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H&r Block Tax Software

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H&r Block Tax Software

H&r block tax software Publication 597 - Main Content Table of Contents Application of Treaty Personal Services Pensions, Annuities, Social Security, and AlimonyRoth IRAs. H&r block tax software Tax-deferred plans. H&r block tax software Investment Income From Canadian Sources Other Income Charitable ContributionsQualified charities. H&r block tax software Income Tax Credits Competent Authority Assistance How To Get Tax HelpText of Treaty U. H&r block tax software S. H&r block tax software Taxation Canadian Taxation Application of Treaty The benefits of the income tax treaty are generally provided on the basis of residence for income tax purposes. H&r block tax software That is, a person who is recognized as a resident of the United States who has income from Canada, will often pay less income tax to Canada on that income than if no treaty was in effect. H&r block tax software Article IV provides definitions of residents of Canada and the United States, and provides specific criteria for applying the treaty in cases where a taxpayer is considered by both countries to be a resident. H&r block tax software Saving clause. H&r block tax software   In most instances, a treaty does not affect the right of a country to tax its own residents (including those who are U. H&r block tax software S. H&r block tax software citizens) or of the United States to tax its residents or citizens (including U. H&r block tax software S. H&r block tax software citizens who are residents of the foreign country). H&r block tax software This provision is known as the “saving clause. H&r block tax software ”   For example, an individual who is a U. H&r block tax software S. H&r block tax software citizen and a resident of Canada may have dividend income from a U. H&r block tax software S. H&r block tax software corporation. H&r block tax software The treaty provides a maximum rate of 15% on dividends received by a resident of Canada from sources in the United States. H&r block tax software Even though a resident of Canada, the individual is a U. H&r block tax software S. H&r block tax software citizen and the saving clause overrides the treaty article that limits the U. H&r block tax software S. H&r block tax software tax to 15%. H&r block tax software    Exceptions to the saving clause can be found in Article XXIX, paragraph 3. H&r block tax software Treaty-based position. H&r block tax software   If you take the position that any U. H&r block tax software S. H&r block tax software tax is overruled or otherwise reduced by a U. H&r block tax software S. H&r block tax software treaty (a treaty-based position), you generally must disclose that position on Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), and attach it to your return. H&r block tax software Personal Services A U. H&r block tax software S. H&r block tax software citizen or resident who is temporarily present in Canada during the tax year is exempt from Canadian income taxes on pay for services performed, or remittances received from the United States, if the citizen or resident qualifies under one of the treaty exemption provisions set out below. H&r block tax software Income from employment (Article XV). H&r block tax software   Income U. H&r block tax software S. H&r block tax software residents receive for the performance of dependent personal services in Canada (except as public entertainers) is exempt from Canadian tax if it is not more than $10,000 in Canadian currency for the year. H&r block tax software If it is more than $10,000 for the year, it is exempt only if: The residents are present in Canada for no more than 183 days in any 12-month period beginning or ending in the year concerned, and The income is not paid by, or on behalf of, a Canadian resident and is not borne by a permanent establishment in Canada. H&r block tax software    Whether there is a permanent establishment in Canada is determined by the rules set forth in Article V. H&r block tax software Example. H&r block tax software You are a U. H&r block tax software S. H&r block tax software resident employed under an 8-month contract with a Canadian firm to install equipment in their Montreal plant. H&r block tax software During the calendar year you were physically present in Canada for 179 days and were paid $16,500 (Canadian) for your services. H&r block tax software Although you were in Canada for not more than 183 days during the year, your income is not exempt from Canadian income tax because it was paid by a Canadian resident and was more than $10,000 (Canadian) for the year. H&r block tax software Pay received by a U. H&r block tax software S. H&r block tax software resident for work regularly done in more than one country as an employee on a ship, aircraft, motor vehicle, or train operated by a U. H&r block tax software S. H&r block tax software resident is exempt from Canadian tax. H&r block tax software Income from self-employment (Article VII). H&r block tax software   Income from services performed (other than those performed as an employee) are taxed in Canada if they are attributable to a permanent establishment in Canada. H&r block tax software This income is treated as business profits, and deductions similar to those allowed under U. H&r block tax software S. H&r block tax software law are allowable. H&r block tax software   If you carry on (or have carried on) business in both Canada and the United States, the business profits are attributable to each country based on the profits that the permanent establishment might be expected to make if it were a distinct and separate person engaged in the same or similar activities. H&r block tax software The business profits attributable to the permanent establishment include only those profits derived from assets used, risks assumed, and activities performed by the permanent establishment. H&r block tax software   You may be considered to have a permanent establishment if you meet certain conditions. H&r block tax software For more information, see Article V (Permanent Establishment) and Article VII (Business Profits). H&r block tax software Public entertainers (Article XVI). H&r block tax software   The provisions under income from employment or income from self-employment do not apply to public entertainers (such as theater, motion picture, radio, or television artistes, musicians, or athletes) from the United States who receive more than $15,000 in gross receipts in Canadian currency, including reimbursed expenses, from their entertainment activities in Canada during the calendar year. H&r block tax software However, this provision for public entertainers does not apply (and the other provisions will apply) to athletes participating in team sports in leagues with regularly scheduled games in both the United States and Canada. H&r block tax software Compensation paid by the U. H&r block tax software S. H&r block tax software Government (Article XIX). H&r block tax software   Wages, salaries, and similar income (other than pensions) paid to a U. H&r block tax software S. H&r block tax software citizen by the United States or any of its agencies, instrumentalities, or political subdivisions for discharging governmental functions are exempt from Canadian income tax. H&r block tax software   The exemption does not apply to pay for services performed in connection with any trade or business carried on for profit by the United States, or any of its agencies, instrumentalities, or political subdivisions. H&r block tax software Students and apprentices (Article XX). H&r block tax software   A full-time student, apprentice, or business trainee who is in Canada to study or acquire business experience is exempt from Canadian income tax on remittances received from any source outside Canada for maintenance, education, or training. H&r block tax software The recipient must be or must have been a U. H&r block tax software S. H&r block tax software resident immediately before visiting Canada. H&r block tax software   An apprentice or business trainee can claim this exemption only for a period of one year from the date the individual first arrived in Canada for the purpose of training. H&r block tax software Pensions, Annuities, Social Security, and Alimony Under Article XVIII, pensions and annuities from Canadian sources paid to U. H&r block tax software S. H&r block tax software residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). H&r block tax software Canadian pensions and annuities paid to U. H&r block tax software S. H&r block tax software residents may be taxed by the United States, but the amount of any pension included in income for U. H&r block tax software S. H&r block tax software tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident. H&r block tax software Pensions. H&r block tax software   A pension includes any payment under a pension or other retirement arrangement, Armed Forces retirement pay, war veterans pensions and allowances, and payments under a sickness, accident, or disability plan. H&r block tax software It includes pensions paid by private employers and the government for services rendered. H&r block tax software   Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada. H&r block tax software   Pensions do not include social security benefits. H&r block tax software Roth IRAs. H&r block tax software   A distribution from a Roth IRA is exempt from Canadian tax to the extent it would be exempt from U. H&r block tax software S. H&r block tax software tax if paid to a U. H&r block tax software S. H&r block tax software resident. H&r block tax software In addition, you may elect to defer any tax in Canada on income accrued within the Roth IRA but not distributed by the Roth IRA. H&r block tax software However, you cannot defer tax on any accruals due to contributions made after you become a Canadian resident. H&r block tax software Tax-deferred plans. H&r block tax software   Generally, income that accrues in a Canadian RRSP or RRIF is subject to U. H&r block tax software S. H&r block tax software tax, even if it is not distributed. H&r block tax software However, a U. H&r block tax software S. H&r block tax software citizen or resident can elect to defer U. H&r block tax software S. H&r block tax software tax on income from the plan until the income is distributed. H&r block tax software Form 8891 is used to make the election. H&r block tax software Annuities. H&r block tax software    An annuity is a stated sum payable periodically at stated times, during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). H&r block tax software Annuities do not include: Non-periodic payments, or An annuity the cost of which was deductible for tax purposes. H&r block tax software Special rules. H&r block tax software    Special rules apply to pensions and annuities with respect to: Short-term assignments, Cross-border commuters, and Individuals who participate in a Canadian qualifying plan. H&r block tax software Generally, distributions in such cases are deemed to be earned in the country in which the plan is established, without regard to where the services were rendered. H&r block tax software Social security benefits. H&r block tax software   U. H&r block tax software S. H&r block tax software social security benefits paid to a resident of Canada are taxed in Canada as if they were benefits under the Canada Pension Plan, except that 15% of the amount of the benefit is exempt from Canadian tax. H&r block tax software Alimony. H&r block tax software   Alimony and similar amounts (including child support payments) from Canadian sources paid to U. H&r block tax software S. H&r block tax software residents are exempt from Canadian tax. H&r block tax software For purposes of U. H&r block tax software S. H&r block tax software tax, these amounts are excluded from income to the same extent they would be excluded from income in Canada if the recipient was a Canadian resident. H&r block tax software Investment Income From Canadian Sources The treaty provides beneficial treatment for certain items of Canadian source income that result from an investment of capital. H&r block tax software Dividends (Article X). H&r block tax software   For Canadian source dividends received by U. H&r block tax software S. H&r block tax software residents, the Canadian income tax generally may not be more than 15%. H&r block tax software   A 5% rate applies to intercorporate dividends paid from a subsidiary to a parent corporation owning at least 10% of the subsidiary's voting stock. H&r block tax software However, a 10% rate applies if the payer of the dividend is a nonresident-owned Canadian investment corporation. H&r block tax software   These rates do not apply if the owner of the dividends carries on, or has carried on, a business in Canada through a permanent establishment and the holding on which the income is paid is effectively connected with that permanent establishment. H&r block tax software Interest (Article XI). H&r block tax software   Generally, Canadian source interest received by U. H&r block tax software S. H&r block tax software residents is exempt from Canadian income tax. H&r block tax software   The exemption does not apply if the owner of the interest carries on, or has carried on, a business in Canada through a permanent establishment and the debt on which the income is paid is effectively connected with that permanent establishment. H&r block tax software Gains from the sale of property (Article XIII). H&r block tax software   Generally, gains from the sale of personal property by a U. H&r block tax software S. H&r block tax software resident having no permanent establishment in Canada are exempt from Canadian income tax. H&r block tax software However, the exemption from Canadian tax does not apply to gains realized by U. H&r block tax software S. H&r block tax software residents on Canadian real property, and on personal property belonging to a permanent establishment in Canada. H&r block tax software   If the property subject to Canadian tax is a capital asset and was owned by the U. H&r block tax software S. H&r block tax software resident on September 26, 1980, not as part of the business property of a permanent establishment in Canada, generally the taxable gain is limited to the appreciation after 1984. H&r block tax software Royalties (Article XII). H&r block tax software   The following are exempt from Canadian tax: Copyright royalties and other like payments for the production or reproduction of any literary, dramatic, musical, or artistic work (other than payments for motion pictures and works on film, videotape, or other means of reproduction for use in connection with television, which may be taxed at 10%), Payments for the use of, or the right to use, computer software, Payments for the use of, or the right to use, any patent or any information concerning industrial, commercial, or scientific experience (but not within a rental or franchise agreement), and Payments for broadcasting as agreed to in an exchange of notes between the countries. H&r block tax software   This rate or exemption does not apply if the owner of the royalties carries on, or has carried on, a business in Canada through a permanent establishment and the right or property on which the income is paid is effectively connected with that permanent establishment. H&r block tax software   This exemption (or lower rate) does not apply to royalties to explore for or to exploit mineral deposits, timber, and other natural resources. H&r block tax software Other Income Generally, Canadian source income that is not specifically mentioned in the treaty, may be taxed by Canada. H&r block tax software Gambling losses. H&r block tax software   Canadian residents may deduct gambling losses in the U. H&r block tax software S. H&r block tax software against gambling winnings in the U. H&r block tax software S. H&r block tax software in the same manner as a U. H&r block tax software S. H&r block tax software resident. H&r block tax software Charitable Contributions United States income tax return. H&r block tax software   Under Article XXI, you may deduct contributions to certain qualified Canadian charitable organizations on your United States income tax return. H&r block tax software Besides being subject to the overall limits applicable to all your charitable contributions under U. H&r block tax software S. H&r block tax software tax law, your charitable contributions to Canadian organizations (other than contributions to a college or university at which you or a member of your family is or was enrolled) are subject to the U. H&r block tax software S. H&r block tax software percentage limits on charitable contributions, applied to your Canadian source income. H&r block tax software If your return does not include gross income from Canadian sources, charitable contributions to Canadian organizations are generally not deductible. H&r block tax software Example. H&r block tax software You are a U. H&r block tax software S. H&r block tax software citizen living in Canada. H&r block tax software You have both U. H&r block tax software S. H&r block tax software and Canadian source income. H&r block tax software During your tax year, you contribute to Canadian organizations that would qualify as charitable organizations under U. H&r block tax software S. H&r block tax software tax law if they were U. H&r block tax software S. H&r block tax software organizations. H&r block tax software To figure the maximum amount of the contribution to Canadian organizations that you can deduct on your U. H&r block tax software S. H&r block tax software income tax return, multiply your adjusted gross income from Canadian sources by the percentage limit that applies to contributions under U. H&r block tax software S. H&r block tax software income tax law. H&r block tax software Then include this amount on your return along with all your domestic charitable contributions, subject to the appropriate percentage limit required for contributions under U. H&r block tax software S. H&r block tax software income tax law. H&r block tax software The appropriate percentage limit for U. H&r block tax software S. H&r block tax software tax purposes is applied to your total adjusted gross income from all sources. H&r block tax software Qualified charities. H&r block tax software   These Canadian organizations must meet the qualifications that a U. H&r block tax software S. H&r block tax software charitable organization must meet under U. H&r block tax software S. H&r block tax software tax law. H&r block tax software Usually an organization will notify you if it qualifies. H&r block tax software For further information on charitable contributions and the U. H&r block tax software S. H&r block tax software percentage limits, see Publication 526, Charitable Contributions. H&r block tax software Canadian income tax return. H&r block tax software   Under certain conditions, contributions to qualified U. H&r block tax software S. H&r block tax software charitable organizations may also be claimed on your Canadian income tax return if you are a Canadian resident. H&r block tax software Income Tax Credits The treaty contains a credit provision (Article XXIV) for the elimination of double taxation. H&r block tax software In general, the United States and Canada both allow a credit against their income tax for the income tax paid to the other country on income from sources in that other country. H&r block tax software For detailed discussions of the U. H&r block tax software S. H&r block tax software income tax treatment of tax paid to foreign countries, see Publication 514, Foreign Tax Credit for Individuals. H&r block tax software See paragraphs (4) and (5) of Article XXIV for certain provisions that affect the computation of the credit allowed by the United States for Canadian income taxes paid by U. H&r block tax software S. H&r block tax software citizens residing in Canada. H&r block tax software Competent Authority Assistance Under Article XXVI, a U. H&r block tax software S. H&r block tax software citizen or resident may request assistance from the U. H&r block tax software S. H&r block tax software competent authority when the actions of Canada, the United States, or both, potentially result in double taxation or taxation contrary to the treaty. H&r block tax software The U. H&r block tax software S. H&r block tax software competent authority may then consult with the Canadian competent authority to determine if the double taxation or denial of treaty benefits in question can be avoided. H&r block tax software If the competent authorities are not able to reach agreement in a case, binding arbitration proceedings may apply. H&r block tax software It is important that your request for competent authority assistance be made as soon as you have been notified by either Canada or the United States of proposed adjustments that would result in denial of treaty benefits or in double taxation. H&r block tax software This is so that implementation of any agreement reached by the competent authorities is not barred by administrative, legal, or procedural barriers. H&r block tax software For information that you should include with your request for competent authority assistance, see Revenue Procedure 2006-54, 2006-49 IRB 1035, available at www. H&r block tax software irs. H&r block tax software gov/irb/2006-49_IRB/ar13. H&r block tax software html. H&r block tax software The request should be addressed to:  Deputy Commissioner (International) Large Business and International Division Attn: Office of Tax Treaty  Internal Revenue Service 1111 Constitution Ave. H&r block tax software , NW Routing: MA3-322A Washington, D. H&r block tax software C. H&r block tax software 20024 In addition to a timely request for assistance, you should take the following measures: File a timely protective claim for credit or refund of U. H&r block tax software S. H&r block tax software taxes on Form 1040X, Form 1120X, or amended Form 1041, whichever is appropriate. H&r block tax software This will, among other things, give you the benefit of a foreign tax credit in case you do not qualify for the treaty benefit in question. H&r block tax software For figuring this credit, attach either Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), or Form 1118, Foreign Tax Credit — Corporations, as appropriate. H&r block tax software Attach your protective claim to your request for competent authority assistance. H&r block tax software Take appropriate action under Canadian procedures to avoid the lapse or termination of your right of appeal under Canadian income tax law. H&r block tax software How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS and the Canada Revenue Agency in several ways. H&r block tax software Text of Treaty You can get the text of the U. H&r block tax software S. H&r block tax software —Canada income tax treaty from: Superintendent of Documents U. H&r block tax software S. H&r block tax software Government Printing Office P. H&r block tax software O. H&r block tax software Box 371954 Pittsburgh, PA 15250-7954 The treaty can also be found on the Internet at IRS. H&r block tax software gov. H&r block tax software U. H&r block tax software S. H&r block tax software Taxation During the filing season, the IRS conducts a taxpayer assistance program in Canada. H&r block tax software To find out if IRS personnel will be in your area, you should contact the consular office at the nearest U. H&r block tax software S. H&r block tax software Embassy or consulate. H&r block tax software Mail. H&r block tax software For answers to technical or account questions, you can write to:   Internal Revenue Service International Section Philadelphia, PA 19255-0525 Phone. H&r block tax software You can call the IRS for help at (267) 941-1000 (not a toll-free call). H&r block tax software Canadian Taxation You can get information on Canadian taxation from the Canada Revenue Agency. H&r block tax software The International Tax Services Office can be contacted on 1-800-267-5177 (from anywhere in Canada and the U. H&r block tax software S. H&r block tax software ) or on the Internet at www. H&r block tax software cra-arc. 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The H&r Block Tax Software

H&r block tax software 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. H&r block tax software Gross monthly rate. H&r block tax software Your cost. H&r block tax software Choosing a survivor annuity after retirement. H&r block tax software Canceling a survivor annuity after retirement. H&r block tax software Annuity starting date after 1986. H&r block tax software Annuity starting date before 1987. H&r block tax software 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. H&r block tax software 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. H&r block tax software The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. H&r block tax software If the refund includes only your contributions, none of the refund is taxable. H&r block tax software 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). H&r block tax software 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. H&r block tax software See Rollover Rules in Part II for information on how to make a rollover. H&r block tax software 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. H&r block tax software Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. H&r block tax software 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. H&r block tax software 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. H&r block tax software For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. H&r block tax software 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. H&r block tax software 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. H&r block tax software OPM will tell you how to make the choice. H&r block tax software The choice for no withholding remains in effect until you change it. H&r block tax software These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. H&r block tax software Form CSA 1099R. H&r block tax software   Form CSA 1099R is mailed to you by OPM each year. H&r block tax software It will show any tax you had withheld. H&r block tax software File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. H&r block tax software    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. H&r block tax software servicesonline. H&r block tax software opm. H&r block tax software gov. H&r block tax software To log in, you will need your retirement CSA claim number and your personal identification number. H&r block tax software Choosing no withholding on payments outside the United States. H&r block tax software   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. H&r block tax software   To choose no withholding if you are a U. H&r block tax software S. H&r block tax software citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. H&r block tax software Otherwise, OPM has to withhold tax. H&r block tax software For example, OPM must withhold if you provide a U. H&r block tax software S. H&r block tax software 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. H&r block tax software S. H&r block tax software home address. H&r block tax software   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. H&r block tax software S. H&r block tax software citizen, a U. H&r block tax software S. H&r block tax software resident alien, or someone who left the United States to avoid tax. H&r block tax software But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. H&r block tax software For details, see Publication 519, U. H&r block tax software S. H&r block tax software Tax Guide for Aliens. H&r block tax software Withholding certificate. H&r block tax software   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. H&r block tax software The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. H&r block tax software If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. H&r block tax software 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. H&r block tax software C. H&r block tax software calling area must call 202-606-0500). H&r block tax software No special form is needed. H&r block tax software You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. H&r block tax software If you have TTY/TDD equipment, call 1-855–887–4957. H&r block tax software If you need a PIN, call OPM's Retirement Information Office. H&r block tax software You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. H&r block tax software servicesonline. H&r block tax software opm. H&r block tax software gov. H&r block tax software You will need your retirement CSA or CSF claim number and your PIN. H&r block tax software Withholding from certain lump-sum payments. H&r block tax software   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. H&r block tax software Tax will be withheld at a 20% rate on the interest distributed. H&r block tax software However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. H&r block tax software If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. H&r block tax software Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. H&r block tax software See Rollover Rules in Part II. H&r block tax software If you receive only your contributions, no tax will be withheld. H&r block tax software Withholding from Thrift Savings Plan payments. H&r block tax software   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. H&r block tax software 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. H&r block tax software  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. H&r block tax software 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. H&r block tax software   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. H&r block tax software The above document is also available in the “Forms & Publications” section of the TSP website at www. H&r block tax software tsp. H&r block tax software gov. H&r block tax software Estimated tax. H&r block tax software   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)). H&r block tax software The return must cover all 12 months. H&r block tax software   You do not have to pay estimated tax for 2014 if you were a U. H&r block tax software S. H&r block tax software citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. H&r block tax software   Publication 505 contains information that you can use to help you figure your estimated tax payments. H&r block tax software 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. H&r block tax software The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. H&r block tax software Children. H&r block tax software   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. H&r block tax software   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. H&r block tax software Form CSF 1099R. H&r block tax software   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. H&r block tax software It will show the total amount of the annuity you received in the past year. H&r block tax software It also should show, separately, the survivor annuity for a child or children. H&r block tax software Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. H&r block tax software   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. H&r block tax software    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. H&r block tax software servicesonline. H&r block tax software opm. H&r block tax software gov. H&r block tax software To log in you will need your retirement CSF claim number and personal identification number. H&r block tax software    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. H&r block tax software C. H&r block tax software calling area must call 202-606-0500). H&r block tax software You will need your CSF claim number and your social security number when you call. H&r block tax software Taxable part of annuity. H&r block tax software   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. H&r block tax software 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. H&r block tax software Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. H&r block tax software 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. H&r block tax software 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. H&r block tax software Annuity statement. H&r block tax software   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). H&r block tax software You will use this information to figure the tax-free recovery of your cost. H&r block tax software Annuity starting date. H&r block tax software   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. H&r block tax software 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. H&r block tax software Gross monthly rate. H&r block tax software   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. H&r block tax software Your cost. H&r block tax software   Your monthly annuity payment contains an amount on which you have previously paid income tax. H&r block tax software This amount represents part of your contributions to the retirement plan. H&r block tax software 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. H&r block tax software   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. H&r block tax software If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. H&r block tax software (See Lump-sum credit under Alternative Annuity Option, later. H&r block tax software )   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. H&r block tax software You cannot claim an interest deduction for any interest payments. H&r block tax software You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. H&r block tax software Recovering your cost tax free. H&r block tax software   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. H&r block tax software 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. H&r block tax software 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). H&r block tax software If your annuity starting date is after November 18, 1996, you must use the Simplified Method. H&r block tax software   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). H&r block tax software The tax-free part is a fixed dollar amount. H&r block tax software It remains the same, even if your annuity is increased. H&r block tax software Generally, this rule applies as long as you receive your annuity. H&r block tax software However, see Exclusion limit , later. H&r block tax software Choosing a survivor annuity after retirement. H&r block tax software    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. H&r block tax software   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. H&r block tax software To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. H&r block tax software Figure the expected return as of the date the reduced annuity begins. H&r block tax software For details on the General Rule, see Publication 939. H&r block tax software Canceling a survivor annuity after retirement. H&r block tax software   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. H&r block tax software The increased annuity does not change the cost recovery you figured at the annuity starting date. H&r block tax software The tax-free part of each annuity payment remains the same. H&r block tax software    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. H&r block tax software C. H&r block tax software calling area must call 202-606-0500). H&r block tax software Exclusion limit. H&r block tax software   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. H&r block tax software Annuity starting date after 1986. H&r block tax software   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. H&r block tax software Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. H&r block tax software Example. H&r block tax software Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. H&r block tax software If your cost is $12,000, the exclusion ends after 10 years (120 months). H&r block tax software Thereafter, your entire annuity is generally fully taxable. H&r block tax software Annuity starting date before 1987. H&r block tax software   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. H&r block tax software If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. H&r block tax software The total exclusion may be more than your cost. H&r block tax software Deduction of unrecovered cost. H&r block tax software   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. H&r block tax software 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). H&r block tax software If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. H&r block tax software 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. H&r block tax software (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. H&r block tax software ) 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. H&r block tax software The Simplified Method does not apply if your annuity starting date is before July 2, 1986. H&r block tax software 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. H&r block tax software This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. H&r block tax software 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. H&r block tax software Worksheet A. H&r block tax software   Use Worksheet A. H&r block tax software Simplified Method (near the end of this publication), to figure your taxable annuity. H&r block tax software Be sure to keep the completed worksheet. H&r block tax software It will help you figure your taxable amounts for later years. H&r block tax software 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. H&r block tax software However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. H&r block tax software Line 2. H&r block tax software   See Your cost , earlier, for an explanation of your cost in the plan. H&r block tax software 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. H&r block tax software Line 3. H&r block tax software   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. H&r block tax software 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. H&r block tax software If your annuity starting date is before 1998, use Table 1. H&r block tax software Line 6. H&r block tax software   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. H&r block tax software 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. H&r block tax software Example. H&r block tax software Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. H&r block tax software 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. H&r block tax software He must use the Simplified Method to figure the tax-free part of his annuity benefits. H&r block tax software Bill's monthly annuity benefit is $1,000. H&r block tax software He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. H&r block tax software At his annuity starting date, he was 65 and Kathy was 57. H&r block tax software Bill's completed Worksheet A is shown later. H&r block tax software 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). H&r block tax software Bill keeps a copy of the completed worksheet for his records. H&r block tax software It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. H&r block tax software Bill's tax-free monthly amount is $100. H&r block tax software (See line 4 of the worksheet. H&r block tax software ) 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software Figuring this percentage is complex and requires the use of actuarial tables. H&r block tax software For these tables and other information about using the General Rule, see Publication 939. H&r block tax software 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. H&r block tax software Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. H&r block tax software After your cost was recovered, all payments became fully taxable. H&r block tax software You cannot use another rule to again exclude amounts from income. H&r block tax software The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. H&r block tax software Worksheet A. H&r block tax software Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. H&r block tax software 1. H&r block tax software Enter the total pension or annuity payments received this year. H&r block tax software Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. H&r block tax software $ 8,000 2. H&r block tax software Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. H&r block tax software See Your cost in Part II, Rules for Retirees, earlier 2. H&r block tax software 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). H&r block tax software Otherwise, go to line 3. H&r block tax software   3. H&r block tax software Enter the appropriate number from Table 1 below. H&r block tax software 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. H&r block tax software 3. H&r block tax software 310 4. H&r block tax software Divide line 2 by the number on line 3 4. H&r block tax software 100 5. H&r block tax software Multiply line 4 by the number of months for which this year's payments were made. H&r block tax software If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. H&r block tax software Otherwise, go to line 6 5. H&r block tax software 800 6. H&r block tax software Enter any amounts previously recovered tax free in years after 1986. H&r block tax software This is the amount shown on line 10 of your worksheet for last year 6. H&r block tax software 0 7. H&r block tax software Subtract line 6 from line 2 7. H&r block tax software 31,000 8. H&r block tax software Enter the smaller of line 5 or line 7 8. H&r block tax software 800 9. H&r block tax software Taxable amount for year. H&r block tax software Subtract line 8 from line 1. H&r block tax software Enter the result, but not less than zero. H&r block tax software Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. H&r block tax software If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. H&r block tax software If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. H&r block tax software 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. H&r block tax software $7,200 10. H&r block tax software Was your annuity starting date before 1987?   Yes. H&r block tax software Do not complete the rest of this worksheet. H&r block tax software    No. H&r block tax software Add lines 6 and 8. H&r block tax software This is the amount you have recovered tax free through 2013. H&r block tax software You will need this number if you need to fill out this worksheet next year 10. H&r block tax software 800 11. H&r block tax software Balance of cost to be recovered. H&r block tax software Subtract line 10 from line 2. H&r block tax software If zero, you will not have to complete this worksheet next year. H&r block tax software The payments you receive next year will generally be fully taxable 11. H&r block tax software $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. H&r block tax software Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. H&r block tax software If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. H&r block tax software You are eligible to make this choice if you meet all of the following requirements. H&r block tax software You are retiring, but not on disability. H&r block tax software You have a life-threatening illness or other critical medical condition. H&r block tax software You do not have a former spouse entitled to court ordered benefits based on your service. H&r block tax software 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. H&r block tax software Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. H&r block tax software The tax-free part represents part of your cost. H&r block tax software The taxable part represents part of the earnings on your annuity contract. H&r block tax software 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. H&r block tax software Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. H&r block tax software Your taxable amount may therefore be more than the lump-sum payment you receive. H&r block tax software 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. H&r block tax software 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. H&r block tax software See Rollover Rules , later, for information on how to make a rollover. H&r block tax software OPM can make a direct rollover only up to the amount of the lump-sum payment. H&r block tax software Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. H&r block tax software 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. H&r block tax software 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. H&r block tax software For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. H&r block tax software Worksheet B. H&r block tax software   Use Worksheet B. H&r block tax software Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. H&r block tax software Be sure to keep the completed worksheet for your records. H&r block tax software   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. H&r block tax software Lump-sum credit. H&r block tax software   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). H&r block tax software 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. H&r block tax software Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. H&r block tax software Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. H&r block tax software 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. H&r block tax software Present value of your annuity contract. H&r block tax software   The present value of your annuity contract is figured using actuarial tables provided by the IRS. H&r block tax software 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. H&r block tax software Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. H&r block tax software , NW Washington, DC 20224-0002 Example. H&r block tax software David Brown retired from the federal government in 2013, one month after his 55th birthday. H&r block tax software 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. H&r block tax software The present value of his annuity contract was $155,000. H&r block tax software The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. H&r block tax software 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. H&r block tax software See Reduced Annuity , later. H&r block tax software Worksheet B. H&r block tax software Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . H&r block tax software  1. H&r block tax software Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. H&r block tax software $ 31,000 2. H&r block tax software Enter the present value of your annuity contract 2. H&r block tax software 155,000 3. H&r block tax software Divide line 1 by line 2 3. H&r block tax software . H&r block tax software 20 4. H&r block tax software Tax-free amount. H&r block tax software Multiply line 1 by line 3. H&r block tax software (Caution: Do not include this amount on line 6 of Worksheet A in this publication. H&r block tax software ) 4. H&r block tax software $6,200 5. H&r block tax software Taxable amount (net cost in the plan). H&r block tax software Subtract line 4 from line 1. H&r block tax software Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. H&r block tax software Also, enter this amount on line 2 of Worksheet A in this publication. H&r block tax software 5. H&r block tax software $24,800   Lump-sum payment in installments. H&r block tax software   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. H&r block tax software You will receive the first installment after you make the choice upon retirement. H&r block tax software The second installment will be paid to you, with interest, in the next calendar year. H&r block tax software (Exceptions to the installment rule are provided for cases of critical medical need. H&r block tax software )   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. H&r block tax software If the payment has a tax-free part, you must treat the taxable part as received first. H&r block tax software How to report. H&r block tax software   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. H&r block tax software 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. H&r block tax software    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. H&r block tax software 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. H&r block tax software These annuity payments each will have a tax-free and a taxable part. H&r block tax software To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). H&r block tax software For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. H&r block tax software 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. H&r block tax software Enter as your net cost on line 2 the amount from Worksheet B, line 5. H&r block tax software 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. H&r block tax software Example. H&r block tax software The facts are the same as in the example for David Brown in the preceding discussion. H&r block tax software In addition, David received 10 annuity payments in 2013 of $1,200 each. H&r block tax software Using Worksheet A, he figures the taxable part of his annuity payments. H&r block tax software He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. H&r block tax software His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). H&r block tax software He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. H&r block tax software David's filled-in Worksheet A is shown on the next page. H&r block tax software Worksheet A. H&r block tax software Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . H&r block tax software 1. H&r block tax software Enter the total pension or annuity payments received this year. H&r block tax software Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. H&r block tax software $ 12,000 2. H&r block tax software Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. H&r block tax software See Your cost in Part II, Rules for Retirees, earlier 2. H&r block tax software 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). H&r block tax software Otherwise, go to line 3. H&r block tax software   3. H&r block tax software Enter the appropriate number from Table 1 below. H&r block tax software 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. H&r block tax software 3. H&r block tax software 360 4. H&r block tax software Divide line 2 by the number on line 3 4. H&r block tax software 68. H&r block tax software 89 5. H&r block tax software Multiply line 4 by the number of months for which this year's payments were made. H&r block tax software If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. H&r block tax software Otherwise, go to line 6 5. H&r block tax software 688. H&r block tax software 90 6. H&r block tax software Enter any amounts previously recovered tax free in years after 1986. H&r block tax software This is the amount shown on line 10 of your worksheet for last year 6. H&r block tax software 0 7. H&r block tax software Subtract line 6 from line 2 7. H&r block tax software 24,800 8. H&r block tax software Enter the smaller of line 5 or line 7 8. H&r block tax software 688. H&r block tax software 90 9. H&r block tax software Taxable amount for year. H&r block tax software Subtract line 8 from line 1. H&r block tax software Enter the result, but not less than zero. H&r block tax software Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. H&r block tax software If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. H&r block tax software If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. H&r block tax software 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. H&r block tax software $11,311. H&r block tax software 10 10. H&r block tax software Was your annuity starting date before 1987?   Yes. H&r block tax software Do not complete the rest of this worksheet. H&r block tax software    No. H&r block tax software Add lines 6 and 8. H&r block tax software This is the amount you have recovered tax free through 2013. H&r block tax software You will need this number if you need to fill out this worksheet next year 10. H&r block tax software 688. H&r block tax software 90 11. H&r block tax software Balance of cost to be recovered. H&r block tax software Subtract line 10 from line 2. H&r block tax software If zero, you will not have to complete this worksheet next year. H&r block tax software The payments you receive next year will generally be fully taxable 11. H&r block tax software $24,111. H&r block tax software 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. H&r block tax software Reemployment after choosing the alternative annuity option. H&r block tax software 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. H&r block tax software 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. H&r block tax software Annuity starting date before November 19, 1996. H&r block tax software   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. H&r block tax software 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. H&r block tax software 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. H&r block tax software 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. H&r block tax software The gift may be taxable for gift tax purposes. H&r block tax software The value of the gift is equal to the value of the annuity. H&r block tax software Joint and survivor annuity. H&r block tax software   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. H&r block tax software This will eliminate any gift tax liability with regard to that gift. H&r block tax software   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. H&r block tax software This may result in a taxable gift. H&r block tax software More information. H&r block tax software   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. H&r block tax software 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. H&r block tax software Annual leave. H&r block tax software   A payment for accrued annual leave received on retirement is a salary payment. H&r block tax software It is taxable as wages in the tax year you receive it. H&r block tax software Voluntary contributions. H&r block tax software   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. H&r block tax software 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. H&r block tax software Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. H&r block tax software See Thrift Savings Plan , later. H&r block tax software Additional annuity benefit. H&r block tax software   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. H&r block tax software This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. H&r block tax software It does not matter that you receive only one monthly check covering both benefits. H&r block tax software 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. H&r block tax software   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. H&r block tax software Refund of voluntary contributions. H&r block tax software   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. H&r block tax software 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. H&r block tax software See Rollover Rules , later. H&r block tax software The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. H&r block tax software 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. H&r block tax software For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. H&r block tax software Community property laws. H&r block tax software   State community property laws apply to your annuity. H&r block tax software These laws will affect your income tax only if you file a return separately from your spouse. H&r block tax software   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. H&r block tax software 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. H&r block tax software   At any time, you have only one domicile even though you may have more than one home. H&r block tax software 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. H&r block tax software The question of your domicile is mainly a matter of your intentions as indicated by your actions. H&r block tax software   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. H&r block tax software The division is based on your periods of service and domicile in community and noncommunity property states while you were married. H&r block tax software   For more information, see Publication 555, Community Property. H&r block tax software 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. H&r block tax software The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. H&r block tax software This amount is taxable as wages. H&r block tax software Your annuity will continue to be taxed just as it was before. H&r block tax software If you are still recovering your cost, you continue to do so. H&r block tax software If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. H&r block tax software 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. H&r block tax software A nonresident alien is an individual who is not a citizen or a resident alien of the United States. H&r block tax software Special rule for figuring your total contributions. H&r block tax software   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. H&r block tax software 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. H&r block tax software For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. H&r block tax software Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. H&r block tax software   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. H&r block tax software Limit on taxable amount. H&r block tax software   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. H&r block tax software Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. H&r block tax software The numerator of the fraction is the retiree's total U. H&r block tax software S. H&r block tax software Government basic pay, other than tax-exempt pay for services performed outside the United States. H&r block tax software The denominator is the retiree's total U. H&r block tax software S. H&r block tax software Government basic pay for all services. H&r block tax software    Basic pay includes regular pay plus any standby differential. H&r block tax software It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. H&r block tax software   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. H&r block tax software (For an annuity, first complete Worksheet A in this publication. H&r block tax software ) Worksheet C. H&r block tax software Limited Taxable Amount for Nonresident Alien 1. H&r block tax software 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. H&r block tax software   2. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay other than tax-exempt pay for services performed outside the United States 2. H&r block tax software   3. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay for all services 3. H&r block tax software   4. H&r block tax software Divide line 2 by line 3 4. H&r block tax software   5. H&r block tax software Limited taxable amount. H&r block tax software Multiply line 1 by line 4. H&r block tax software Enter this amount on Form 1040NR, line 17b 5. H&r block tax software   Example 1. H&r block tax software You are a nonresident alien who performed all services for the U. H&r block tax software S. H&r block tax software Government abroad as a nonresident alien. H&r block tax software You retired and began to receive a monthly annuity of $200. H&r block tax software Your total basic pay for all services for the U. H&r block tax software S. H&r block tax software Government was $100,000. H&r block tax software All of your basic pay was tax exempt because it was not U. H&r block tax software S. H&r block tax software source income. H&r block tax software The taxable amount of your annuity using Worksheet A in this publication is $720. H&r block tax software You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. H&r block tax software Worksheet C. H&r block tax software Limited Taxable Amount for Nonresident Alien — Example 1 1. H&r block tax software 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. H&r block tax software $ 720 2. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay other than tax-exempt pay for services performed outside the United States 2. H&r block tax software 0 3. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay for all services 3. H&r block tax software 100,000 4. H&r block tax software Divide line 2 by line 3 4. H&r block tax software 0 5. H&r block tax software Limited taxable amount. H&r block tax software Multiply line 1 by line 4. H&r block tax software Enter this amount on Form 1040NR, line 17b 5. H&r block tax software 0 Example 2. H&r block tax software You are a nonresident alien who performed services for the U. H&r block tax software S. H&r block tax software Government as a nonresident alien both within the United States and abroad. H&r block tax software You retired and began to receive a monthly annuity of $240. H&r block tax software Your total basic pay for your services for the U. H&r block tax software S. H&r block tax software 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. H&r block tax software The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. H&r block tax software S. H&r block tax software source income. H&r block tax software The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. H&r block tax software You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. H&r block tax software Worksheet C. H&r block tax software Limited Taxable Amount for Nonresident Alien — Example 2 1. H&r block tax software 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. H&r block tax software $ 1,980 2. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay other than tax-exempt pay for services performed outside the United States 2. H&r block tax software 40,000 3. H&r block tax software Enter the total U. H&r block tax software S. H&r block tax software Government basic pay for all services 3. H&r block tax software 120,000 4. H&r block tax software Divide line 2 by line 3 4. H&r block tax software . H&r block tax software 333 5. H&r block tax software Limited taxable amount. H&r block tax software Multiply line 1 by line 4. H&r block tax software Enter this amount on Form 1040NR, line 17b 5. H&r block tax software 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. H&r block tax software (However, see Roth TSP balance and Uniformed services TSP accounts, next. H&r block tax software ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. H&r block tax software The way that you withdraw your account balance determines when you must pay the tax. H&r block tax software Roth TSP balance. H&r block tax software   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. H&r block tax software This means Roth TSP contributions are included in your income. H&r block tax software The contribution limits are the same as the traditional TSP. H&r block tax software You can elect to have part or all of your TSP contributions designated as a Roth TSP. H&r block tax software Agency contributions will be part of your traditional TSP balance. H&r block tax software Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. H&r block tax software   Qualified distributions from your Roth TSP are not included in income. H&r block tax software This applies to both your cost in the account and income earned on that account. H&r block tax software 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. H&r block tax software   For more information, go to the TSP website, www. H&r block tax software tsp. H&r block tax software gov, or the TSP Service Office. H&r block tax software See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. H&r block tax software Uniformed services TSP accounts. H&r block tax software   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. H&r block tax software However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. H&r block tax software See Roth TSP balance discussed previously to get more information about Roth contributions. H&r block tax software 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. H&r block tax software You can get more information from the TSP website, www. H&r block tax software tsp. H&r block tax software gov, or the TSP Service Office. H&r block tax software Direct rollover by the TSP. H&r block tax software   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. H&r block tax software However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. H&r block tax software Also, see Rollover Rules , later. H&r block tax software Direct rollover by the TSP to a Roth IRA. H&r block tax software   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. H&r block tax software However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. H&r block tax software Also, see Rollovers to Roth IRAs for more information, later. H&r block tax software Note. H&r block tax software 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. H&r block tax software This is because you already paid tax on those contributions. H&r block tax software You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. H&r block tax software TSP annuity. H&r block tax software   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. H&r block tax software The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. H&r block tax software 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. H&r block tax software See Roth TSP balance , earlier. H&r block tax software This is because you already paid tax on those contributions. H&r block tax software Cash withdrawals. H&r block tax software   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. H&r block tax software (See Rollover Rules , later. H&r block tax software ) 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. H&r block tax software See Lump-Sum Distributions in Publication 575 for details. H&r block tax software However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. H&r block tax software See Roth TSP balance , earlier. H&r block tax software    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. H&r block tax software   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. H&r block tax software 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. H&r block tax software See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. H&r block tax software 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. H&r block tax software See Roth TSP balance , earlier, for a discussion of those conditions. H&r block tax software Tax on early distributions. H&r block tax software   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. H&r block tax software However, this additional tax does not apply in certain situations, including any of the following. H&r block tax software You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. H&r block tax software You choose to receive your account balance in monthly payments based on your life expectancy. H&r block tax software You are totally and permanently disabled. H&r block tax software You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). H&r block tax software The earnings may be subject to the 10% tax depending on whether you met certain conditions. H&r block tax software See Roth TSP balance , earlier. H&r block tax software   For more information, see Tax on Early Distributions in Publication 575. H&r block tax software Outstanding loan. H&r block tax software   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. H&r block tax software The distribution also may be subject to the additional 10% tax on early distributions. H&r block tax software 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. H&r block tax software See Rollover Rules , later. H&r block tax software   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. H&r block tax software However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. H&r block tax software See Roth TSP balance , earlier. H&r block tax software More information. H&r block tax software   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. H&r block tax software 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). H&r block tax software    The above documents are also available on the TSP website at www. H&r block tax software tsp. H&r block tax software gov. H&r block tax software Select “Forms & Publications. H&r block tax software ” 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. H&r block tax software You do not include the amount rolled over in your income, and you cannot take a deduction for it. H&r block tax software The amount rolled over is taxed later as the new program pays that amount to you. H&r block tax software 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. H&r block tax software 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. H&r block tax software To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. H&r block tax software You can also roll over a distribution from a qualified retirement plan into a Roth IRA. H&r block tax software 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. H&r block tax software See Rollovers to Roth IRAs , later, for more information. H&r block tax software Qualified retirement plan. H&r block tax software   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. H&r block tax software The CSRS, FERS, and TSP are considered qualified retirement plans. H&r block tax software Distributions eligible for rollover treatment. H&r block tax software   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. H&r block tax software You cannot roll over any part of your CSRS or FERS annuity payments. H&r block tax software   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. H&r block tax software   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. H&r block tax software However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. H&r block tax software Direct rollover option. H&r block tax software   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. H&r block tax software   There is an automatic rollover requirement for mandatory distributions. H&r block tax software A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. H&r block tax software The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. H&r block tax software 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. H&r block tax software If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. H&r block tax software No tax withheld. H&r block tax software   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. H&r block tax software 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. H&r block tax software Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. H&r block tax software Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. H&r block tax software Payment to you option. H&r block tax software   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. H&r block tax software However, the full amount is treated as distributed to you even though you actually receive only 80%. H&r block tax software 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. H&r block tax software Rollovers to Roth IRAs are generally included in income. H&r block tax software Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. H&r block tax software 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. H&r block tax software 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). H&r block tax software Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. H&r block tax software See Roth TSP balance , earlier. H&r block tax software Also, see Tax on Early Distributions in Publication 575. H&r block tax software Exception to withholding. H&r block tax software   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. H&r block tax software Partial rollovers. H&r block tax software   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. H&r block tax software See Lump-Sum Distributions in Publication 575. H&r block tax software However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. H&r block tax software Rolling over more than amount received. H&r block tax software   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). H&r block tax software Example. H&r block tax software You left government service at age 53. H&r block tax software On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you