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Freetaxusa Part Two - Income The eight chapters in this part discuss many kinds of income. Freetaxusa They explain which income is and is not taxed. Freetaxusa See Part Three for information on gains and losses you report on Form 8949 and Schedule D (Form 1040) and for information on selling your home. Freetaxusa Table of Contents 5. Freetaxusa Wages, Salaries, and Other EarningsReminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. Freetaxusa Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits 6. Freetaxusa Tip IncomeIntroduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. Freetaxusa Reporting Tips to Your EmployerElectronic tip statement. Freetaxusa Final report. Freetaxusa Reporting Tips on Your Tax Return Allocated Tips 7. Freetaxusa Interest IncomeReminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. Freetaxusa Custodian account for your child. Freetaxusa Penalty for failure to supply SSN. Freetaxusa Reporting backup withholding. Freetaxusa Savings account with parent as trustee. Freetaxusa Interest not reported on Form 1099-INT. Freetaxusa Nominees. Freetaxusa Incorrect amount. Freetaxusa Information reporting requirement. Freetaxusa Taxable InterestInterest subject to penalty for early withdrawal. Freetaxusa Money borrowed to invest in certificate of deposit. Freetaxusa U. Freetaxusa S. Freetaxusa Savings Bonds Education Savings Bond Program U. Freetaxusa S. Freetaxusa Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. Freetaxusa How To Report Interest IncomeSchedule B (Form 1040A or 1040). Freetaxusa Reporting tax-exempt interest. Freetaxusa U. Freetaxusa S. Freetaxusa savings bond interest previously reported. Freetaxusa 8. Freetaxusa Dividends and Other DistributionsReminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Freetaxusa Reporting tax withheld. Freetaxusa Nominees. Freetaxusa Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Freetaxusa Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Freetaxusa Alternative minimum tax treatment. Freetaxusa How To Report Dividend IncomeInvestment interest deducted. Freetaxusa 9. Freetaxusa Rental Income and ExpensesIntroduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Freetaxusa Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Freetaxusa Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Freetaxusa Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) 10. Freetaxusa Retirement Plans, Pensions, and AnnuitiesWhat's New Reminder IntroductionThe General Rule. Freetaxusa Individual retirement arrangements (IRAs). Freetaxusa Civil service retirement benefits. Freetaxusa Useful Items - You may want to see: General InformationIn-plan rollovers to designated Roth accounts. Freetaxusa How To Report Cost (Investment in the Contract) Taxation of Periodic PaymentsExclusion limited to cost. Freetaxusa Exclusion not limited to cost. Freetaxusa Simplified Method Taxation of Nonperiodic PaymentsLump-Sum Distributions RolloversIn-plan rollovers to designated Roth accounts. Freetaxusa Special Additional TaxesTax on Early Distributions Tax on Excess Accumulation Survivors and Beneficiaries 11. Freetaxusa Social Security and Equivalent Railroad Retirement BenefitsIntroduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits 12. Freetaxusa Other IncomeIntroduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Freetaxusa Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Freetaxusa Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Freetaxusa Method 2. Freetaxusa RoyaltiesDepletion. Freetaxusa Coal and iron ore. Freetaxusa Sale of property interest. Freetaxusa Part of future production sold. Freetaxusa Unemployment BenefitsTypes of unemployment compensation. Freetaxusa Governmental program. Freetaxusa Repayment of unemployment compensation. Freetaxusa Tax withholding. Freetaxusa Repayment of benefits. Freetaxusa Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Freetaxusa Deduction for costs involved in unlawful discrimination suits. Freetaxusa Energy conservation measure. Freetaxusa Dwelling unit. Freetaxusa Current income required to be distributed. Freetaxusa Current income not required to be distributed. Freetaxusa How to report. Freetaxusa Losses. Freetaxusa Grantor trust. Freetaxusa Nonemployee compensation. Freetaxusa Corporate director. Freetaxusa Personal representatives. Freetaxusa Manager of trade or business for bankruptcy estate. Freetaxusa Notary public. Freetaxusa Election precinct official. Freetaxusa Difficulty-of-care payments. Freetaxusa Maintaining space in home. Freetaxusa Reporting taxable payments. Freetaxusa Lotteries and raffles. Freetaxusa Form W-2G. Freetaxusa Reporting winnings and recordkeeping. Freetaxusa Inherited pension or IRA. Freetaxusa Employee awards or bonuses. Freetaxusa Pulitzer, Nobel, and similar prizes. Freetaxusa Payment for services. Freetaxusa VA payments. Freetaxusa Prizes. Freetaxusa Strike and lockout benefits. Freetaxusa Prev Up Next Home More Online Publications
Freetaxusa 15. Freetaxusa 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. Freetaxusa . Freetaxusa For tax years beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Freetaxusa NIIT is a 3. Freetaxusa 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income (MAGI) over the threshold amount. Freetaxusa NIIT may need to be included when calculating your estimated tax. Freetaxusa For more information, see Publication 505,Tax Withholding and Estimated Tax. Freetaxusa Additional Medicare Tax. Freetaxusa For tax years beginning in 2013, a 0. Freetaxusa 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. Freetaxusa You may need to include this amount when figuring your estimated tax. Freetaxusa For more information, see Publication 505. Freetaxusa Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Freetaxusa See Publication 505 for the general rules and requirements for paying estimated tax. Freetaxusa If you are a qualified farmer, defined below, you are subject to the special rules covered in this chapter for paying estimated tax. Freetaxusa 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. Freetaxusa S. Freetaxusa 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. Freetaxusa Special Estimated Tax Rules for Qualified Farmers Special rules apply to the payment of estimated tax by individuals who are qualified farmers. Freetaxusa If you are not a qualified farmer as defined next, see Publication 505 for the estimated tax rules that apply. Freetaxusa 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. Freetaxusa 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. Freetaxusa See also Percentage From Farming , later, for information on how to determine the percentage of your gross income from farming. Freetaxusa 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. Freetaxusa On a joint return, you must add your spouse's gross income to your gross income. Freetaxusa 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. Freetaxusa Wages, salaries, tips, etc. Freetaxusa Taxable interest. Freetaxusa Ordinary dividends. Freetaxusa Taxable refunds, credits, or offsets of state and local income taxes. Freetaxusa Alimony. Freetaxusa Gross business income from Schedule C (Form 1040). Freetaxusa Gross business receipts from Schedule C-EZ (Form 1040). Freetaxusa Capital gains from Schedule D (Form 1040). Freetaxusa Losses are not netted against gains. Freetaxusa Gains on sales of business property. Freetaxusa Taxable IRA distributions, pensions, annuities, and social security benefits. Freetaxusa Gross rental income from Schedule E (Form 1040). Freetaxusa Gross royalty income from Schedule E (Form 1040). Freetaxusa Taxable net income from an estate or trust reported on Schedule E (Form 1040). Freetaxusa Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040). Freetaxusa Gross farm rental income from Form 4835. Freetaxusa Gross farm income from Schedule F (Form 1040). Freetaxusa Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065). Freetaxusa Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120S). Freetaxusa Unemployment compensation. Freetaxusa Other income not included with any of the items listed above. Freetaxusa Gross Income From Farming Gross income from farming is income from cultivating the soil or raising agricultural commodities. Freetaxusa It includes the following amounts. Freetaxusa Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Freetaxusa Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Freetaxusa Crop shares for the use of your land. Freetaxusa Gains from sales of draft, breeding, dairy, or sporting livestock. Freetaxusa Gross income from farming is the total of the following amounts from your tax return. Freetaxusa Gross farm income from Schedule F (Form 1040). Freetaxusa Gross farm rental income from Form 4835. Freetaxusa Gross farm income from Schedule E (Form 1040), Parts II and III. Freetaxusa Gains from the sale of livestock used for draft, breeding, sport, or dairy purposes reported on Form 4797. Freetaxusa For more information about income from farming, see chapter 3. Freetaxusa Farm income does not include any of the following: Wages you receive as a farm employee. Freetaxusa Income you receive from contract grain harvesting and hauling with workers and machines you furnish. Freetaxusa Gains you receive from the sale of farm land and depreciable farm equipment. Freetaxusa Percentage From Farming Figure your gross income from all sources, discussed earlier. Freetaxusa Then figure your gross income from farming, discussed earlier. Freetaxusa Divide your farm gross income by your total gross income to determine the percentage of gross income from farming. Freetaxusa Example 1. Freetaxusa Jane Smith had the following total gross income and farm gross income amounts in 2013. Freetaxusa 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). Freetaxusa However, that loss is not netted against the gain to figure Ms. Freetaxusa Smith's total gross income or her gross farm income. Freetaxusa Her gross farm income is 64% of her total gross income ($80,000 ÷ $125,000 = 0. Freetaxusa 64). Freetaxusa Special Rules for Qualified Farmers The following special estimated tax rules apply if you are a qualified farmer for 2013. Freetaxusa 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. Freetaxusa 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% (. Freetaxusa 6667) of the total tax shown on your 2013 tax return or 100% of the total tax shown on your 2012 return. Freetaxusa 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. Freetaxusa See Required Annual Payment , next, for details. Freetaxusa Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers. Freetaxusa Example 2. Freetaxusa Assume the same fact as in Example 1. Freetaxusa Ms. Freetaxusa Smith's gross farm income is only 64% of her total income. Freetaxusa Therefore, based on her 2013 income, she does not qualify to use the special estimated tax rules for qualified farmers. Freetaxusa However, she does qualify if at least two-thirds of her 2012 gross income was from farming. Freetaxusa Example 3. Freetaxusa Assume the same facts as in Example 1 except that Ms. Freetaxusa Smith's farm income from Schedule F was $90,000 instead of $75,000. Freetaxusa 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). Freetaxusa She qualifies to use the special estimated tax rules for qualified farmers, since 67. Freetaxusa 9% (at least two-thirds) of her gross income is from farming ($95,000 ÷ $140,000 = . Freetaxusa 679). Freetaxusa 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. Freetaxusa Apply the following special rules for qualified farmers to the worksheet. Freetaxusa On line 14a, multiply line 13c by 662/3% (. Freetaxusa 6667). Freetaxusa On line 14b, enter 100% of the tax shown on your 2012 tax return regardless of the amount of your adjusted gross income. Freetaxusa 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. Freetaxusa For more information, see chapter 4 of Publication 505. Freetaxusa 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. Freetaxusa Use Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to determine if you owe a penalty. Freetaxusa See the instructions for Form 2210-F. Freetaxusa Figure 15-1. Freetaxusa Estimated Tax for Farmers Please click here for the text description of the image. Freetaxusa Figure 2–A If you receive a penalty notice, do not ignore it, even if you think it is in error. Freetaxusa 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. Freetaxusa 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. Freetaxusa Include a computation similar to the one in Example 1 (earlier), showing that you met the gross income from farming requirement. Freetaxusa Prev Up Next Home More Online Publications