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Free 2012 Federal Tax Filing

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Free 2012 Federal Tax Filing

Free 2012 federal tax filing 10. Free 2012 federal tax filing   Indoor Tanning Services Tax Table of Contents The tax on indoor tanning service is 10% of the amount paid for that service. Free 2012 federal tax filing The tax is paid by the person paying for the services and is collected by the person receiving payment for the indoor tanning services. Free 2012 federal tax filing Definition of indoor tanning services. Free 2012 federal tax filing   Indoor tanning service means a service employing any electronic product designed to incorporate one or more ultraviolet lamps and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning. Free 2012 federal tax filing The term does not include phototherapy service performed by, and on the premises of, a licensed medical professional (such as a dermatologist, psychologist, or registered nurse). Free 2012 federal tax filing See regulations section 49. Free 2012 federal tax filing 5000B-1 for more information, and special rules for qualified physical fitness facilities, undesignated payment cards, and bundled payments. Free 2012 federal tax filing File Form 720. Free 2012 federal tax filing   The person receiving the payment for indoor tanning services (collector) must collect and remit the tax and file the return. Free 2012 federal tax filing If the tax is not collected for any reason, the collector is liable for the tax. Free 2012 federal tax filing The collector is not required to make semimonthly deposits of the tax. Free 2012 federal tax filing Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Storms and Floods in Missouri

KS-MO-2011-34, Aug. 17, 2011

ST. LOUIS — Victims of flooding beginning on June 1, 2011, in parts of Missouri may qualify for tax relief from the Internal Revenue Service.

The President has declared Andrew, Atchison, Buchanan, Holt, Lafayette and Platte counties a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from June 1 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after June 1 and on or before June 16, 2011, as long as the deposits were made by June 16, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after June 1 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after June 1 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after June 1 and on or before June 16, provided the taxpayer made these deposits by June 16.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Missouri/Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information:

Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The Free 2012 Federal Tax Filing

Free 2012 federal tax filing 5. Free 2012 federal tax filing   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Free 2012 federal tax filing 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 2012 federal tax filing   If you are a U. Free 2012 federal tax filing S. Free 2012 federal tax filing 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 2012 federal tax filing S. Free 2012 federal tax filing law. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. Free 2012 federal tax filing For details, see Publication 54, Tax Guide for U. Free 2012 federal tax filing S. Free 2012 federal tax filing Citizens and Resident Aliens Abroad. Free 2012 federal tax filing Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. Free 2012 federal tax filing The following topics are included. Free 2012 federal tax filing Bonuses and awards. Free 2012 federal tax filing Special rules for certain employees. Free 2012 federal tax filing Sickness and injury benefits. Free 2012 federal tax filing The chapter explains what income is included in the employee's gross income and what is not included. Free 2012 federal tax filing 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 2012 federal tax filing Form W-2. Free 2012 federal tax filing    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. Free 2012 federal tax filing 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. 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Free 2012 federal tax filing    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 2012 federal tax filing 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 2012 federal tax filing See Repayments in chapter 12. Free 2012 federal tax filing Allowances and reimbursements. Free 2012 federal tax filing    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. Free 2012 federal tax filing If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Free 2012 federal tax filing Back pay awards. Free 2012 federal tax filing    Include in income amounts you are awarded in a settlement or judgment for back pay. Free 2012 federal tax filing These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Free 2012 federal tax filing They should be reported to you by your employer on Form W-2. Free 2012 federal tax filing Bonuses and awards. Free 2012 federal tax filing   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Free 2012 federal tax filing These include prizes such as vacation trips for meeting sales goals. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Employee achievement award. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing Your employer can tell you whether your award is a qualified plan award. Free 2012 federal tax filing 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 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing 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 2012 federal tax filing Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Free 2012 federal tax filing 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 2012 federal tax filing Differential wage payments. Free 2012 federal tax filing   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 2012 federal tax filing These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Free 2012 federal tax filing The payments are reported as wages on Form W-2. Free 2012 federal tax filing Government cost-of-living allowances. Free 2012 federal tax filing   Most payments received by U. Free 2012 federal tax filing S. Free 2012 federal tax filing Government civilian employees for working abroad are taxable. Free 2012 federal tax filing However, certain cost-of-living allowances are tax free. Free 2012 federal tax filing Publication 516, U. Free 2012 federal tax filing S. Free 2012 federal tax filing Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Free 2012 federal tax filing Nonqualified deferred compensation plans. Free 2012 federal tax filing   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Free 2012 federal tax filing This amount is shown on Form W-2, box 12, using code Y. Free 2012 federal tax filing This amount is not included in your income. Free 2012 federal tax filing   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 2012 federal tax filing This amount is included in your wages shown on Form W-2, box 1. Free 2012 federal tax filing It is also shown on Form W-2, box 12, using code Z. Free 2012 federal tax filing Note received for services. Free 2012 federal tax filing    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 2012 federal tax filing 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 2012 federal tax filing Do not include that part again in your income. Free 2012 federal tax filing Include the rest of the payment in your income in the year of payment. Free 2012 federal tax filing   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 2012 federal tax filing Severance pay. Free 2012 federal tax filing   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Free 2012 federal tax filing Accrued leave payment. Free 2012 federal tax filing    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. 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Free 2012 federal tax filing    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 2012 federal tax filing Sick pay. Free 2012 federal tax filing   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Free 2012 federal tax filing In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. Free 2012 federal tax filing A state sickness or disability fund. Free 2012 federal tax filing An association of employers or employees. Free 2012 federal tax filing An insurance company, if your employer paid for the plan. Free 2012 federal tax filing However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Free 2012 federal tax filing For more information, see Publication 525. Free 2012 federal tax filing Social security and Medicare taxes paid by employer. Free 2012 federal tax filing   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 2012 federal tax filing The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Free 2012 federal tax filing However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Free 2012 federal tax filing Stock appreciation rights. Free 2012 federal tax filing   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Free 2012 federal tax filing 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 2012 federal tax filing You include the cash payment in your income in the year you use the right. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Accounting period. Free 2012 federal tax filing   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Free 2012 federal tax filing Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Free 2012 federal tax filing The general rule: benefits are reported for a full calendar year (January 1–December 31). Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing  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 2012 federal tax filing   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 2012 federal tax filing Form W-2. Free 2012 federal tax filing   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 2012 federal tax filing Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . Free 2012 federal tax filing 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 2012 federal tax filing Long-term care coverage. Free 2012 federal tax filing    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Free 2012 federal tax filing However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Free 2012 federal tax filing This amount will be reported as wages in box 1 of your Form W-2. Free 2012 federal tax filing   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. Free 2012 federal tax filing Archer MSA contributions. Free 2012 federal tax filing    Contributions by your employer to your Archer MSA generally are not included in your income. Free 2012 federal tax filing Their total will be reported in box 12 of Form W-2 with code R. Free 2012 federal tax filing You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Free 2012 federal tax filing File the form with your return. Free 2012 federal tax filing Health flexible spending arrangement (health FSA). Free 2012 federal tax filing   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 2012 federal tax filing Note. Free 2012 federal tax filing Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Free 2012 federal tax filing The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Free 2012 federal tax filing For more information, see Notice 2012-40, 2012-26 I. Free 2012 federal tax filing R. Free 2012 federal tax filing B. Free 2012 federal tax filing 1046, available at www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/irb/2012-26 IRB/ar09. Free 2012 federal tax filing html. Free 2012 federal tax filing Health reimbursement arrangement (HRA). Free 2012 federal tax filing   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 2012 federal tax filing Health savings accounts (HSA). Free 2012 federal tax filing   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 2012 federal tax filing Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Free 2012 federal tax filing Contributions made by your employer are not included in your income. Free 2012 federal tax filing Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Free 2012 federal tax filing Distributions not used for qualified medical expenses are included in your income. Free 2012 federal tax filing See Publication 969 for the requirements of an HSA. Free 2012 federal tax filing   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Free 2012 federal tax filing The contributions are treated as a distribution of money and are not included in the partner's gross income. Free 2012 federal tax filing 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 2012 federal tax filing In both situations, the partner can deduct the contribution made to the partner's HSA. Free 2012 federal tax filing   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 2012 federal tax filing The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Free 2012 federal tax filing Qualified HSA funding distribution. Free 2012 federal tax filing   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 2012 federal tax filing See Publication 590 for the requirements for these qualified HSA funding distributions. Free 2012 federal tax filing Failure to maintain eligibility. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing This income is also subject to an additional 10% tax. Free 2012 federal tax filing 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 2012 federal tax filing See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Free 2012 federal tax filing Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Free 2012 federal tax filing They also are included as social security and Medicare wages in boxes 3 and 5. Free 2012 federal tax filing However, they are not included as wages in box 1. Free 2012 federal tax filing To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Free 2012 federal tax filing File the form with your return. 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Free 2012 federal tax filing Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Free 2012 federal tax filing For more information, see Publication 970, Tax Benefits for Education. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing For exceptions, see Entire cost excluded , and Entire cost taxed , later. Free 2012 federal tax filing 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 2012 federal tax filing Also, it is shown separately in box 12 with code C. Free 2012 federal tax filing Group-term life insurance. Free 2012 federal tax filing   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 2012 federal tax filing Permanent benefits. Free 2012 federal tax filing   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 2012 federal tax filing Your employer should be able to tell you the amount to include in your income. Free 2012 federal tax filing Accidental death benefits. Free 2012 federal tax filing   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 2012 federal tax filing Former employer. Free 2012 federal tax filing   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 2012 federal tax filing Also, it is shown separately in box 12 with code C. Free 2012 federal tax filing Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Free 2012 federal tax filing You must pay these taxes with your income tax return. Free 2012 federal tax filing Include them on line 60, Form 1040, and follow the instructions for line 60. Free 2012 federal tax filing For more information, see the Instructions for Form 1040. Free 2012 federal tax filing Two or more employers. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing You must figure how much to include in your income. Free 2012 federal tax filing 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 2012 federal tax filing Figuring the taxable cost. Free 2012 federal tax filing   Use the following worksheet to figure the amount to include in your income. Free 2012 federal tax filing     Worksheet 5-1. Free 2012 federal tax filing Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Free 2012 federal tax filing Enter the total amount of your insurance coverage from your employer(s) 1. Free 2012 federal tax filing   2. Free 2012 federal tax filing Limit on exclusion for employer-provided group-term life insurance coverage 2. Free 2012 federal tax filing 50,000 3. Free 2012 federal tax filing Subtract line 2 from line 1 3. Free 2012 federal tax filing   4. Free 2012 federal tax filing Divide line 3 by $1,000. Free 2012 federal tax filing Figure to the nearest tenth 4. Free 2012 federal tax filing   5. Free 2012 federal tax filing Go to Table 5-1. Free 2012 federal tax filing 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 2012 federal tax filing   6. Free 2012 federal tax filing Multiply line 4 by line 5 6. Free 2012 federal tax filing   7. Free 2012 federal tax filing Enter the number of full months of coverage at this cost. Free 2012 federal tax filing 7. Free 2012 federal tax filing   8. Free 2012 federal tax filing Multiply line 6 by line 7 8. Free 2012 federal tax filing   9. Free 2012 federal tax filing Enter the premiums you paid per month 9. Free 2012 federal tax filing       10. Free 2012 federal tax filing Enter the number of months you paid the premiums 10. Free 2012 federal tax filing       11. Free 2012 federal tax filing Multiply line 9 by line 10. Free 2012 federal tax filing 11. Free 2012 federal tax filing   12. Free 2012 federal tax filing Subtract line 11 from line 8. Free 2012 federal tax filing Include this amount in your income as wages 12. Free 2012 federal tax filing      Table 5-1. Free 2012 federal tax filing Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. Free 2012 federal tax filing 05 25 through 29 . Free 2012 federal tax filing 06 30 through 34 . Free 2012 federal tax filing 08 35 through 39 . Free 2012 federal tax filing 09 40 through 44 . Free 2012 federal tax filing 10 45 through 49 . Free 2012 federal tax filing 15 50 through 54 . Free 2012 federal tax filing 23 55 through 59 . Free 2012 federal tax filing 43 60 through 64 . Free 2012 federal tax filing 66 65 through 69 1. Free 2012 federal tax filing 27 70 and older 2. Free 2012 federal tax filing 06 Example. Free 2012 federal tax filing You are 51 years old and work for employers A and B. Free 2012 federal tax filing Both employers provide group-term life insurance coverage for you for the entire year. Free 2012 federal tax filing Your coverage is $35,000 with employer A and $45,000 with employer B. Free 2012 federal tax filing You pay premiums of $4. Free 2012 federal tax filing 15 a month under the employer B group plan. Free 2012 federal tax filing You figure the amount to include in your income as shown in Worksheet 5-1. Free 2012 federal tax filing Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. Free 2012 federal tax filing Worksheet 5-1. Free 2012 federal tax filing Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. Free 2012 federal tax filing Enter the total amount of your insurance coverage from your employer(s) 1. Free 2012 federal tax filing 80,000 2. Free 2012 federal tax filing Limit on exclusion for employer-provided group-term life insurance coverage 2. Free 2012 federal tax filing 50,000 3. Free 2012 federal tax filing Subtract line 2 from line 1 3. Free 2012 federal tax filing 30,000 4. Free 2012 federal tax filing Divide line 3 by $1,000. Free 2012 federal tax filing Figure to the nearest tenth 4. Free 2012 federal tax filing 30. Free 2012 federal tax filing 0 5. Free 2012 federal tax filing Go to Table 5-1. Free 2012 federal tax filing 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 2012 federal tax filing . Free 2012 federal tax filing 23 6. Free 2012 federal tax filing Multiply line 4 by line 5 6. Free 2012 federal tax filing 6. Free 2012 federal tax filing 90 7. Free 2012 federal tax filing Enter the number of full months of coverage at this cost. Free 2012 federal tax filing 7. Free 2012 federal tax filing 12 8. Free 2012 federal tax filing Multiply line 6 by line 7 8. Free 2012 federal tax filing 82. Free 2012 federal tax filing 80 9. Free 2012 federal tax filing Enter the premiums you paid per month 9. Free 2012 federal tax filing 4. Free 2012 federal tax filing 15     10. Free 2012 federal tax filing Enter the number of months you paid the premiums 10. Free 2012 federal tax filing 12     11. Free 2012 federal tax filing Multiply line 9 by line 10. Free 2012 federal tax filing 11. Free 2012 federal tax filing 49. Free 2012 federal tax filing 80 12. Free 2012 federal tax filing Subtract line 11 from line 8. Free 2012 federal tax filing Include this amount in your income as wages 12. Free 2012 federal tax filing 33. Free 2012 federal tax filing 00 Entire cost excluded. Free 2012 federal tax filing   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Free 2012 federal tax filing You are permanently and totally disabled and have ended your employment. Free 2012 federal tax filing Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Free 2012 federal tax filing 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 2012 federal tax filing (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Free 2012 federal tax filing ) 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 2012 federal tax filing Entire cost taxed. Free 2012 federal tax filing   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 2012 federal tax filing You are a key employee and your employer's plan discriminates in favor of key employees. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Free 2012 federal tax filing Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Free 2012 federal tax filing 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 2012 federal tax filing Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Free 2012 federal tax filing 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 2012 federal tax filing Exclusion limit. Free 2012 federal tax filing   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Free 2012 federal tax filing   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Free 2012 federal tax filing   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Free 2012 federal tax filing   If the benefits have a value that is more than these limits, the excess must be included in your income. Free 2012 federal tax filing You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Free 2012 federal tax filing Commuter highway vehicle. Free 2012 federal tax filing   This is a highway vehicle that seats at least six adults (not including the driver). Free 2012 federal tax filing 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 2012 federal tax filing Transit pass. Free 2012 federal tax filing   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 2012 federal tax filing Qualified parking. Free 2012 federal tax filing   This is parking provided to an employee at or near the employer's place of business. Free 2012 federal tax filing 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 2012 federal tax filing It does not include parking at or near the employee's home. Free 2012 federal tax filing Qualified bicycle commuting. Free 2012 federal tax filing   This is reimbursement based on the number of qualified bicycle commuting months for the year. Free 2012 federal tax filing 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 2012 federal tax filing The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Free 2012 federal tax filing Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Free 2012 federal tax filing (Your employer can tell you whether your retirement plan is qualified. Free 2012 federal tax filing ) However, the cost of life insurance coverage included in the plan may have to be included. Free 2012 federal tax filing See Group-Term Life Insurance , earlier, under Fringe Benefits. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. Free 2012 federal tax filing S. Free 2012 federal tax filing Civil Service Retirement Benefits, if you are a federal employee or retiree). Free 2012 federal tax filing Elective deferrals. Free 2012 federal tax filing   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 2012 federal tax filing The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Free 2012 federal tax filing 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 2012 federal tax filing However, it is included in wages subject to social security and Medicare taxes. Free 2012 federal tax filing   Elective deferrals include elective contributions to the following retirement plans. Free 2012 federal tax filing Cash or deferred arrangements (section 401(k) plans). Free 2012 federal tax filing The Thrift Savings Plan for federal employees. Free 2012 federal tax filing Salary reduction simplified employee pension plans (SARSEP). Free 2012 federal tax filing Savings incentive match plans for employees (SIMPLE plans). Free 2012 federal tax filing Tax-sheltered annuity plans (403(b) plans). Free 2012 federal tax filing Section 501(c)(18)(D) plans. Free 2012 federal tax filing Section 457 plans. Free 2012 federal tax filing Qualified automatic contribution arrangements. Free 2012 federal tax filing   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 2012 federal tax filing You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Free 2012 federal tax filing 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 2012 federal tax filing   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 2012 federal tax filing Overall limit on deferrals. Free 2012 federal tax filing   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 2012 federal tax filing The limit for SIMPLE plans is $12,000. Free 2012 federal tax filing The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. Free 2012 federal tax filing The limit for section 457 plans is the lesser of your includible compensation or $17,500. Free 2012 federal tax filing Amounts deferred under specific plan limits are part of the overall limit on deferrals. Free 2012 federal tax filing Designated Roth contributions. Free 2012 federal tax filing   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 2012 federal tax filing Designated Roth contributions are treated as elective deferrals, except that they are included in income. Free 2012 federal tax filing Excess deferrals. Free 2012 federal tax filing   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Free 2012 federal tax filing However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Free 2012 federal tax filing   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 2012 federal tax filing See Publication 525 for a discussion of the tax treatment of excess deferrals. Free 2012 federal tax filing Catch-up contributions. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. Free 2012 federal tax filing Your employer can tell you which kind of option you hold. Free 2012 federal tax filing For more information, see Publication 525. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing (You can choose to include the value of the property in your income in the year it is transferred to you. Free 2012 federal tax filing ) For more information, see Restricted Property in Publication 525. Free 2012 federal tax filing Dividends received on restricted stock. Free 2012 federal tax filing   Dividends you receive on restricted stock are treated as compensation and not as dividend income. Free 2012 federal tax filing Your employer should include these payments on your Form W-2. Free 2012 federal tax filing Stock you chose to include in income. Free 2012 federal tax filing   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 2012 federal tax filing Report them on your return as dividends. Free 2012 federal tax filing For a discussion of dividends, see chapter 8. Free 2012 federal tax filing    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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing , in addition to your salary. Free 2012 federal tax filing If the offering is made to the religious institution, it is not taxable to you. Free 2012 federal tax filing 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 2012 federal tax filing However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Free 2012 federal tax filing See chapter 24. Free 2012 federal tax filing Pension. Free 2012 federal tax filing    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. Free 2012 federal tax filing It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Free 2012 federal tax filing Housing. Free 2012 federal tax filing    Special rules for housing apply to members of the clergy. Free 2012 federal tax filing 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 2012 federal tax filing However, the exclusion cannot be more than the reasonable pay for your service. Free 2012 federal tax filing If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. Free 2012 federal tax filing The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. Free 2012 federal tax filing 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 2012 federal tax filing For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free 2012 federal tax filing 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 2012 federal tax filing Services performed for the order. Free 2012 federal tax filing   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 2012 federal tax filing   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 2012 federal tax filing Any wages you earn as an agent of an order that you turn over to the order are not included in your income. Free 2012 federal tax filing Example. Free 2012 federal tax filing You are a member of a church order and have taken a vow of poverty. Free 2012 federal tax filing You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. Free 2012 federal tax filing You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. Free 2012 federal tax filing However, you remain under the general direction and control of the order. Free 2012 federal tax filing 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 2012 federal tax filing Services performed outside the order. Free 2012 federal tax filing   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 2012 federal tax filing They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. Free 2012 federal tax filing 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 2012 federal tax filing Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. Free 2012 federal tax filing Example. Free 2012 federal tax filing Mark Brown is a member of a religious order and has taken a vow of poverty. Free 2012 federal tax filing He renounces all claims to his earnings and turns over his earnings to the order. Free 2012 federal tax filing Mark is a schoolteacher. Free 2012 federal tax filing He was instructed by the superiors of the order to get a job with a private tax-exempt school. Free 2012 federal tax filing Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. Free 2012 federal tax filing Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. Free 2012 federal tax filing The wages Mark earns working for the school are included in his income. Free 2012 federal tax filing Foreign Employer Special rules apply if you work for a foreign employer. Free 2012 federal tax filing U. Free 2012 federal tax filing S. Free 2012 federal tax filing citizen. Free 2012 federal tax filing   If you are a U. Free 2012 federal tax filing S. Free 2012 federal tax filing 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 2012 federal tax filing Social security and Medicare taxes. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. Free 2012 federal tax filing Employees of international organizations or foreign governments. Free 2012 federal tax filing   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 2012 federal tax filing   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. Free 2012 federal tax filing 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 2012 federal tax filing Your work is like the work done by employees of the United States in foreign countries. Free 2012 federal tax filing The foreign government gives an equal exemption to employees of the United States in its country. Free 2012 federal tax filing Waiver of alien status. Free 2012 federal tax filing   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 2012 federal tax filing See Foreign Employer in Publication 525. Free 2012 federal tax filing Employment abroad. Free 2012 federal tax filing   For information on the tax treatment of income earned abroad, see Publication 54. Free 2012 federal tax filing 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 2012 federal tax filing Allowances generally are not taxed. Free 2012 federal tax filing For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. Free 2012 federal tax filing Differential wage payments. Free 2012 federal tax filing   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. Free 2012 federal tax filing These wages are subject to income tax withholding and are reported on a Form W-2. Free 2012 federal tax filing See the discussion under Miscellaneous Compensation , earlier. Free 2012 federal tax filing Military retirement pay. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing   For more detailed discussion of survivor annuities, see chapter 10. Free 2012 federal tax filing Disability. Free 2012 federal tax filing   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. Free 2012 federal tax filing Veterans' benefits. Free 2012 federal tax filing   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 2012 federal tax filing The following amounts paid to veterans or their families are not taxable. Free 2012 federal tax filing Education, training, and subsistence allowances. Free 2012 federal tax filing Disability compensation and pension payments for disabilities paid either to veterans or their families. Free 2012 federal tax filing Grants for homes designed for wheelchair living. Free 2012 federal tax filing Grants for motor vehicles for veterans who lost their sight or the use of their limbs. Free 2012 federal tax filing 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 2012 federal tax filing Interest on insurance dividends you leave on deposit with the VA. Free 2012 federal tax filing Benefits under a dependent-care assistance program. Free 2012 federal tax filing The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. Free 2012 federal tax filing Payments made under the compensated work therapy program. Free 2012 federal tax filing Any bonus payment by a state or political subdivision because of service in a combat zone. Free 2012 federal tax filing 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 2012 federal tax filing Peace Corps. Free 2012 federal tax filing   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 2012 federal tax filing Taxable allowances. Free 2012 federal tax filing   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 2012 federal tax filing Living allowances designated by the Director of the Peace Corps as basic compensation. Free 2012 federal tax filing These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Free 2012 federal tax filing Leave allowances. Free 2012 federal tax filing Readjustment allowances or termination payments. Free 2012 federal tax filing These are considered received by you when credited to your account. Free 2012 federal tax filing Example. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Volunteers in Service to America (VISTA). Free 2012 federal tax filing   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. Free 2012 federal tax filing National Senior Services Corps programs. Free 2012 federal tax filing   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. Free 2012 federal tax filing Retired Senior Volunteer Program (RSVP). Free 2012 federal tax filing Foster Grandparent Program. Free 2012 federal tax filing Senior Companion Program. Free 2012 federal tax filing Service Corps of Retired Executives (SCORE). Free 2012 federal tax filing   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. Free 2012 federal tax filing Volunteer tax counseling. Free 2012 federal tax filing   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 2012 federal tax filing   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 2012 federal tax filing See chapter 24. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing However, certain payments may not be taxable to you. Free 2012 federal tax filing 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 2012 federal tax filing In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. Free 2012 federal tax filing Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. Free 2012 federal tax filing Cost paid by you. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing See Reimbursement in a later year in chapter 21. Free 2012 federal tax filing Cafeteria plans. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Free 2012 federal tax filing You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Free 2012 federal tax filing For information on this credit and the definition of permanent and total disability, see chapter 33. Free 2012 federal tax filing Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Free 2012 federal tax filing Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Free 2012 federal tax filing The rules for reporting pensions are explained in How To Report in chapter 10. Free 2012 federal tax filing For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. Free 2012 federal tax filing Retirement and profit-sharing plans. Free 2012 federal tax filing   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 2012 federal tax filing The payments must be reported as a pension or annuity. Free 2012 federal tax filing For more information on pensions, see chapter 10. Free 2012 federal tax filing Accrued leave payment. Free 2012 federal tax filing   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Free 2012 federal tax filing The payment is not a disability payment. Free 2012 federal tax filing Include it in your income in the tax year you receive it. Free 2012 federal tax filing Military and Government Disability Pensions Certain military and government disability pensions are not taxable. Free 2012 federal tax filing Service-connected disability. Free 2012 federal tax filing   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 2012 federal tax filing The armed forces of any country. Free 2012 federal tax filing The National Oceanic and Atmospheric Administration. Free 2012 federal tax filing The Public Health Service. Free 2012 federal tax filing The Foreign Service. Free 2012 federal tax filing Conditions for exclusion. Free 2012 federal tax filing   Do not include the disability payments in your income if any of the following conditions apply. Free 2012 federal tax filing You were entitled to receive a disability payment before September 25, 1975. Free 2012 federal tax filing 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 2012 federal tax filing You receive the disability payments for a combat-related injury. Free 2012 federal tax filing 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 2012 federal tax filing You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Free 2012 federal tax filing Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. Free 2012 federal tax filing Pension based on years of service. Free 2012 federal tax filing   If you receive a disability pension based on years of service, in most cases you must include it in your income. Free 2012 federal tax filing 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 2012 federal tax filing You must include the rest of your pension in your income. Free 2012 federal tax filing Retroactive VA determination. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. Free 2012 federal tax filing The letter must show the amount withheld and the effective date of the benefit. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing Special statute of limitations. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing You retired in 2007 and receive a pension based on your years of service. Free 2012 federal tax filing On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. Free 2012 federal tax filing Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. Free 2012 federal tax filing 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 2012 federal tax filing You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. Free 2012 federal tax filing Terrorist attack or military action. Free 2012 federal tax filing   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. Free 2012 federal tax filing Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. Free 2012 federal tax filing 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 2012 federal tax filing Qualified long-term care services. Free 2012 federal tax filing   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 2012 federal tax filing Chronically ill individual. Free 2012 federal tax filing   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 2012 federal tax filing Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Free 2012 federal tax filing An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Free 2012 federal tax filing Limit on exclusion. Free 2012 federal tax filing   You generally can exclude from gross income up to $320 a day for 2013. Free 2012 federal tax filing See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. Free 2012 federal tax filing 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 2012 federal tax filing The exemption also applies to your survivors. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Free 2012 federal tax filing Return to work. Free 2012 federal tax filing    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Free 2012 federal tax filing Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Free 2012 federal tax filing Railroad sick pay. Free 2012 federal tax filing    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. Free 2012 federal tax filing However, do not include them in your income if they are for an on-the-job injury. Free 2012 federal tax filing   If you received income because of a disability, see Disability Pensions , earlier. Free 2012 federal tax filing Federal Employees' Compensation Act (FECA). Free 2012 federal tax filing   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Free 2012 federal tax filing 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 2012 federal tax filing Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. Free 2012 federal tax filing Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Free 2012 federal tax filing    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 2012 federal tax filing For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. Free 2012 federal tax filing    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 2012 federal tax filing It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). Free 2012 federal tax filing If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. Free 2012 federal tax filing Do not deduct it separately. Free 2012 federal tax filing Other compensation. Free 2012 federal tax filing   Many other amounts you receive as compensation for sickness or injury are not taxable. Free 2012 federal tax filing These include the following amounts. Free 2012 federal tax filing Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. Free 2012 federal tax filing 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 2012 federal tax filing Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Free 2012 federal tax filing Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Free 2012 federal tax filing This compensation must be based only on the injury and not on the period of your absence from work. Free 2012 federal tax filing These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Free 2012 federal tax filing Reimbursement for medical care. Free 2012 federal tax filing    A reimbursement for medical care is generally not taxable. Free 2012 federal tax filing However, it may reduce your medical expense deduction. Free 2012 federal tax filing For more information, see chapter 21. Free 2012 federal tax filing Prev  Up  Next   Home   More Online Publications