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Free e-file state taxes only 15. Free e-file state taxes only   Estimated Tax Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Special Estimated Tax Rules for Qualified FarmersQualified Farmer Special Rules for Qualified Farmers Estimated Tax Penalty for 2013 What's New Net Investment Income Tax. Free e-file state taxes only . Free e-file state taxes only  For tax years beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Free e-file state taxes only NIIT is a 3. Free e-file state taxes only 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income (MAGI) over the threshold amount. Free e-file state taxes only NIIT may need to be included when calculating your estimated tax. Free e-file state taxes only For more information, see Publication 505,Tax Withholding and Estimated Tax. Free e-file state taxes only Additional Medicare Tax. Free e-file state taxes only  For tax years beginning in 2013, a 0. Free e-file state taxes only 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income over a threshold amount based on your filing status. Free e-file state taxes only You may need to include this amount when figuring your estimated tax. Free e-file state taxes only For more information, see Publication 505. Free e-file state taxes only Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Free e-file state taxes only See Publication 505 for the general rules and requirements for paying estimated tax. Free e-file state taxes only If you are a qualified farmer, defined below, you are subject to the special rules covered in this chapter for paying estimated tax. Free e-file state taxes only Topics - This chapter discusses: Special estimated tax rules for qualified farmers Estimated tax penalty Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. Free e-file state taxes only S. Free e-file state taxes only Individual Income Tax Return 1040-ES Estimated Tax for Individuals 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 16 for information about getting publications and forms. Free e-file state taxes only Special Estimated Tax Rules for Qualified Farmers Special rules apply to the payment of estimated tax by individuals who are qualified farmers. Free e-file state taxes only If you are not a qualified farmer as defined next, see Publication 505 for the estimated tax rules that apply. Free e-file state taxes only Qualified Farmer An individual is a qualified farmer for 2013 if at least two-thirds of his or her gross income from all sources for 2012 or 2013 was from farming. Free e-file state taxes only See Gross Income , next, for information on how to figure your gross income from all sources and see Gross Income From Farming , later, for information on how to figure your gross income from farming. Free e-file state taxes only See also Percentage From Farming , later, for information on how to determine the percentage of your gross income from farming. Free e-file state taxes only Gross Income Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. Free e-file state taxes only On a joint return, you must add your spouse's gross income to your gross income. Free e-file state taxes only To decide whether two-thirds of your gross income was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return. Free e-file state taxes only Wages, salaries, tips, etc. Free e-file state taxes only Taxable interest. Free e-file state taxes only Ordinary dividends. Free e-file state taxes only Taxable refunds, credits, or offsets of state and local income taxes. Free e-file state taxes only Alimony. Free e-file state taxes only Gross business income from Schedule C (Form 1040). Free e-file state taxes only Gross business receipts from Schedule C-EZ (Form 1040). Free e-file state taxes only Capital gains from Schedule D (Form 1040). Free e-file state taxes only Losses are not netted against gains. Free e-file state taxes only Gains on sales of business property. Free e-file state taxes only Taxable IRA distributions, pensions, annuities, and social security benefits. Free e-file state taxes only Gross rental income from Schedule E (Form 1040). Free e-file state taxes only Gross royalty income from Schedule E (Form 1040). Free e-file state taxes only Taxable net income from an estate or trust reported on Schedule E (Form 1040). Free e-file state taxes only Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040). Free e-file state taxes only Gross farm rental income from Form 4835. Free e-file state taxes only Gross farm income from Schedule F (Form 1040). Free e-file state taxes only Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065). Free e-file state taxes only Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120S). Free e-file state taxes only Unemployment compensation. Free e-file state taxes only Other income not included with any of the items listed above. Free e-file state taxes only Gross Income From Farming Gross income from farming is income from cultivating the soil or raising agricultural commodities. Free e-file state taxes only It includes the following amounts. Free e-file state taxes only Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Free e-file state taxes only Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Free e-file state taxes only Crop shares for the use of your land. Free e-file state taxes only Gains from sales of draft, breeding, dairy, or sporting livestock. Free e-file state taxes only Gross income from farming is the total of the following amounts from your tax return. Free e-file state taxes only Gross farm income from Schedule F (Form 1040). Free e-file state taxes only Gross farm rental income from Form 4835. Free e-file state taxes only Gross farm income from Schedule E (Form 1040), Parts II and III. Free e-file state taxes only Gains from the sale of livestock used for draft, breeding, sport, or dairy purposes reported on Form 4797. Free e-file state taxes only For more information about income from farming, see chapter 3. Free e-file state taxes only Farm income does not include any of the following: Wages you receive as a farm employee. Free e-file state taxes only Income you receive from contract grain harvesting and hauling with workers and machines you furnish. Free e-file state taxes only Gains you receive from the sale of farm land and depreciable farm equipment. Free e-file state taxes only Percentage From Farming Figure your gross income from all sources, discussed earlier. Free e-file state taxes only Then figure your gross income from farming, discussed earlier. Free e-file state taxes only Divide your farm gross income by your total gross income to determine the percentage of gross income from farming. Free e-file state taxes only Example 1. Free e-file state taxes only Jane Smith had the following total gross income and farm gross income amounts in 2013. Free e-file state taxes only Gross Income   Total Farm Taxable interest $3,000   Dividends 500   Rental income (Sch E) 41,500   Farm income (Sch F) 75,000 $75,000 Gain (Form 4797) 5,000 5,000 Total $125,000 $80,000 Schedule D showed gain from the sale of dairy cows carried over from Form 4797 ($5,000) in addition to a loss from the sale of corporate stock ($2,000). Free e-file state taxes only However, that loss is not netted against the gain to figure Ms. Free e-file state taxes only Smith's total gross income or her gross farm income. Free e-file state taxes only Her gross farm income is 64% of her total gross income ($80,000 ÷ $125,000 = 0. Free e-file state taxes only 64). Free e-file state taxes only Special Rules for Qualified Farmers The following special estimated tax rules apply if you are a qualified farmer for 2013. Free e-file state taxes only You do not have to pay estimated tax if you file your 2013 tax return and pay all the tax due by March 3, 2014. Free e-file state taxes only You do not have to pay estimated tax if your 2013 income tax withholding (including any amount applied to your 2013 estimated tax from your 2012 return) will be at least 662/3% (. Free e-file state taxes only 6667) of the total tax shown on your 2013 tax return or 100% of the total tax shown on your 2012 return. Free e-file state taxes only If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2014, using special rules to figure the amount of the payment. Free e-file state taxes only See Required Annual Payment , next, for details. Free e-file state taxes only Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers. Free e-file state taxes only Example 2. Free e-file state taxes only Assume the same fact as in Example 1. Free e-file state taxes only Ms. Free e-file state taxes only Smith's gross farm income is only 64% of her total income. Free e-file state taxes only Therefore, based on her 2013 income, she does not qualify to use the special estimated tax rules for qualified farmers. Free e-file state taxes only However, she does qualify if at least two-thirds of her 2012 gross income was from farming. Free e-file state taxes only Example 3. Free e-file state taxes only Assume the same facts as in Example 1 except that Ms. Free e-file state taxes only Smith's farm income from Schedule F was $90,000 instead of $75,000. Free e-file state taxes only This made her total gross income $140,000 ($3,000 + $500 + $41,500 + $90,000 + $5,000) and her farm gross income $95,000 ($90,000 + $5,000). Free e-file state taxes only She qualifies to use the special estimated tax rules for qualified farmers, since 67. Free e-file state taxes only 9% (at least two-thirds) of her gross income is from farming ($95,000 ÷ $140,000 = . Free e-file state taxes only 679). Free e-file state taxes only Required Annual Payment If you are a qualified farmer and must pay estimated tax for 2013, use the worksheet on Form 1040-ES to figure the amount of your required annual payment. Free e-file state taxes only Apply the following special rules for qualified farmers to the worksheet. Free e-file state taxes only On line 14a, multiply line 13c by 662/3% (. Free e-file state taxes only 6667). Free e-file state taxes only On line 14b, enter 100% of the tax shown on your 2012 tax return regardless of the amount of your adjusted gross income. Free e-file state taxes only For this purpose, the “tax shown on your 2012 tax return” is the amount on line 61 of your 2012 return modified by certain adjustments. Free e-file state taxes only For more information, see chapter 4 of Publication 505. Free e-file state taxes only Estimated Tax Penalty for 2013 If you do not pay all your required estimated tax for 2013 by January 15, 2014, or file your 2013 return and pay any tax due by March 3, 2014, you may owe a penalty. Free e-file state taxes only Use Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to determine if you owe a penalty. Free e-file state taxes only See the instructions for Form 2210-F. Free e-file state taxes only Figure 15-1. Free e-file state taxes only Estimated Tax for Farmers Please click here for the text description of the image. Free e-file state taxes only Figure 2–A If you receive a penalty notice, do not ignore it, even if you think it is in error. Free e-file state taxes only You may get a penalty notice even though you filed your return on time, attached Form 2210-F, and met the gross-income-from-farming requirement. Free e-file state taxes only If you receive a penalty notice for underpaying estimated tax and you think it is in error, write to the address on the notice and explain why you think the notice is in error. Free e-file state taxes only Include a computation similar to the one in Example 1 (earlier), showing that you met the gross income from farming requirement. Free e-file state taxes only Prev  Up  Next   Home   More Online Publications
 

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Free e-file state taxes only Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. Free e-file state taxes only Gross monthly rate. Free e-file state taxes only Your cost. Free e-file state taxes only Choosing a survivor annuity after retirement. Free e-file state taxes only Canceling a survivor annuity after retirement. Free e-file state taxes only Annuity starting date after 1986. Free e-file state taxes only Annuity starting date before 1987. Free e-file state taxes only Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. Free e-file state taxes only Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. Free e-file state taxes only The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. Free e-file state taxes only If the refund includes only your contributions, none of the refund is taxable. Free e-file state taxes only If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). Free e-file state taxes only If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Free e-file state taxes only See Rollover Rules in Part II for information on how to make a rollover. Free e-file state taxes only Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. Free e-file state taxes only Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. Free e-file state taxes only If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free e-file state taxes only If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. Free e-file state taxes only For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free e-file state taxes only A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. Free e-file state taxes only Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. Free e-file state taxes only OPM will tell you how to make the choice. Free e-file state taxes only The choice for no withholding remains in effect until you change it. Free e-file state taxes only These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. Free e-file state taxes only If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments. Free e-file state taxes only You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. Free e-file state taxes only Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. Free e-file state taxes only For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. Free e-file state taxes only Form CSA 1099R. Free e-file state taxes only   Form CSA 1099R is mailed to you by OPM each year. Free e-file state taxes only It will show any tax you had withheld. Free e-file state taxes only File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. Free e-file state taxes only    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. Free e-file state taxes only servicesonline. Free e-file state taxes only opm. Free e-file state taxes only gov. Free e-file state taxes only To log in, you will need your retirement CSA claim number and your personal identification number. Free e-file state taxes only Choosing no withholding on payments outside the United States. Free e-file state taxes only   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. Free e-file state taxes only   To choose no withholding if you are a U. Free e-file state taxes only S. Free e-file state taxes only citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. Free e-file state taxes only Otherwise, OPM has to withhold tax. Free e-file state taxes only For example, OPM must withhold if you provide a U. Free e-file state taxes only S. Free e-file state taxes only address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. Free e-file state taxes only S. Free e-file state taxes only home address. Free e-file state taxes only   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. Free e-file state taxes only S. Free e-file state taxes only citizen, a U. Free e-file state taxes only S. Free e-file state taxes only resident alien, or someone who left the United States to avoid tax. Free e-file state taxes only But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. Free e-file state taxes only For details, see Publication 519, U. Free e-file state taxes only S. Free e-file state taxes only Tax Guide for Aliens. Free e-file state taxes only Withholding certificate. Free e-file state taxes only   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. Free e-file state taxes only The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. Free e-file state taxes only If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. Free e-file state taxes only To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free e-file state taxes only C. Free e-file state taxes only calling area must call 202-606-0500). Free e-file state taxes only No special form is needed. Free e-file state taxes only You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. Free e-file state taxes only If you have TTY/TDD equipment, call 1-855–887–4957. Free e-file state taxes only If you need a PIN, call OPM's Retirement Information Office. Free e-file state taxes only You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. Free e-file state taxes only servicesonline. Free e-file state taxes only opm. Free e-file state taxes only gov. Free e-file state taxes only You will need your retirement CSA or CSF claim number and your PIN. Free e-file state taxes only Withholding from certain lump-sum payments. Free e-file state taxes only   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. Free e-file state taxes only Tax will be withheld at a 20% rate on the interest distributed. Free e-file state taxes only However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. Free e-file state taxes only If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. Free e-file state taxes only Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. Free e-file state taxes only See Rollover Rules in Part II. Free e-file state taxes only If you receive only your contributions, no tax will be withheld. Free e-file state taxes only Withholding from Thrift Savings Plan payments. Free e-file state taxes only   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. Free e-file state taxes only The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. Free e-file state taxes only  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. Free e-file state taxes only By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. Free e-file state taxes only   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. Free e-file state taxes only The above document is also available in the “Forms & Publications” section of the TSP website at www. Free e-file state taxes only tsp. Free e-file state taxes only gov. Free e-file state taxes only Estimated tax. Free e-file state taxes only   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). Free e-file state taxes only The return must cover all 12 months. Free e-file state taxes only   You do not have to pay estimated tax for 2014 if you were a U. Free e-file state taxes only S. Free e-file state taxes only citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. Free e-file state taxes only   Publication 505 contains information that you can use to help you figure your estimated tax payments. Free e-file state taxes only Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. Free e-file state taxes only The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. Free e-file state taxes only Children. Free e-file state taxes only   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. Free e-file state taxes only   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. Free e-file state taxes only Form CSF 1099R. Free e-file state taxes only   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. Free e-file state taxes only It will show the total amount of the annuity you received in the past year. Free e-file state taxes only It also should show, separately, the survivor annuity for a child or children. Free e-file state taxes only Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. Free e-file state taxes only   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. Free e-file state taxes only    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. Free e-file state taxes only servicesonline. Free e-file state taxes only opm. Free e-file state taxes only gov. Free e-file state taxes only To log in you will need your retirement CSF claim number and personal identification number. Free e-file state taxes only    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free e-file state taxes only C. Free e-file state taxes only calling area must call 202-606-0500). Free e-file state taxes only You will need your CSF claim number and your social security number when you call. Free e-file state taxes only Taxable part of annuity. Free e-file state taxes only   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. Free e-file state taxes only To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. Free e-file state taxes only Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. Free e-file state taxes only If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. Free e-file state taxes only However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. Free e-file state taxes only Annuity statement. Free e-file state taxes only   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). Free e-file state taxes only You will use this information to figure the tax-free recovery of your cost. Free e-file state taxes only Annuity starting date. Free e-file state taxes only   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. Free e-file state taxes only If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. Free e-file state taxes only Gross monthly rate. Free e-file state taxes only   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. Free e-file state taxes only Your cost. Free e-file state taxes only   Your monthly annuity payment contains an amount on which you have previously paid income tax. Free e-file state taxes only This amount represents part of your contributions to the retirement plan. Free e-file state taxes only Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. Free e-file state taxes only   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. Free e-file state taxes only If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. Free e-file state taxes only (See Lump-sum credit under Alternative Annuity Option, later. Free e-file state taxes only )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. Free e-file state taxes only You cannot claim an interest deduction for any interest payments. Free e-file state taxes only You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. Free e-file state taxes only Recovering your cost tax free. Free e-file state taxes only   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. Free e-file state taxes only If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. Free e-file state taxes only If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). Free e-file state taxes only If your annuity starting date is after November 18, 1996, you must use the Simplified Method. Free e-file state taxes only   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). Free e-file state taxes only The tax-free part is a fixed dollar amount. Free e-file state taxes only It remains the same, even if your annuity is increased. Free e-file state taxes only Generally, this rule applies as long as you receive your annuity. Free e-file state taxes only However, see Exclusion limit , later. Free e-file state taxes only Choosing a survivor annuity after retirement. Free e-file state taxes only    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. Free e-file state taxes only   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. Free e-file state taxes only To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. Free e-file state taxes only Figure the expected return as of the date the reduced annuity begins. Free e-file state taxes only For details on the General Rule, see Publication 939. Free e-file state taxes only Canceling a survivor annuity after retirement. Free e-file state taxes only   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. Free e-file state taxes only The increased annuity does not change the cost recovery you figured at the annuity starting date. Free e-file state taxes only The tax-free part of each annuity payment remains the same. Free e-file state taxes only    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. Free e-file state taxes only C. Free e-file state taxes only calling area must call 202-606-0500). Free e-file state taxes only Exclusion limit. Free e-file state taxes only   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. Free e-file state taxes only Annuity starting date after 1986. Free e-file state taxes only   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. Free e-file state taxes only Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. Free e-file state taxes only Example. Free e-file state taxes only Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. Free e-file state taxes only If your cost is $12,000, the exclusion ends after 10 years (120 months). Free e-file state taxes only Thereafter, your entire annuity is generally fully taxable. Free e-file state taxes only Annuity starting date before 1987. Free e-file state taxes only   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. Free e-file state taxes only If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. Free e-file state taxes only The total exclusion may be more than your cost. Free e-file state taxes only Deduction of unrecovered cost. Free e-file state taxes only   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. Free e-file state taxes only The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). Free e-file state taxes only If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. Free e-file state taxes only Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. Free e-file state taxes only (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. Free e-file state taxes only ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. Free e-file state taxes only The Simplified Method does not apply if your annuity starting date is before July 2, 1986. Free e-file state taxes only Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. Free e-file state taxes only This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Free e-file state taxes only If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. Free e-file state taxes only Worksheet A. Free e-file state taxes only   Use Worksheet A. Free e-file state taxes only Simplified Method (near the end of this publication), to figure your taxable annuity. Free e-file state taxes only Be sure to keep the completed worksheet. Free e-file state taxes only It will help you figure your taxable amounts for later years. Free e-file state taxes only Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. Free e-file state taxes only However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. Free e-file state taxes only Line 2. Free e-file state taxes only   See Your cost , earlier, for an explanation of your cost in the plan. Free e-file state taxes only If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. Free e-file state taxes only Line 3. Free e-file state taxes only   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. Free e-file state taxes only If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. Free e-file state taxes only If your annuity starting date is before 1998, use Table 1. Free e-file state taxes only Line 6. Free e-file state taxes only   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. Free e-file state taxes only If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. Free e-file state taxes only Example. Free e-file state taxes only Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. Free e-file state taxes only His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. Free e-file state taxes only He must use the Simplified Method to figure the tax-free part of his annuity benefits. Free e-file state taxes only Bill's monthly annuity benefit is $1,000. Free e-file state taxes only He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. Free e-file state taxes only At his annuity starting date, he was 65 and Kathy was 57. Free e-file state taxes only Bill's completed Worksheet A is shown later. Free e-file state taxes only To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). Free e-file state taxes only Bill keeps a copy of the completed worksheet for his records. Free e-file state taxes only It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. Free e-file state taxes only Bill's tax-free monthly amount is $100. Free e-file state taxes only (See line 4 of the worksheet. Free e-file state taxes only ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. Free e-file state taxes only If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. Free e-file state taxes only If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. Free e-file state taxes only General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. Free e-file state taxes only If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. Free e-file state taxes only If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. Free e-file state taxes only Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. Free e-file state taxes only Figuring this percentage is complex and requires the use of actuarial tables. Free e-file state taxes only For these tables and other information about using the General Rule, see Publication 939. Free e-file state taxes only Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. Free e-file state taxes only Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. Free e-file state taxes only After your cost was recovered, all payments became fully taxable. Free e-file state taxes only You cannot use another rule to again exclude amounts from income. Free e-file state taxes only The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. Free e-file state taxes only Worksheet A. Free e-file state taxes only Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. Free e-file state taxes only 1. Free e-file state taxes only Enter the total pension or annuity payments received this year. Free e-file state taxes only Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Free e-file state taxes only $ 8,000 2. Free e-file state taxes only Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Free e-file state taxes only See Your cost in Part II, Rules for Retirees, earlier 2. Free e-file state taxes only 31,000 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Free e-file state taxes only Otherwise, go to line 3. Free e-file state taxes only   3. Free e-file state taxes only Enter the appropriate number from Table 1 below. Free e-file state taxes only But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Free e-file state taxes only 3. Free e-file state taxes only 310 4. Free e-file state taxes only Divide line 2 by the number on line 3 4. Free e-file state taxes only 100 5. Free e-file state taxes only Multiply line 4 by the number of months for which this year's payments were made. Free e-file state taxes only If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Free e-file state taxes only Otherwise, go to line 6 5. Free e-file state taxes only 800 6. Free e-file state taxes only Enter any amounts previously recovered tax free in years after 1986. Free e-file state taxes only This is the amount shown on line 10 of your worksheet for last year 6. Free e-file state taxes only 0 7. Free e-file state taxes only Subtract line 6 from line 2 7. Free e-file state taxes only 31,000 8. Free e-file state taxes only Enter the smaller of line 5 or line 7 8. Free e-file state taxes only 800 9. Free e-file state taxes only Taxable amount for year. Free e-file state taxes only Subtract line 8 from line 1. Free e-file state taxes only Enter the result, but not less than zero. Free e-file state taxes only Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Free e-file state taxes only If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Free e-file state taxes only If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Free e-file state taxes only If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Free e-file state taxes only $7,200 10. Free e-file state taxes only Was your annuity starting date before 1987?   Yes. Free e-file state taxes only Do not complete the rest of this worksheet. Free e-file state taxes only    No. Free e-file state taxes only Add lines 6 and 8. Free e-file state taxes only This is the amount you have recovered tax free through 2013. Free e-file state taxes only You will need this number if you need to fill out this worksheet next year 10. Free e-file state taxes only 800 11. Free e-file state taxes only Balance of cost to be recovered. Free e-file state taxes only Subtract line 10 from line 2. Free e-file state taxes only If zero, you will not have to complete this worksheet next year. Free e-file state taxes only The payments you receive next year will generally be fully taxable 11. Free e-file state taxes only $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Free e-file state taxes only Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. Free e-file state taxes only If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. Free e-file state taxes only You are eligible to make this choice if you meet all of the following requirements. Free e-file state taxes only You are retiring, but not on disability. Free e-file state taxes only You have a life-threatening illness or other critical medical condition. Free e-file state taxes only You do not have a former spouse entitled to court ordered benefits based on your service. Free e-file state taxes only If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. Free e-file state taxes only Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. Free e-file state taxes only The tax-free part represents part of your cost. Free e-file state taxes only The taxable part represents part of the earnings on your annuity contract. Free e-file state taxes only Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. Free e-file state taxes only Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. Free e-file state taxes only Your taxable amount may therefore be more than the lump-sum payment you receive. Free e-file state taxes only You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. Free e-file state taxes only If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. Free e-file state taxes only See Rollover Rules , later, for information on how to make a rollover. Free e-file state taxes only OPM can make a direct rollover only up to the amount of the lump-sum payment. Free e-file state taxes only Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. Free e-file state taxes only The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free e-file state taxes only It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. Free e-file state taxes only For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free e-file state taxes only Worksheet B. Free e-file state taxes only   Use Worksheet B. Free e-file state taxes only Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. Free e-file state taxes only Be sure to keep the completed worksheet for your records. Free e-file state taxes only   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. Free e-file state taxes only Lump-sum credit. Free e-file state taxes only   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). Free e-file state taxes only However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. Free e-file state taxes only Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. Free e-file state taxes only Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. Free e-file state taxes only You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. Free e-file state taxes only Present value of your annuity contract. Free e-file state taxes only   The present value of your annuity contract is figured using actuarial tables provided by the IRS. Free e-file state taxes only If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. Free e-file state taxes only Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. Free e-file state taxes only , NW Washington, DC 20224-0002 Example. Free e-file state taxes only David Brown retired from the federal government in 2013, one month after his 55th birthday. Free e-file state taxes only He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. Free e-file state taxes only The present value of his annuity contract was $155,000. Free e-file state taxes only The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. Free e-file state taxes only The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. Free e-file state taxes only See Reduced Annuity , later. Free e-file state taxes only Worksheet B. Free e-file state taxes only Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . Free e-file state taxes only  1. Free e-file state taxes only Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. Free e-file state taxes only $ 31,000 2. Free e-file state taxes only Enter the present value of your annuity contract 2. Free e-file state taxes only 155,000 3. Free e-file state taxes only Divide line 1 by line 2 3. Free e-file state taxes only . Free e-file state taxes only 20 4. Free e-file state taxes only Tax-free amount. Free e-file state taxes only Multiply line 1 by line 3. Free e-file state taxes only (Caution: Do not include this amount on line 6 of Worksheet A in this publication. Free e-file state taxes only ) 4. Free e-file state taxes only $6,200 5. Free e-file state taxes only Taxable amount (net cost in the plan). Free e-file state taxes only Subtract line 4 from line 1. Free e-file state taxes only Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Free e-file state taxes only Also, enter this amount on line 2 of Worksheet A in this publication. Free e-file state taxes only 5. Free e-file state taxes only $24,800   Lump-sum payment in installments. Free e-file state taxes only   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. Free e-file state taxes only You will receive the first installment after you make the choice upon retirement. Free e-file state taxes only The second installment will be paid to you, with interest, in the next calendar year. Free e-file state taxes only (Exceptions to the installment rule are provided for cases of critical medical need. Free e-file state taxes only )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. Free e-file state taxes only If the payment has a tax-free part, you must treat the taxable part as received first. Free e-file state taxes only How to report. Free e-file state taxes only   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Free e-file state taxes only Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. Free e-file state taxes only    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. Free e-file state taxes only Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. Free e-file state taxes only These annuity payments each will have a tax-free and a taxable part. Free e-file state taxes only To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). Free e-file state taxes only For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. Free e-file state taxes only To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. Free e-file state taxes only Enter as your net cost on line 2 the amount from Worksheet B, line 5. Free e-file state taxes only Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Free e-file state taxes only Example. Free e-file state taxes only The facts are the same as in the example for David Brown in the preceding discussion. Free e-file state taxes only In addition, David received 10 annuity payments in 2013 of $1,200 each. Free e-file state taxes only Using Worksheet A, he figures the taxable part of his annuity payments. Free e-file state taxes only He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. Free e-file state taxes only His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). Free e-file state taxes only He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. Free e-file state taxes only David's filled-in Worksheet A is shown on the next page. Free e-file state taxes only Worksheet A. Free e-file state taxes only Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . Free e-file state taxes only 1. Free e-file state taxes only Enter the total pension or annuity payments received this year. Free e-file state taxes only Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Free e-file state taxes only $ 12,000 2. Free e-file state taxes only Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. Free e-file state taxes only See Your cost in Part II, Rules for Retirees, earlier 2. Free e-file state taxes only 24,800 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Free e-file state taxes only Otherwise, go to line 3. Free e-file state taxes only   3. Free e-file state taxes only Enter the appropriate number from Table 1 below. Free e-file state taxes only But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Free e-file state taxes only 3. Free e-file state taxes only 360 4. Free e-file state taxes only Divide line 2 by the number on line 3 4. Free e-file state taxes only 68. Free e-file state taxes only 89 5. Free e-file state taxes only Multiply line 4 by the number of months for which this year's payments were made. Free e-file state taxes only If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Free e-file state taxes only Otherwise, go to line 6 5. Free e-file state taxes only 688. Free e-file state taxes only 90 6. Free e-file state taxes only Enter any amounts previously recovered tax free in years after 1986. Free e-file state taxes only This is the amount shown on line 10 of your worksheet for last year 6. Free e-file state taxes only 0 7. Free e-file state taxes only Subtract line 6 from line 2 7. Free e-file state taxes only 24,800 8. Free e-file state taxes only Enter the smaller of line 5 or line 7 8. Free e-file state taxes only 688. Free e-file state taxes only 90 9. Free e-file state taxes only Taxable amount for year. Free e-file state taxes only Subtract line 8 from line 1. Free e-file state taxes only Enter the result, but not less than zero. Free e-file state taxes only Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. Free e-file state taxes only If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. Free e-file state taxes only If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. Free e-file state taxes only If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. Free e-file state taxes only $11,311. Free e-file state taxes only 10 10. Free e-file state taxes only Was your annuity starting date before 1987?   Yes. Free e-file state taxes only Do not complete the rest of this worksheet. Free e-file state taxes only    No. Free e-file state taxes only Add lines 6 and 8. Free e-file state taxes only This is the amount you have recovered tax free through 2013. Free e-file state taxes only You will need this number if you need to fill out this worksheet next year 10. Free e-file state taxes only 688. Free e-file state taxes only 90 11. Free e-file state taxes only Balance of cost to be recovered. Free e-file state taxes only Subtract line 10 from line 2. Free e-file state taxes only If zero, you will not have to complete this worksheet next year. Free e-file state taxes only The payments you receive next year will generally be fully taxable 11. Free e-file state taxes only $24,111. Free e-file state taxes only 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. Free e-file state taxes only Reemployment after choosing the alternative annuity option. Free e-file state taxes only If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. Free e-file state taxes only If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. Free e-file state taxes only Annuity starting date before November 19, 1996. Free e-file state taxes only   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. Free e-file state taxes only Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. Free e-file state taxes only However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. Free e-file state taxes only Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. Free e-file state taxes only The gift may be taxable for gift tax purposes. Free e-file state taxes only The value of the gift is equal to the value of the annuity. Free e-file state taxes only Joint and survivor annuity. Free e-file state taxes only   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. Free e-file state taxes only This will eliminate any gift tax liability with regard to that gift. Free e-file state taxes only   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. Free e-file state taxes only This may result in a taxable gift. Free e-file state taxes only More information. Free e-file state taxes only   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. Free e-file state taxes only Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. Free e-file state taxes only Annual leave. Free e-file state taxes only   A payment for accrued annual leave received on retirement is a salary payment. Free e-file state taxes only It is taxable as wages in the tax year you receive it. Free e-file state taxes only Voluntary contributions. Free e-file state taxes only   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. Free e-file state taxes only They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. Free e-file state taxes only Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. Free e-file state taxes only See Thrift Savings Plan , later. Free e-file state taxes only Additional annuity benefit. Free e-file state taxes only   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. Free e-file state taxes only This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. Free e-file state taxes only It does not matter that you receive only one monthly check covering both benefits. Free e-file state taxes only Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. Free e-file state taxes only   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. Free e-file state taxes only Refund of voluntary contributions. Free e-file state taxes only   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. Free e-file state taxes only If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. Free e-file state taxes only See Rollover Rules , later. Free e-file state taxes only The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. Free e-file state taxes only It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. Free e-file state taxes only For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. Free e-file state taxes only Community property laws. Free e-file state taxes only   State community property laws apply to your annuity. Free e-file state taxes only These laws will affect your income tax only if you file a return separately from your spouse. Free e-file state taxes only   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. Free e-file state taxes only Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. Free e-file state taxes only   At any time, you have only one domicile even though you may have more than one home. Free e-file state taxes only Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Free e-file state taxes only The question of your domicile is mainly a matter of your intentions as indicated by your actions. Free e-file state taxes only   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. Free e-file state taxes only The division is based on your periods of service and domicile in community and noncommunity property states while you were married. Free e-file state taxes only   For more information, see Publication 555, Community Property. Free e-file state taxes only Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. Free e-file state taxes only The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. Free e-file state taxes only This amount is taxable as wages. Free e-file state taxes only Your annuity will continue to be taxed just as it was before. Free e-file state taxes only If you are still recovering your cost, you continue to do so. Free e-file state taxes only If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. Free e-file state taxes only Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. Free e-file state taxes only A nonresident alien is an individual who is not a citizen or a resident alien of the United States. Free e-file state taxes only Special rule for figuring your total contributions. Free e-file state taxes only   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. Free e-file state taxes only You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. Free e-file state taxes only For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. Free e-file state taxes only Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. Free e-file state taxes only   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. Free e-file state taxes only Limit on taxable amount. Free e-file state taxes only   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. Free e-file state taxes only Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. Free e-file state taxes only The numerator of the fraction is the retiree's total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay, other than tax-exempt pay for services performed outside the United States. Free e-file state taxes only The denominator is the retiree's total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay for all services. Free e-file state taxes only    Basic pay includes regular pay plus any standby differential. Free e-file state taxes only It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. Free e-file state taxes only   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. Free e-file state taxes only (For an annuity, first complete Worksheet A in this publication. Free e-file state taxes only ) Worksheet C. Free e-file state taxes only Limited Taxable Amount for Nonresident Alien 1. Free e-file state taxes only Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free e-file state taxes only   2. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free e-file state taxes only   3. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay for all services 3. Free e-file state taxes only   4. Free e-file state taxes only Divide line 2 by line 3 4. Free e-file state taxes only   5. Free e-file state taxes only Limited taxable amount. Free e-file state taxes only Multiply line 1 by line 4. Free e-file state taxes only Enter this amount on Form 1040NR, line 17b 5. Free e-file state taxes only   Example 1. Free e-file state taxes only You are a nonresident alien who performed all services for the U. Free e-file state taxes only S. Free e-file state taxes only Government abroad as a nonresident alien. Free e-file state taxes only You retired and began to receive a monthly annuity of $200. Free e-file state taxes only Your total basic pay for all services for the U. Free e-file state taxes only S. Free e-file state taxes only Government was $100,000. Free e-file state taxes only All of your basic pay was tax exempt because it was not U. Free e-file state taxes only S. Free e-file state taxes only source income. Free e-file state taxes only The taxable amount of your annuity using Worksheet A in this publication is $720. Free e-file state taxes only You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Free e-file state taxes only Worksheet C. Free e-file state taxes only Limited Taxable Amount for Nonresident Alien — Example 1 1. Free e-file state taxes only Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free e-file state taxes only $ 720 2. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free e-file state taxes only 0 3. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay for all services 3. Free e-file state taxes only 100,000 4. Free e-file state taxes only Divide line 2 by line 3 4. Free e-file state taxes only 0 5. Free e-file state taxes only Limited taxable amount. Free e-file state taxes only Multiply line 1 by line 4. Free e-file state taxes only Enter this amount on Form 1040NR, line 17b 5. Free e-file state taxes only 0 Example 2. Free e-file state taxes only You are a nonresident alien who performed services for the U. Free e-file state taxes only S. Free e-file state taxes only Government as a nonresident alien both within the United States and abroad. Free e-file state taxes only You retired and began to receive a monthly annuity of $240. Free e-file state taxes only Your total basic pay for your services for the U. Free e-file state taxes only S. Free e-file state taxes only Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. Free e-file state taxes only The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. Free e-file state taxes only S. Free e-file state taxes only source income. Free e-file state taxes only The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. Free e-file state taxes only You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. Free e-file state taxes only Worksheet C. Free e-file state taxes only Limited Taxable Amount for Nonresident Alien — Example 2 1. Free e-file state taxes only Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. Free e-file state taxes only $ 1,980 2. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay other than tax-exempt pay for services performed outside the United States 2. Free e-file state taxes only 40,000 3. Free e-file state taxes only Enter the total U. Free e-file state taxes only S. Free e-file state taxes only Government basic pay for all services 3. Free e-file state taxes only 120,000 4. Free e-file state taxes only Divide line 2 by line 3 4. Free e-file state taxes only . Free e-file state taxes only 333 5. Free e-file state taxes only Limited taxable amount. Free e-file state taxes only Multiply line 1 by line 4. Free e-file state taxes only Enter this amount on Form 1040NR, line 17b 5. Free e-file state taxes only 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. Free e-file state taxes only (However, see Roth TSP balance and Uniformed services TSP accounts, next. Free e-file state taxes only ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. Free e-file state taxes only The way that you withdraw your account balance determines when you must pay the tax. Free e-file state taxes only Roth TSP balance. Free e-file state taxes only   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. Free e-file state taxes only This means Roth TSP contributions are included in your income. Free e-file state taxes only The contribution limits are the same as the traditional TSP. Free e-file state taxes only You can elect to have part or all of your TSP contributions designated as a Roth TSP. Free e-file state taxes only Agency contributions will be part of your traditional TSP balance. Free e-file state taxes only Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. Free e-file state taxes only   Qualified distributions from your Roth TSP are not included in income. Free e-file state taxes only This applies to both your cost in the account and income earned on that account. Free e-file state taxes only A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. Free e-file state taxes only   For more information, go to the TSP website, www. Free e-file state taxes only tsp. Free e-file state taxes only gov, or the TSP Service Office. Free e-file state taxes only See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. Free e-file state taxes only Uniformed services TSP accounts. Free e-file state taxes only   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. Free e-file state taxes only However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. Free e-file state taxes only See Roth TSP balance discussed previously to get more information about Roth contributions. Free e-file state taxes only The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Free e-file state taxes only You can get more information from the TSP website, www. Free e-file state taxes only tsp. Free e-file state taxes only gov, or the TSP Service Office. Free e-file state taxes only Direct rollover by the TSP. Free e-file state taxes only   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. Free e-file state taxes only However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Free e-file state taxes only Also, see Rollover Rules , later. Free e-file state taxes only Direct rollover by the TSP to a Roth IRA. Free e-file state taxes only   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. Free e-file state taxes only However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. Free e-file state taxes only Also, see Rollovers to Roth IRAs for more information, later. Free e-file state taxes only Note. Free e-file state taxes only A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. Free e-file state taxes only This is because you already paid tax on those contributions. Free e-file state taxes only You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. Free e-file state taxes only TSP annuity. Free e-file state taxes only   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. Free e-file state taxes only The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. Free e-file state taxes only However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. Free e-file state taxes only See Roth TSP balance , earlier. Free e-file state taxes only This is because you already paid tax on those contributions. Free e-file state taxes only Cash withdrawals. Free e-file state taxes only   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. Free e-file state taxes only (See Rollover Rules , later. Free e-file state taxes only ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. Free e-file state taxes only See Lump-Sum Distributions in Publication 575 for details. Free e-file state taxes only However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. Free e-file state taxes only See Roth TSP balance , earlier. Free e-file state taxes only    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. Free e-file state taxes only   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. Free e-file state taxes only If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. Free e-file state taxes only See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. Free e-file state taxes only However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. Free e-file state taxes only See Roth TSP balance , earlier, for a discussion of those conditions. Free e-file state taxes only Tax on early distributions. Free e-file state taxes only   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. Free e-file state taxes only However, this additional tax does not apply in certain situations, including any of the following. Free e-file state taxes only You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. Free e-file state taxes only You choose to receive your account balance in monthly payments based on your life expectancy. Free e-file state taxes only You are totally and permanently disabled. Free e-file state taxes only You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). Free e-file state taxes only The earnings may be subject to the 10% tax depending on whether you met certain conditions. Free e-file state taxes only See Roth TSP balance , earlier. Free e-file state taxes only   For more information, see Tax on Early Distributions in Publication 575. Free e-file state taxes only Outstanding loan. Free e-file state taxes only   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. Free e-file state taxes only The distribution also may be subject to the additional 10% tax on early distributions. Free e-file state taxes only However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. Free e-file state taxes only See Rollover Rules , later. Free e-file state taxes only   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. Free e-file state taxes only However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. Free e-file state taxes only See Roth TSP balance , earlier. Free e-file state taxes only More information. Free e-file state taxes only   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. Free e-file state taxes only Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). Free e-file state taxes only    The above documents are also available on the TSP website at www. Free e-file state taxes only tsp. Free e-file state taxes only gov. Free e-file state taxes only Select “Forms & Publications. Free e-file state taxes only ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. Free e-file state taxes only You do not include the amount rolled over in your income, and you cannot take a deduction for it. Free e-file state taxes only The amount rolled over is taxed later as the new program pays that amount to you. Free e-file state taxes only If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. Free e-file state taxes only However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. Free e-file state taxes only To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. Free e-file state taxes only You can also roll over a distribution from a qualified retirement plan into a Roth IRA. Free e-file state taxes only Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. Free e-file state taxes only See Rollovers to Roth IRAs , later, for more information. Free e-file state taxes only Qualified retirement plan. Free e-file state taxes only   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. Free e-file state taxes only The CSRS, FERS, and TSP are considered qualified retirement plans. Free e-file state taxes only Distributions eligible for rollover treatment. Free e-file state taxes only   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. Free e-file state taxes only You cannot roll over any part of your CSRS or FERS annuity payments. Free e-file state taxes only   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. Free e-file state taxes only   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. Free e-file state taxes only However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. Free e-file state taxes only Direct rollover option. Free e-file state taxes only   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. Free e-file state taxes only   There is an automatic rollover requirement for mandatory distributions. Free e-file state taxes only A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. Free e-file state taxes only The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. Free e-file state taxes only You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. Free e-file state taxes only If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. Free e-file state taxes only No tax withheld. Free e-file state taxes only   If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. Free e-file state taxes only However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. Free e-file state taxes only Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. Free e-file state taxes only Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. Free e-file state taxes only Payment to you option. Free e-file state taxes only   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. Free e-file state taxes only However, the full amount is treated as distributed to you even though you actually receive only 80%. Free e-file state taxes only You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. Free e-file state taxes only Rollovers to Roth IRAs are generally included in income. Free e-file state taxes only Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. Free e-file state taxes only If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. Free e-file state taxes only However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). Free e-file state taxes only Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. Free e-file state taxes only See Roth TSP balance , earlier. Free e-file state taxes only Also, see Tax on Early Distributions in Publication 575. Free e-file state taxes only Exception to withholding. Free e-file state taxes only   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. Free e-file state taxes only Partial rollovers. Free e-file state taxes only   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. Free e-file state taxes only See Lump-Sum Distributions in Publication 575. Free e-file state taxes only However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. Free e-file state taxes only Rolling over more than amount received. Free e-file state taxes only   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). Free e-file state taxes only Example. Free e-file state taxes only You left government service at age 53. Free e-file state taxes only On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you