online   A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. Free 2011 taxes online Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Free 2011 taxes online An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Free 2011 taxes online Limit on exclusion. Free 2011 taxes online   You generally can exclude from gross income up to $320 a day for 2013. Free 2011 taxes online See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. Free 2011 taxes online Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Free 2011 taxes online The exemption also applies to your survivors. Free 2011 taxes online The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Free 2011 taxes online If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Free 2011 taxes online For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Free 2011 taxes online Return to work. Free 2011 taxes online    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Free 2011 taxes online Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Free 2011 taxes online Railroad sick pay. Free 2011 taxes online    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. Free 2011 taxes online However, do not include them in your income if they are for an on-the-job injury. Free 2011 taxes online   If you received income because of a disability, see Disability Pensions , earlier. Free 2011 taxes online Federal Employees' Compensation Act (FECA). Free 2011 taxes online   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Free 2011 taxes online However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Free 2011 taxes online Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. Free 2011 taxes online Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Free 2011 taxes online    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Free 2011 taxes online For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. Free 2011 taxes online    You can deduct the amount you spend to buy back sick leave for an earlier year to be eligible for nontaxable FECA benefits for that period. Free 2011 taxes online It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). Free 2011 taxes online If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. Free 2011 taxes online Do not deduct it separately. Free 2011 taxes online Other compensation. Free 2011 taxes online   Many other amounts you receive as compensation for sickness or injury are not taxable. Free 2011 taxes online These include the following amounts. Free 2011 taxes online Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. Free 2011 taxes online Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Free 2011 taxes online Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Free 2011 taxes online Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Free 2011 taxes online This compensation must be based only on the injury and not on the period of your absence from work. Free 2011 taxes online These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Free 2011 taxes online Reimbursement for medical care. Free 2011 taxes online    A reimbursement for medical care is generally not taxable. Free 2011 taxes online However, it may reduce your medical expense deduction. Free 2011 taxes online For more information, see chapter 21. Free 2011 taxes online Prev  Up  Next   Home   More Online Publications
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Highlights from the IRS Report

FS-2013-7, June 2013 

The report released by Principal Deputy Commissioner Danny Werfel reflects a number of important findings, aggressive actions and next steps to help the IRS make improvements. Highlights of the three major areas covered in “Charting a Path Forward at the IRS: Initial Assessment and Plan of Action” include:

Accountability. This covers the steps being taken to ensure accountability for the mismanagement described in last month’s Treasury Inspector General for Tax Administration (TIGTA) report:

  • The report found significant management and judgment failures occurred, as outlined in the TIGTA report. These contributed to the inappropriate treatment of taxpayers applying for tax- exempt status. 

  • The IRS is identifying the individuals within the IRS who are responsible for the mismanagement identified in the TIGTA report, evaluating their role and determining the appropriate consequences for each individual.

  • We have installed new leadership at all five levels of the senior executive managerial chain that had responsibility over the activities identified in the TIGTA report.

  • The IRS is digging deeper into the facts to determine if there are instances of wrongdoing or inappropriate conduct beyond the mismanagement identified in the original TIGTA report.  By extending our review beyond the scope of the original audit, we are ensuring a more comprehensive understanding of the facts and circumstances that led to these events.

  • In addition, the IRS has empaneled an Accountability Review Board to provide recommendations within 60 days (and later as needed) on any additional personnel actions that should be taken.

Fixing the Problems with the Review of Applications for Tax-Exempt Status. This part covers several process improvements underway to ensure that taxpayers are treated appropriately and effectively in the review of applications for tax-exempt status:   

  • Suspended the use of any “be-on-the-lookout,” or BOLO, lists in the application process for tax-exempt status.

  • Started development of new guidance materials to allow IRS staff to operate without BOLO lists and under the reformed, more efficient process.

  • Initiated an end-to-end overhaul of the business processes by which applications for tax-exempt status are fulfilled.

  • Added technical and programmatic experts from across the IRS to assist the Exempt Organizations staff with the review of applications for tax- exempt status.

  • Created a new voluntary process to help certain taxpayers who have been in our priority application backlog for more than 120 days to gain fast-track approval to operate as a 501(c)(4) tax-exempt entity. This self-certification process allows them a streamlined path to tax-exempt status if they agree they will operate within limits and thresholds of political and social welfare activities. These groups have the option of obtaining an approval if they self-certify that less than 40 percent of their expenditures and volunteer time will go toward political campaign intervention activities and that at least 60 percent of their expenditures and volunteer time will go toward social welfare activities. 

  • Created a new “Advocacy Application Review Committee” to provide expertise from other parts of the IRS to review screening and determination decisions inside the Exempt Organizations area.

  • Started the process to create a new check-and-balance mechanism, where IRS criteria and screening procedures will be reviewed on a systemic basis and report any material risks of inappropriate criteria immediately to the IRS Commissioner, the IRS Oversight Board, and the relevant tax committees of Congress.

  • Worked with the Department of the Treasury regarding the need for greater clarity for certain terms relevant for 501(c)(4) tax-exempt organizations, with a commitment for inclusion in the next Treasury Priority Guidance Plan.

  • Continued to make substantial progress on all TIGTA recommendations from their May report on Exempt Organizations.

Review of IRS Operations and Risks. The report identifies a series of actions to ensure taxpayers that selection criteria across the IRS are appropriate and that taxpayers are aware of how they can seek assistance if they have concerns about the IRS. The report further outlines steps underway to ensure that critical program or operational risks within the IRS are identified early, raised to the right decision-makers and shared timely with key stakeholders:

  • Although there is no current evidence that selection criteria in other IRS business unit is inappropriate, the nature of the problems identified in the tax-exempt application process warrants a review of certain process controls within the IRS.  The IRS will initiate a comprehensive, agency-wide review of compliance selection criteria.  Results will be shared with the Department of the Treasury, the IRS Oversight Board, and the Chairpersons of the House Ways and Means Committee and the Senate Finance Committee.

  • The IRS has been very successful in mission execution across its very broad portfolio for many years, collecting 92 percent of government receipts of about $2.5 trillion in FY 2012.  At the same time, the Service is challenged by many of the same concerns affecting other large organizations, both public and private sector, including budgetary concerns, human capital concerns, and overall programmatic execution concerns. The report outlines initial areas where challenges exist and actions are needed to position the IRS to successfully fulfill its mission.

  • The report calls for establishing an Enterprise Risk Management Program to provide a common framework for capturing, reporting and addressing risk areas across the IRS.  This will improve timeliness in bringing information to the attention of the Commissioner and other IRS leaders as well as stakeholders to help prevent future instances of inappropriate treatment or mismanagement.

  • Initiate additional internal and external education and outreach about the role of the National Taxpayer Advocate, an independent voice inside the IRS, in assisting taxpayers in resolving problems with the IRS. 

  • Establish routine reporting on IRS operational risks with Congress and the IRS Oversight Board.

 

Page Last Reviewed or Updated: 19-Dec-2013

The Free 2011 Taxes Online

Free 2011 taxes online Publication 544 - Additional Material Table of Contents Tax Publications for Business TaxpayersSee How To Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail. Free 2011 taxes online General Guides 1 Your Rights as a Taxpayer 17 Your Federal Income Tax (For Individuals) 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 509 Tax Calendars 910 IRS Guide to Free Tax Services Employer's Guides 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 80 (Circular SS), Federal Tax Guide For Employers in the U. Free 2011 taxes online S. Free 2011 taxes online Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands 926 Household Employer's Tax Guide Specialized Publications 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses 505 Tax Withholding and Estimated Tax 510 Excise Taxes (Including Fuel Tax Credits and Refunds) 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 517 Social Security and Other Information for Members of the Clergy and Religious Workers 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 537 Installment Sales 538 Accounting Periods and Methods 541 Partnerships 542 Corporations 544 Sales and Other Dispositions of Assets 551 Basis of Assets 556 Examination of Returns, Appeal Rights, and Claims for Refund 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 561 Determining the Value of Donated Property 583 Starting a Business and Keeping Records 587 Business Use of Your Home (Including Use by Daycare Providers) 594 What You Should Know About The IRS Collection Process 595 Capital Construction Fund for Commercial Fishermen 597 Information on the United States-Canada Income Tax Treaty 598 Tax on Unrelated Business Income of Exempt Organizations 686 Certification for Reduced Tax Rates in Tax Treaty Countries 901 U. Free 2011 taxes online S. Free 2011 taxes online Tax Treaties 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property 947 Practice Before the IRS and Power of Attorney 1544 Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) 1546 Taxpayer Advocate Service - Your Voice at the IRS Spanish Language Publications 1SP Derechos del Contribuyente 179 (Circular PR), Guía Contributiva Federal Para Patronos Puertorriqueños 579SP Cómo Preparar la Declaración de Impuesto Federal 594SP Qué es lo Debemos Saber Sobre El Proceso de Cobro del IRS 850 English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service 1544SP Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio) Commonly Used Tax FormsSee How To Get Tax Help for a variety of ways to get forms, including by computer, phone, and mail. Free 2011 taxes online Form Number and Form Title W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 941 Employer's QUARTERLY Federal Tax Return 944 Employer's ANNUAL Federal Tax Return 1040 U. Free 2011 taxes online S. Free 2011 taxes online Individual Income Tax Return Sch. Free 2011 taxes online A & B Itemized Deductions & Interest and Ordinary Dividends Sch. Free 2011 taxes online C Profit or Loss From Business Sch. Free 2011 taxes online C-EZ Net Profit From Business Sch. Free 2011 taxes online D Capital Gains and Losses Sch. Free 2011 taxes online E Supplemental Income and Loss Sch. Free 2011 taxes online F Profit or Loss From Farming Sch. Free 2011 taxes online H Household Employment Taxes Sch. Free 2011 taxes online J Income Averaging for Farmers and Fishermen Sch. Free 2011 taxes online R Credit for the Elderly or the Disabled Sch. Free 2011 taxes online SE Self-Employment Tax 1040-ES Estimated Tax for Individuals 1040X Amended U. Free 2011 taxes online S. Free 2011 taxes online Individual Income Tax Return 1065 U. Free 2011 taxes online S. Free 2011 taxes online Return of Partnership Income Sch. Free 2011 taxes online D Capital Gains and Losses Sch. Free 2011 taxes online K-1 Partner's Share of Income, Deductions, Credits, etc. Free 2011 taxes online 1120 U. Free 2011 taxes online S. Free 2011 taxes online Corporation Income Tax Return Sch. Free 2011 taxes online D Capital Gains and Losses 1120S U. Free 2011 taxes online S. Free 2011 taxes online Income Tax Return for an S Corporation Sch. Free 2011 taxes online D Capital Gains and Losses and Built-In Gains Sch. Free 2011 taxes online K-1 Shareholder's Share of Income, Deductions, Credits, etc. Free 2011 taxes online 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2441 Child and Dependent Care Expenses 2848 Power of Attorney and Declaration of Representative 3800 General Business Credit 3903 Moving Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property 4868 Application for Automatic Extension of Time To File U. Free 2011 taxes online S. Free 2011 taxes online Individual Income Tax Return 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 6252 Installment Sale Income 7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns 8283 Noncash Charitable Contributions 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8582 Passive Activity Loss Limitations 8606 Nondeductible IRAs 8822 Change of Address 8829 Expenses for Business Use of Your Home 8949 Sales and Other Dispositions of Capital Assets Prev  Up  Next   Home   More Online Publications